January is Financial Wellness Month, and while there’s never a bad time to review general financial wellness best practices — make a budget, create an emergency fund, make saving automatic — one specific aspect of financial wellness is becoming ever more important: fraud prevention.
Falling victim to a scam can put a major dent in the financial security you’ve worked so hard to establish, and fraudsters are growing increasingly sophisticated.
Imposter scams are among the most common types of consumer fraud. These are phishing scams in which the fraudster pose as someone from a legitimate organization, such as a bank or major retailer, to convince the victim to hand over money or share sensitive personal information. Email is the most popular contact method, but phone calls and text messages are often used as well.
Scammers often create a sense of urgency to trick victims. For example, you might receive a call claiming a family member was in a car accident or is experiencing a serious legal issue and needs money sent immediately via a payment app. Other tactics include fake tech support alerts, such as a text warning of malware on your phone with a link that actually installs malicious software. Scammers may also pose as your bank, sending emails or texts about ‘suspicious activity’ with a link to verify your account. These links often lead to a spoofed website designed to trick you handing over your login credentials.
Watch for red flags
While fraudsters are endlessly creative, they often use similar tactics to scam people, so watch for these warning signs:
- Fear and pressure: Scammers use scare tactics and urgency to make you act without thinking. Legitimate organizations don’t use threats or high-pressure tactics.
- Unusual payment methods: Requests for payment via gift cards, cryptocurrency, payment apps, or wire transfers are almost always scams.
- Suspicious messages: Scam emails or texts may ask you to click links, open attachments, or provide personal information (which banks will never do). Be on the lookout for misspellings and poor-quality graphics and take note of where a message originates. These often arrive from strange email addresses or phone numbers.
The American Bankers Association’s “Banks Never Ask That” initiative provides detailed guidance on how to spot phishing scams via email, phone, text message or mobile payment app.
To avoid falling for these scams, keep in mind three rules of thumb:
Don’t click links, open attachments, or share personal info from unexpected messages. Verify requests independently by visiting the organization’s website or app directly to confirm.
Don’t share personal details unless you initiated the call. If you receive a call from an institution requesting sensitive information, hang up and call the official number on file, even if the caller ID looks legitimate (and even if it shows your bank’s telephone number, these calls can be spoofed).
Don’t send money or make payments without verifying the request. Scammers rely on urgency — always pause before paying and take the time to confirm.
Protect your personal information
The more information scammers have about you, the more convincing their schemes can be. Safeguard your information with these steps:
- Keep important physical documents like birth certificates, Social Security cards, and financial records in a secure location.
- Shred documents with personal or financial data before discarding.
- Use a locking mailbox for sensitive mail.
- Don’t reveal personal information on social media – it could inadvertently help scammers to guess your passwords or security answers.
- Create strong, unique passwords (12+ characters with a mix of upper- and lowercase letters, numbers, and characters) for each account; use a password manager if needed.
- Enable two-factor authentication for key accounts like online banking.
- Keep devices and applications updated to ensure you’re protected with the latest security patches.
- Password-protect your home Wi-Fi network and avoid sensitive tasks (online banking) on public networks — turn off Wi-Fi and use your cellular data instead.
Stay vigilant
Even if you don’t think you’ve been targeted by scammers, always keep a close eye on your financial accounts and sign up for alerts that notify you of transactions in real time. Double-check anything you don’t recognize, even if it’s a small charge; sometimes criminals will do a test before attempting a large transaction. Report any suspected fraud to your bank immediately.
Fraud prevention is a collaborative effort. Financial institutions use sophisticated tools for protecting customer accounts, securing digital payments and detecting fraud, but some degree of risk will always remain — including the natural human susceptibility to social engineering. Vigilance and a healthy dose of skepticism can help you avoid scams and safeguard your financial wellness.