How to Avoid the Most Common Financial Scams

Disclaimer: This post is sponsored by PSECU, a Pennsylvania-based credit union.

Since the invention of money, shady shysters have sought to line their own pocketbooks off the blood, sweat and tears of others. Although no one wants to consider themselves a sucker, scammers continue to bilk people out of millions of dollars annually.

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Those seeking to defraud others prey on the good nature most people possess, as well as the emotions everyone experiences. Modern technology allows thieves new avenues for ripping off those caught unawares. However, those who educate themselves on common scam techniques can avoid falling victim.

Check, Please! 

In these uncertain financial times, who doesn't fantasize about receiving an unexpected check in the mail, a lucrative work-from-home position or both? Scammers attack the economically vulnerable, since they know poverty persuades many to believe an easier path to prosperity must exist.

Check-cashing scams often stem from legitimate employment searches. Cybercrooks target job-seekers with opportunities for easy income by processing checks for their overseas clientele. 

The thieves mail victims a realistic-looking check with instructions to cash it, return a certain amount via money-wiring services and keep the rest as their "salary."

Often, the checks appear so realistic, even banks don't catch the fraud until after the victim has spent their so-called wages. Victims then face hefty overcharge fees for all money cleared after depositing the fake check, and may face criminal conspiracy charges in extreme repeat cases. 

Avoiding this scam proves simple: Never cash checks from an unverified source and never wire funds back to the initial sender.

We Need You 

Most people possess generous spirits, and natural disasters prompt many to open their wallets to their charity of choice. However, those receiving solicitations for donations via phone, email or social media messages should hesitate before whipping out their credit card.

To avoid charity scams, only donate to well-known organizations. If contacted by phone by someone soliciting aid, inform the caller that a donation will be made through the charity's website.

Illegal Access 

Ironically, many online scammers trick victims into revealing their passwords and other important information, like credit card numbers, under the guise of needing to verify their identity due to a breach of their account.

Never provide email passwords, Social Security numbers or credit card information via email or to unsolicited phone callers.

When an email indicates a data breach, research online to see if others have experienced the same thing. Refrain from posting chain-letter breach scams on social media. Those silly "I got a friend request from myself" messenger threads only annoy those who recognize the hoax, so don't pass on any warnings not covered in the news.

I, Robocall 

Every day, millions of Americans pick up the phone, say hello - and meet with a robotic voice urging them not to hang up before learning how to cut credit card bills by two-thirds, qualify for student loan forgiveness or enjoy an all-expenses-paid cruise.

The best rule of thumb for dealing with robocalls? Simply hang up. Go even further by registering with the Federal Do-Not-Call list and reporting unwanted phone solicitations. The volume of calls may not decrease immediately, but multiple reports aid prosecutors in holding those responsible accountable.

Wire Me the Money

Wiring money to anyone but well-known family members overseas generally spells trouble. Wiring funds to unknown individuals means waving goodbye to cash that will likely never be recovered.

Exercise caution when an online merchant only accepts payment via wire, as legitimate vendors offer ways to pay that don't include a visit to Western Union. Bank wire scams often target those seeking to purchase prescription medications without a scrip from a doctor, especially in the U.S., where many lack health insurance and sufficient funds to visit a physician for regular med checkups.

The Tax Man Calls 

CPAs and enrolled agents advise their clients that taxing authorities initiate contact via U.S. mail, not phone or email, when sending correspondence. However, savvy scammers imitate IRS agents so well, thousands get suckered into paying nonexistent liabilities with gift cards.

Understand that all taxing authorities must follow certain rules of procedure when attempting to collect tax debt. The IRS website expressly informs taxpayers that the first step they take when collecting debt involves sending a snail-mail letter to the debtor's last known address.

Hang up on calls from people claiming to be tax collectors and contact the appropriate entity directly to determine if liability exists. Report repeated calls from the same number to the FCC or local law enforcement, who will aid in filing charges, if possible.

Stay Savvy and Safe

Criminals who fail at their pilfering schemes eventually give up and move on. Still, even when authorities apprehend one fraudster, others wait to take their place.

By ignoring unsolicited phone calls and emails and by verifying any amounts won or owed directly with the responsible institution, everyone can help prevent others from losing their shirts in shady scams.