Are you familiar with the current top financial scams?

November 8th, 2013 Jen Bailey
Fraud

Con artists are very persuasive, using all types of excuses, explanations, and offers to lead you – and your money – astray.

One of the most effective ways to reduce your chances of falling prey to financial frauds is to educate yourself about scams commonly used. Understanding the types of scams that are out there will help you recognize and avoid them when you encounter them.

We’ve put together a list of the six most common scams currently in existence:

Sweepstakes and lottery scams

This scam often makes contact with you by mail, phone or email, saying you won something, but before you can collect the prize you need to send money to pay for taxes, customs or other fees. Remember that actual lottery, sweepstakes and prize contestants NEVER require people to pay money up front. Ask yourself, “Did I buy a ticket or enter a prize contest?” If the answer is no, it is a scam!

Craigslist/eBay money transfer scams

In this scam, the scammer will try to convince you to pay through MoneyGram or another money transferring agency to avoid sales tax and get a great price. They may even send you a letter or email of authentication telling you that you have purchased the item, but in order to deliver it you need to wire funds first.

Unlike E-Bay, Craigslist is not responsible for transaction mishaps. As a result, if you send money to someone and it turns out to be a fraud, you can’t hold Craigslist responsible. When buying items on Craigslist it is best to exchange payments in person never wire money up front, chances are it’s a scam. Exchange payment in person instead.

Friend/family in trouble scams

If you are contacted by a person who says that a friend or family member is in trouble and needs financial help, always contact the friend or family member FIRST to confirm that help is indeed needed. Many times this can be done with a simple phone call.

Relationship/friend scams

This scam works when someone you know or have been communicating with online (such as a dating site) moves to another country, falls on hard times or is in an emergency situation and asks you to send them money. Make sure you investigate the claims being made by the individual fully before deciding to support them financially. It is typically a scam – especially if you have never met or don’t know the individual very well.

Check overpayment scams

In this scam, the scammer will respond to a classified ad (such as Craigslist or eBay) and offer to use a check to pay for the item. You receive the check to cover the purchase of the item and return shipping. The check exceeds the amount and the scammer asks you to send the excess amount by MoneyGram, money transfer or wire. The actual check is usually bad and takes several days or weeks before it bounces, making you responsible for the entire amount of the bad check.

There is no reason why someone would give you a check or money order that exceeds the agreed-upon sales price. It’s a scam.

Mystery shopper scams

For this scam you’ll be asked to serve as a mystery shopper to evaluate the customer service of a company, such as a wire transfer agency. You are asked to take a check and deposit it and then send the money back via a money transfer. This is a scam and you will be responsible for the money you sent.

Education, a healthy dose of skepticism and good judgment are the best defenses against becoming a fraud victim. If you have any doubt about the validity of an offer, just remember: if it looks too good to be true, it probably is.

About the author

Jen Bailey is a Personal Banker at MidWestOne Bank.

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