Financial scams can cause you to lose the hard-earned savings that you have accrued. Understanding how to protect your assets is part of good money management. To protect yourself from financial harm, here are some tips that you should keep in mind.
Common Financial Scams and How to Avoid Them
Learn how to identify the most common financial scams. Doing so helps protect yourself, your assets, and your business.
Tax Scams
Tax scams are very common during tax season. It goes like this: You’ll receive a phone call, email, or text from someone claiming to be from the IRS. They may ask you to verify your personal information (including your Social Security number). They may demand payment for overdue taxes. They may even threaten serious consequences if you don’t comply.
How to protect yourself: Avoid tax scams by working with a trusted tax professional like Susan Gordon Lee. Always pay your taxes on time. File early so that no one else can claim any potential refund.
Investment Scams
Some common investment scams include:
- Ponzi Schemes. A Ponzi scheme is an investment scam that generates returns for earlier investors with money taken from new investors. The scheme leads people to believe that profits are coming from product sales. In reality, they remain unaware that other investors are the source of the funds.
- Offshore Investing Scams. In an offshore investing scam, you’re told that you’ll get big profits if you send your money ‘offshore’ to a different country. Oftentimes, the aim is to lower or avoid taxes. Be careful of tax avoidance schemes. You may end up owning the government money back in interest, penalties, and taxes.
How to protect yourself: The best way to avoid investment scams is to work with a trustworthy and reliable wealth manager.
Phishing Emails
Phishing emails look like genuine notifications from your financial institution. They may state that there’s an issue with your credit card or bank account. To resolve it, you’ll have to click on the provided link, sign in to your account, and update your information. However, while the website you’re directed to looks authentic, it’s not. Any information that you enter will be stolen and used to access your account(s).
How to protect yourself: Never click on an email link, especially if there are grammatical errors, spelling mistakes, and others. Check that the website URL is secure (begins with https://). Also, remember that your financial institution has a record of your information. Thus, they don’t have to ‘confirm it’.
Small Business Scams
There are numerous types of small business scams, including:
- Office Supply Scams. The scammer acts as your regular supplier. Then, they will contact you, reminding you that it’s time to re-order whatever they’re selling. If you’re tricked into agreeing, you’ll receive an order of overpriced merchandise.
- Fake Invoices. As a business owner, you probably receive many bills every month. It’s fairly easy for a scammer to slip in a fake invoice. You may be billed for office supplies you never ordered or advertising that never ran.
How to protect yourself: Train your staff to be tech-savvy and how to spot signs of a scam. Develop professional relationships with genuine company representatives. This way, you know who you’re dealing with.
The Bottom Line
Unfortunately, there are many types of financial scams out there today. These scammers are only getting more creative.
The best way to avoid financial scams is to educate yourself about them. Be on the lookout!
If you or someone you know was scammed, report it immediately to the Federal Trade Commission: https://reportfraud.ftc.gov/#/.