Bahar Ferguson
Banking is essential for our economy, but it’s not without its risks. Banking scams are on the rise, to the tune of 2.2 million incidents, costing Americans $3.3 billion in losses.
Banking scams are becoming more sophisticated and more challenging to spot, too. But there are some telltale signs that will help you avoid becoming a victim.
Here’s what you should know about financial scams so you can avoid them in the first place. We also include tips on protecting yourself from these kinds of criminals. {mprestriction ids="1,3"}
13 Common Banking Scams
Criminals get creative when it comes to tricking people into giving up their personal information and then stealing their money. The 13 most common scams they’re currently using are:
1. Phishing
2. Smishing
3. Vishing
4. Government Imposters
5. ATM Skimming
6. Fake Check Cashing Schemes
7. Online Lending Scams
8. Overpayment Scams
9. Automatic Withdrawals
10. Employment Scams
11. Unsolicited Check Fraud
12. Charity Scams
13. Lottery Schemes
Let’s look at each type to know how they operate and what to watch out for.
Phishing Financial Scams. Phishing is a common scam where criminals pose as legitimate businesses or organizations. They do so to acquire personal information such as passwords, credit card numbers or account information.
Phishing bank scams are typically carried out by email or instant messaging. They use fear as a tactic, often telling you that someone attempted to sign into your account and that you need to log in and reset your password.
The link to reset your password often directs the user to enter personal information at a fake website that resembles a legitimate one. These scams can be difficult to spot. They may use official-looking logos and language.
Smishing. A smishing bank scam is a phishing attack where the attacker impersonates a financial institution. The main objective is to trick the victim into giving up their personal information, such as banking login credentials. This usually occurs via short message service or instant messaging.
Smishing attacks are rising and criminals are targeting major banks in the United States. These attacks are difficult to detect. Falling for this deception is very costly for the victims.
Vishing Bank Scams. Vishing is another phishing technique where criminals use voice messages or phone calls to trick people into giving them personal information. The scammer may pose as a bank employee or someone from a financial institution.
They often use a spoofed caller ID through VoIP (voice over Internet protocol) platforms. It appears they’re calling from a legitimate business phone number, making it difficult for victims to recognize the scam.
The main objective is getting their victims to disclose personal information like a Social Security number or bank account login information.
Government Imposters. This scam involves posing as a government official and threatening jail time or other horrible consequences for outstanding debt.
For example, posing as an FBI or IRS agent, they contact individuals and request payment via gift card. Methods of contact include phone calls, text messages or email.
ATM Skimming. An ATM skimming bank scam is a fraud that occurs when an ATM gets tampered with to steal card information. Criminals attach devices to ATM machines to capture people’s card information and PINs. These devices read the information on the card’s magnetic stripe.
The stolen information gets used to create a counterfeit card and withdraw money from the victim’s account. ATM skimming can be difficult for victims to detect because the skimming devices are often small and unobtrusive.
Fake Check Cashing. A fake check cashing scam is a type of fraud where the perpetrator uses a forged or counterfeit check to obtain cash from a bank. They don’t cash the check themselves, though. They often wait outside a bank and ask someone else to do it.
The scammer gives an excuse of why they can’t cash it themselves, such as forgetting their ID. They prey on the good nature of others who want to help them.
Once the victim cashes or deposits the check, they are responsible for the funds when the check gets returned as a counterfeit.
Online Lending Scams. An online lending bank scam is a type of fraud that involves scammers posing as bona fide online lenders.
These scammers often use fake websites and documents to make their offers seem legitimate. They may even promise low-interest rates or no fees to get people to sign up.
Once someone has signed up for a loan, the scammers will get personal information such as banking details or Social Security numbers. Sometimes the scammer will request an upfront fee before approving the loan.
Overpayment Scams. A new wave of scams is targeting online vendors and sellers. Scammers pose as buyers and “accidentally” send fake checks, money orders or proof of payment for more than the purchase price. Next, they ask the seller to refund the overpayment via an online payment service or wire transfer.
The seller ends up in the red, taking a hit for the cost of the item they sold, the amount of the fake payment and the overage amount they sent to the scammer.
Automatic Withdrawals Schemes. This type of bank scam occurs when a criminal gains access to your bank account information and uses it to set up unauthorized withdrawals from your account.
It’s difficult to spot because the withdrawals are from legitimate companies, sometimes even from companies you do business with. Look for small, frequent withdrawals you don’t recognize or remember.
Employment Scams. An employment scam occurs when a person poses as a legitimate employment agency or job placement firm aiming to take advantage of job seekers. The scammer will promise potential victims high-paying jobs or access to exclusive job openings.
They want your personal information, ID and Social Security number. They get it by asking you to verify your identity as part of the process. In some cases, the scammer may even offer to help the victim find a job in exchange for a fee.
Unsolicited Check Fraud. Unsolicited check fraud starts with an unexpected check arriving in the mail, often disguised as a rebate or refund of an overpayment. It may look legitimate and probably is. However, there’s fine print that often gets missed.
The recipient becomes legally obligated to a long-term financial contract by cashing or depositing the check. The amount of the check is only part of the agreement.
Charity Scams. Charity fraud involves scammers posing as legitimate charities to solicit donations. Solicitation methods include online donation platforms, social media or even in person.
The scammers often use hard-hitting tactics to get people to donate and they may even promise matching funds from a corporate sponsor. In reality, the money goes into the scammers’ pockets and the people who need the help don’t get any.
Lottery Schemes. A lottery scheme involves a message or personal phone call claiming you’ve won a prize or lottery payout. The caller then claims that you must pay taxes or fees before they can process and mail you the prize.
Protect Yourself from Banking Scams
Banking scams are becoming increasingly common. Here are a few tips to help you avoid becoming a victim of one:
1. Use different passwords for every website and make your passwords unique and difficult to guess. Think about those long passwords Apple suggests for new accounts. This is the caliber you are looking for.
2. If you get an email or phone call from your bank that seems suspicious, call your bank directly to check.
3. Don’t respond to requests for personal or financial information through email, text or pop-ups. Don’t click on any of these types of links either. Instead, go directly to the website yourself.
4. Keep your guard up and never give your personal information to anyone you don’t know.
5. Monitor your accounts. If you discover any suspicious transactions, contact your bank immediately.
6. Don’t cash any checks which pay more than the amount necessary. Instead, return to the sender.
7. Only use reputable websites and services. Research them ahead of time and look for a large variety of reviews from other users.
8. Seem too good to be true? It likely is.
9. Always read the fine print.
If you suspect a banking scam, contact your bank immediately. You can also report banking scams to the Federal Trade Commission at https://www.usa.gov/stop-scams-frauds.
Bahar Ferguson is the president of Wasatch I.T, a Utah-based IT company for small and mid-sized businesses.{/mprestriction}
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