Protect Yourself from Financial Scams: Essential Tips and Insights

Key Takeaways

• If you receive an unsolicited call or text requesting your Fidelity security code, refrain from responding. Only provide a security code if you have initiated a call to our official phone number. Ensure that you only enter the code on an official Fidelity app or website.

• Activate additional security measures such as multi-factor authentication, and ensure your mobile phone and email accounts are secure.

• Exercise caution with calls or emails that threaten legal action or account closures.

• Do not trust unsolicited calls from individuals claiming to be from technical support, the IRS, or your financial institutions.

• Be cautious with the information you share on social media, avoid sending money to unknown individuals, and thoroughly research companies before engaging in business based on a social media advertisement or post.

In 2023, American consumers experienced losses exceeding $10 billion due to fraudulent activities. The most frequently reported scam was impostor fraud, where perpetrators impersonate banks, financial institutions, government agencies, or other reputable organizations to illicitly obtain money or personal information. Impostor scams alone accounted for nearly $2.7 billion in reported losses in 2023. It is important to remain vigilant, as this type of fraud is increasing and can have severe consequences.

While the impostor scam is notably harmful, it is not the only threat to be vigilant about. In dealing with many of these scams, exercising caution and maintaining skepticism in the digital realm are among your most effective defenses. If something appears suspicious, pause. Allow your emotions to settle and investigate the situation thoroughly. Scammers frequently impose tight deadlines to pressure you into making hasty decisions. Be aware that requests for payment via cryptocurrency, gift cards, or bank transfers are significant indicators of fraudulent activity.

Below are six prevalent financial scams to be aware of, along with guidance on what to do if you suspect you have fallen victim.

1. Impostor Scam

An impostor scam may unfold as follows: You receive a phone call, and the caller ID indicates it is your financial institution. However, it is not; it is a scammer. These fraudsters claim they have detected fraudulent activity in your account and urge immediate action.

They may request you to verify your identity by sending a code for you to read back to them or enter into your phone. This code is intended to reset your password, enabling them to access your funds. Never disclose such codes unless you initiated the communication. Avoid providing or entering a code unless you have contacted the bank or financial institution using their official number. Do not input the code into your phone or a website unless accessing an official app or website. Scammers can convert the distinct tones of phone buttons into text, even without visually seeing the numbers entered.

To safeguard yourself:

• If you receive a call, text, or email requesting action or personal information, do not respond.

• Instead, disconnect the call or close the email or text, then visit the bank or financial institution's website and contact them directly.

• Avoid providing or "confirming" any personal identifying information.

• Never relay a security code or enter a code into a text message unless you have initiated the service call to a company's official phone number.

• Only input the security code into your phone or a website when logging into an official app or website.

2. Remote Access Scam

You might receive a call warning you of a computer issue, or a message may appear on your screen indicating a virus infection. Following the caller's or message's instructions could result in your computer being compromised and personal information being stolen. You may then be asked to pay a fee to regain access to your computer or data.

To protect yourself:

• Do not permit anyone to remotely control your computer and never disclose passwords or security codes over the phone. Remote access can be beneficial if you contact a verified and trusted resource for assistance—the key is that you initiated the contact.

• Avoid clicking on pop-up ads or attachments from unknown senders. Do not click links in emails. Instead, manually type known URLs into your browser. Do not call any numbers provided in pop-up warnings; legitimate security alerts will not request a phone call.

• If asked to download software granting access to your device, terminate the call. No reputable institution will request this unsolicited.

• Be cautious of callers who ask you to keep the conversation confidential—a common scammer strategy.

• Update your security software and run a scan if you suspect a computer issue. Seek technical support from a company you trust.

• Regularly back up your data. This allows you to restore control by cleaning your hard drive and reinstalling your operating system.

• Consider enhancing your account security by enrolling in the highest security levels offered and ensuring your contact information is current.

3. Confidence/Romance Scams

Individuals may be led to believe they are in a relationship—be it familial, friendly, or romantic—resulting in their willingness to send money, personal information, or valuable items to the scammer. This includes scams like the "grandparent scam," where someone impersonates a grandchild and urgently requests money for emergencies such as accidents or arrests, exploiting the victim's emotions.

To safeguard yourself:

• Avoid sending money or gifts to someone you have not met in person.

• Recognize warning signs: the individual quickly professes love, attempts to isolate you from family and friends, requests money, and/or claims to reside far away.

• Proceed with caution. Ask questions and verify the consistency of their answers.

• Discuss this new relationship with someone you trust. Heed any concerns from family or friends.

• If you fall victim to a romance scam, report it to the FBI’s Internet Crime Complaint Center and contact your local FBI field office.

4. Fake Charities

You may be approached via email, phone, or in person to donate to an organization that appears to be a legitimate cause but is actually fraudulent. Friends might also share links on social media. These scams often use names similar to well-known charities or target individuals affected by events like wars or natural disasters, or those with an interest in specific diseases or social causes. Charity scams increasingly appear on social media platforms like Facebook, X (formerly Twitter), TikTok, WhatsApp, and LinkedIn.

To protect yourself:

• Research charities before donating through the Better Business Bureau's (BBB) Wise Giving Alliance, Charity Navigator, Charity Watch, or GuideStar.

• Visit official charity websites by manually entering the URLs in your browser.

5. Social Media/Investment Scams

Scammers exploit personal information shared on social media for various scams, including romance scams. The FTC has also highlighted investment fraud and online shopping fraud as prevalent schemes. These scams often originate on social media, promising unrealistic deals.

In online shopping fraud, you might see ads for expensive items at suspiciously low prices. After purchasing, you may receive incorrect items or nothing at all.

Investment scams are more challenging to identify. Scammers may hack celebrity accounts to solicit cryptocurrency, promising to return double or triple the amount. Fake websites may also be created to deceive individuals into investing in cryptocurrency, with victims unable to retrieve their funds. Additionally, fraudulent cryptocurrency apps mimic legitimate companies. Investment scams may also stem from fake advertisements.

To protect yourself:

• Be wary of unsolicited investment offers.

• Scammers may attempt to move conversations off the original social media platform.

• If an offer seems too good to be true, it likely is. Avoid anyone promising significant returns with no risk.

• Verify the authenticity of emails from investment companies. Avoid clicking links in emails; instead, research the company and contact them directly.

• Instead of clicking on ads, search for the company and visit their site directly.

• If considering a new company, search online for the company name alongside terms like scam or complaints.

• If you fall victim to a social media or internet scam, report it to the FBI’s Internet Crime Complaint Center and contact your local FBI field office.

6. Tax Refund Fraud

Fraudsters may illegally obtain your Social Security number to file a false tax return in your name and collect a refund. Your legitimate tax return may be rejected because the IRS has already processed one using your Social Security number. In some cases, you might receive a notice indicating a suspicious return was filed in your name before you submit your own.

To protect yourself:

• File your tax return early to reduce the chance of a fraudulent filing occurring beforehand.

• If your return is rejected due to a duplicate filing, submit Form 14039, Identity Theft Affidavit, to the IRS.

• Remember, the IRS will contact you via the US Postal Service, not by phone, text, or email.

• Do not respond to calls, texts, or emails from individuals claiming to be the IRS.

• Visit Identity Theft Central for information on tax-related identity theft and data security from the IRS. Consider obtaining an Identity Protection PIN from the IRS to prevent unauthorized tax filings using your Social Security number.

• Review identity theft resources provided by your state as well.

• Continue to pay taxes and file your legitimate tax return, though it may require a paper submission. Attach Form 14039, Identity Theft Affidavit, when filing.

Practice Good Cyber Habits

These scams represent a fraction of the threats out there. Security measures are not infallible, and anyone can experience a momentary lapse in judgment. By maintaining awareness and adopting basic preventive measures, you can shield yourself from most fraudulent schemes. Always pause to identify red flags before responding to unsolicited emails, phone calls, texts, or social media messages requesting money or information—even if they appear to be from a trusted source.

Best Regards,

Stock Market Charlie