Sidestepping Swindlers

You’ve probably heard of scams before, but you don’t really think about it until it happens to you. But this type of situation is more common than you might think, and younger people can be twice as likely to fall into a scam than the elderly. Scammers defraud others by using deceptive means to get something, usually money. In 2020, the public lost over $3.4 billion with a median loss of about $306 per scam. So while scams may seem like a minor annoyance to some, they can have a considerable impact on fraud victims’ finances.

Advance-Fee Scheme

This scheme happens when you have to pay an advance fee for an alleged greater amount of money. You are contacted through email, mail, or phone. The scammer asks for a fee, similar to a finder’s fee, to allow you to access that money. The money can include but is not limited to grants and inheritances. After paying the fee, you may find yourself scammed as you are later told that you can’t access that promised money and won’t be given a refund for the fee you already paid. Scammers who use this scheme typically don’t intend to ever give you money.

Bank Scams

There are multiple types of bank scams, including letter of credit and prime bank note frauds as well as overpayment and fake check scams. 

Letter of credit fraud happens when fake letters of credit or bank guarantees are promised to investors in return for impossibly high interest rates. Actual letters of credit are given by banks for payment of international trade goods. These letters are never issued as investment vehicles or sold by banks. 

Similarly, prime bank note fraud occurs when scammers allege that they have bank guarantees, especially from well-known international “prime” banks, to sell. They convince victims to invest in these guarantees which fraudsters claim to be able to buy at a lower price and resell for above the actual price multiple times. Behind the scheme, the victims are actually sending money to a foreign bank where it is later transferred to an off-shore account in the fraudster’s control.

In addition, other common banking scams include overpayment scams. Overpayment scams happen when you are sent a check to deposit and wire some money to the sender. However, if the check is not legitimate, you may have to pay the bank for the check’s amount as well as lose the money you wired.

Last but not least, another bank scam can happen when a fraudster sends you a check. Unsolicited checks, when cashed, may approve purchases like memberships or apply for a loan that you didn’t willingly authorize. When you try to cancel matters like a membership, you may find out that the cancellation period has passed and that you are paying more money for something you authorized without knowing.

Charity Fraud

Scammers can create fake charitable organizations that solicit donations through a variety of platforms such as crowdfunding sites and emails. These donations don’t support a real charitable cause, instead they go to the organization’s founder. Victims may be ignorant of what their money is really used for.

A similar fraud that scammers attempt is disaster fraud, after victims have already experienced natural disasters and emergencies. Fraudsters may do insurance fraud and masquerade themselves as government affiliations. This type of fraud can affect disaster victims even more, exploiting them when they are already victimized.

Government Scams

When receiving anything from the government, you should always check that it is credible. For example, a scammer may pose as an IRS agent who claims that you owe taxes and will go to jail if they are not paid promptly. The scammer may ask for a wire transfer or even personal information. The IRS does not immediately send anyone who owes taxes to jail, they will most likely send letters notifying you first. During the COVID-era, scammers may also pretend to be from the IRS or another government agency and charge false fees or ask for personal information in exchange for getting stimulus check money. To be better safe than sorry, it is advisable to check credible government sites or call a reliable government number to check.

Healthcare Scams

Even in healthcare, scammers can find victims. Fraudsters can include patients, medical providers, and more. These scammers usually commit fraud to gain illegal benefits or payments, which can result in higher prices for healthcare insurance and unneeded medical procedures.

Furthermore, sometimes these scams involve the dead. Swindlers may attempt funeral or cemetery fraud. This happens when people arrange a plan for their own funeral and pay expenses in advance. However, swindlers may target those people’s families and charge for more than the actual expenses or register themselves as financial beneficiaries instead. Here, the victims may end up losing a significant amount of money.

Impersonation/Identity Scams

Identity theft is one of the common crimes in America today. A common example of this crime is credit card fraud, where a fraudster uses someone else’s credit card without their permission to buy items or receive money.

Another variation of identity scams is imposter scams. Imposters hide behind a false online identity to gain the trust of victims, in hopes of stealing money. A specific sub-category is romance scams, where scammers gain the trust of victims looking for romantic partners to deceive them and steal money.

The elderly can also fall prey to imposter scams and a host of other ones. For example, in the grandparent scam, a scammer may pretend to be the victim’s grandchild or relative and request money for an urgent financial need. As a result, the victim loses money to a scammer instead of really helping out a family member.

Internet Scams

One of the ways a scammer may launch their scheme is through the internet. Phishing scammers may contact you through calling, emailing, or mailing and for personal information, often to steal your money. The scammers may pretend to be a company you trust. A related scam is spoofing. Spoofing happens when scammers disguise a fake email as coming from a legitimate source, also to gain personal information from email recipients.

Another internet fraud is ransomware. Malicious actors may send phishing emails to lock you out of your computer and demand money to decrypt your computer. This type of fraud can also affect companies and organizations.

Investment Scams

There are several types of investment scams, including prime note bank fraud which is noted above, as well as market manipulation and redemption or strawman fraud. In market manipulation scams, fraudsters artificially increase the price of a low-trading security. Then the fraudsters sell the security into the market which results in unlawful gains and losses for victimized investors.

Another investment scam is redemption or strawman fraud. Here, scammers falsely claim the U.S. Treasury controls every citizen’s bank account and promises to teach you how to access it. The scammer may use real official documents but not for their intended purposes so the scheme appears legitimate or go a step further by using false legal theories and notaries.

Online Retail Scams

If you’re looking for a car, make sure to buy from reputable sources. Often, fake advertisements that look legitimate are scams, especially online vehicle sales. A buyer looks at the car advertisement and purchases, usually by buying prepaid gift cards and entering the codes, where the transaction is finished. The scammer then takes the money and the buyer ends up losing their money as well as never getting an actual car.

A similar example is holiday scams. These scams work just like the online vehicle sale scam, only holiday scams appear during the holidays when people are eager to spend money. Buyers may buy items but never receive them, or sellers can ship items but never end up paid.

Ponzi Scheme

In a Ponzi scheme, new investors’ investments are paid to current investors as “returns.” The schemers keep on recruiting new investors and paying off the old ones. They also entice investors often by offering high investment returns with little risk. This scheme keeps on continuing until no more investors invest.

Pyramid Scheme

The pyramid scheme is an elaborate scam based on a multi-level marketing model. A scammer may recruit people who invest in the scheme. Then, the recruited people recruit more people. The newer recruits’ investments are used to pay the earlier recruits. The process goes on until no more participants can be recruited, and the scheme ultimately fails. This scheme is illegal by law, and members (people recruited into the scheme) often don’t gain any profit.

Other Scams

Besides all the scams listed above, there are always scammers looking to exploit people in any way. Some of these schemes include work-at-home scams and student loan scams.

Work-at-home scams claim that you can earn a lot of money from the comfort of your home. However, scammers will ask for a fee, or fees for equipment and inventory. But after you paid, the items that you purchase don’t give you any real income.

For students, scammers also hunt those searching for financial aid. Typically speaking, scammers pose as commercial financial aid services that may guarantee aid or pressure you to buy what looks too good to be true. These services may not be reputable, and in fact, do not provide any real financial aid . Students with loans to pay off may also be targeted. Scammers may pretend as a student loan forgiveness service and use your information to transfer your loan payments to themselves instead.

Conclusion

To sum up, there are many possible types of scams. Some of the ones listed above may be familiar and others surprising. It is always a good idea to double-check if you are being scammed, and always report fraud to the proper authorities immediately after you find out.