Artificial intelligence tools and sophisticated technology are making it harder for consumers to detect fraud.
The fraud cost American consumers over $7 billion during the first three quarters of 2023, according to the Federal Trade Commission. These numbers increased by 5% compared to the same period in 2022.
The perpetrators of these types of crimes can be organized gangs or transnational criminal enterprises with employees who follow scripts to lure victims.
The most important step to avoid being deceived is to know what can happen and discuss the issue with family and friends. When people are aware of a specific scam, they are 80% less likely to get involved in it, and if they do, they are 40% less likely to lose money or confidential information, according to the FINRA Investor Education Foundation.
Here are five of the top financial scams you should watch out for in 2024
• Grandparent Scams
Playing on people’s emotions and impersonating someone they care about is a starting point for many fraud schemes.
The grandparent scam is becoming a more harmful version with advanced technology. Thieves can capture a voice recording and generate an imitated version of voices that can be used to deceive the victim.
Fraudsters may call and pretend to be a family member in immediate danger – for example, claiming they have been arrested or are seriously ill – and urgently need money. Fraudsters often try to isolate their victims by inventing some reason why the victim cannot consult friends, family, or authorities, such as saying the case is under a “gag order.”
• Romance Scams
Romance scams have been a common way to use new but fake relationships to steal people’s money. This type of fraud is growing in popularity. These scams often start with private messages on social media or dating apps.
Once the new “suitor” gains their trust, they may claim that someone close to them is sick, injured, or imprisoned. After lying, they will ask for money or a purchase made in their name.
Scammers often request payments in harder-to-trace and reverse ways, such as gift cards and peer-to-peer services like Venmo and Zelle.
Another frequent lie from these “suitors” is an offer to help invest in cryptocurrency. While many victims of romance scams send money in gift cards, the most significant dollar losses – over one-third of losses in romance scams in 2022 – were in cryptocurrencies, according to the FTC.
• Cryptocurrency Scams
Investment-related scams are the most expensive type of financial fraud, with total losses exceeding $3.8 billion in 2022, according to the FTC.
Scammers use cryptocurrencies because they do not have the same legal protections as credit or debit cards, and payments often cannot be reversed. In investment scams, cryptocurrency is central in two ways: it can be both the investment and the payments that cannot be reversed.
Cryptocurrency scams can start with an “investment manager” calling you out of the blue with a tip that seems too good to be true or a scammer claiming to be an influencer who can quadruple your money.
• Employment Scams
Business and employment-related frauds are another significant category of financial fraud.
Some scammers use attractive and hard-to-detect tactics to lure victims through interviews with a company that may seem legitimate. Then, this fake employer sends the victim a fake email to collect personal information. One excuse is to conduct a background check. Once personal information is obtained, it becomes easier to access a bank account.
Other job scams may promise guaranteed or easy income if you purchase a program they offer.
• Tax Scams
In this scam, con artists offer to help you create an online account at IRS.gov to pay taxes. With the taxpayer’s information, they file a false tax return to obtain a refund. The information can also be used for other financial frauds or identity theft, as well as to obtain a loan or open a line of credit.
If you fall victim to a fraud, report it to local authorities, the FBI, the attorney general of the state where the fraud occurred, AARP, and the FTC.
Source: CNBC