How to Prevent Financial Fraud & Scams: 5 Strategies

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Financial fraud and scams have become a pervasive threat in an era where our lives are intertwined with the digital world. As of 2021, Americans have lost over $5.8 billion from breaches in personal data.

So how can everyday people prevent financial fraud and scams? From cybercriminals eagerly seeking personal information to advanced scam tactics, the risks are constantly evolving. It’s critical to arm yourself with knowledge and the right strategies to learn how to prevent financial fraud.

Are you ready to learn some keys that can help you protect your finances?

Strategy #1: Guard Your Personal Information

In today’s digital world, where shopping, banking, and working can be done online, protecting your personal information is essential. This is true for all ages.

Hackers and bad actors are targeting attacks based on demographics and behavior. Younger adults are targeted during the online buying process, investment deals, and employment opportunities. Meanwhile, older adults are twice as likely to fall victim to scams involving winning a prize.

The internet is a network of information, so how can you prevent financial fraud online? Here are a few tips:

  • Verify the recipient: Ensure the legitimacy and trust of any organization you share personal information with. Confirm their identity through official channels such as a verified website, official contact numbers, or in-person interactions when possible.
  • Use secure communication: Avoid sharing sensitive information over unencrypted emails or unsecured Wi-Fi networks. Look for websites with “https” in the URL, which indicates a secure connection.
  • Minimize sharing: Only provide the necessary personal information required for the specific transaction or purpose. The less information shared, the less potential for compromise.
  • Initiate contact: When possible, always be the one to take the lead and initiate contact. Never share personal information online or over the phone unless you initiate contact.

Strategy #2: Beware of Unsolicited Offers

While the thought of winning big is unanimously attractive, it’s also a common tactic cybercriminals use. Prize scams typically involve informing victims that they have won a valuable prize, such as a car, vacation, electronic device, or lottery amount.

However, before cashing in on the offer, victims are often asked to pay taxes, shipping fees, or other related charges. According to the Better Business Bureau, prize scams have affected over 500,000 individuals and resulted in over $117 million in loss. During the COVID-19 pandemic, the Federal Trade Commission (FTC) saw an increase of more than 35% in dollar losses.

Be wary of unsolicited offers of money, gifts, or incredible deals. Whether received through email, phone calls, or text messages, unsolicited offers may have a real intention of deception or defraud. If you do receive these types of communication, take the following precautions:

  • If something seems suspicious, investigate it further before taking any action.
  • Independently verify the credibility of the offer and the organization making it.
  • Never share personal information in response to an unsolicited offer.
  • Regularly update your devices and software to protect against malicious content.\
  • Staying vigilant and exercising caution helps minimize the risk of falling victim to scams, phishing attempts, and other fraudulent activities.

Strategy #3: Keep Your Technology Secure

According to the FTC, financial fraud is on the rise, with a 70% increase in 2021. This type of fraudulent activity can have devastating consequences with lasting results.

Prioritizing technology security helps safeguard sensitive data and provides a secure environment for financial transactions. Updating your devices, including computers, smartphones, and tablets, with the latest security patches and software helps prevent financial fraud.

These updates often contain critical bug fixes and security enhancements that address vulnerabilities that cybercriminals could exploit. One vulnerability left unaddressed has the potential to let a bad actor walk right through the back door.

Another element of security is strong password protection. More importantly, using unique passwords for your financial accounts adds an extra layer of protection. Avoid using easily guessable or repeated passwords. A password manager can be implemented to help store multiple different passwords for different accounts.

Installing reputable antivirus and anti-malware software plays another critical role in staying secure. Software solutions are designed to detect and eliminate various types of malware, ransomware, or spyware.

Strategy #4: Always Verify

Scammers are continually adapting to exploit new opportunities for malicious purposes. One particularly concerning threat is the rise of AI voice scams. With advancements in artificial intelligence, fraudsters can now convincingly mimic voices, deceiving unsuspecting individuals over the phone.

In light of these sophisticated scams, it is critical to prioritize verification of investment opportunities or demands for payment. Taking the time to verify communication before taking any action can shield you from falling victim to these advanced schemes.

Scammers often employ tactics that appear legitimate and urgent, pressuring victims to make impulsive decisions. When contacted about an offer or payment demand, exercise caution and invest time to verify its authenticity.

Don’t take any immediate action when payment or action is requested. Instead of relying on the provided contact information, take the initiative to contact the organization directly. Look for customer reviews, news articles, or other reliable sources of information that help determine its validity.

Strategy #5: Knowledge of Common Financial Scams is Powerful

Don’t be caught off guard. Stay informed about common financial scams, including essential facts. Post-pandemic phishing tactics alone have seen a 667% increase in targeted attacks. Here are some examples of other types of scams to be aware of to help protect yourself against financial fraud.

Identity Theft

Identity theft occurs when someone steals another person’s personal information, such as their name, social security number, or credit card details, to commit fraud. The data can be used to make unauthorized purchases, open credit accounts, or even apply for loans under the victim’s name.

Lottery and Sweepstakes Scams

Lottery or sweepstake scams involve fraudulent notifications claiming that the recipient has won a large sum of money or an attractive prize. Victims are usually asked to pay fees or provide personal information to claim their winnings. Legitimate lotteries and sweepstakes do not require upfront payment for prize redemption.

Tech Support Scams

Tech support scams involve people posing as technical support representatives from reputable companies. They contact potential victims through unsolicited phone calls or pop-up messages and claim their computer has an issue. The scammer then tries to trick the victim into providing remote access to their computer or paying for unnecessary software.

You Now Know How to Prevent Financial Fraud & Scams

In this digital era, it’s crucial to protect your personal information and financial well-being. Be cautious of unsolicited offers while keeping your technology secure and verifying any source of communication to reduce the risk of falling victim to financial fraud.

Keep in mind that cybercriminals are always changing their tactics. Technology offers incredible convenience and opportunities, but also presents risks. Stay vigilant, stay informed, and take proactive steps to safeguard yourself.

If you’re seeking expert guidance and support in securing your financial well-being, consider contacting our team at Juice Financial. Explore our FinTech offerings, and share them with your boss and colleagues, to help your workspace learn more about how to prevent financial fraud.