I recently read an article about how millennials fall for financial scams more than any other age group. Now, I’m not going to pick on millennials here, but it got me thinking about how prevalent financial scams are, especially if the generation who grew up doing internet research is falling for them.
How can we all protect ourselves from being scammed in this age of social media and online consumption? It can be a challenge when so much of life is shared online and so many of our purchases are made on computers and devices. Scams work because they look and sound legitimate and can catch us when we are not expecting it.
Common scams that people are falling for today
This is not an all-inclusive list, but some common scams include:
- Phony debt collections – this can include people claiming you owe an outstanding debt from a credit card, medical bills, or even the IRS. This is especially easy to fall for if you actually DO have one of these things.
- Identity theft – people can access personal information by hacking corporate records to access data they can use to steal your identity.
- Impostor scams – scammers pretend to be a family member in an emergency to try and convince you to send them money to help.
- Travel, vacation and timeshare scams
- Mortgage and debt relief scams – more than one of my non-planner colleagues has forwarded an email about student loan relief, asking if the planner team thinks it’s legit and those things look real if you don’t do some digging!
Avoiding a scam
Scams most often present themselves through an email or phone call, although more and more are showing up as social media posts. Ever received an email from a wealthy person in some far-off country wanting to give you millions if you just wire them some cash to move the money to you? Or get a call from the IRS saying you owe thousands right now or they will have you arrested? Some scams may be easy to spot, while some may be tougher to identify.
Here are some great tips from the Better Business Bureau to help you avoid being scammed. In addition, know that the IRS does not call people to collect tax debts – they will send you a letter. And law enforcement does not charge you a fee for their services, so if you get a call from law enforcement asking for money, that is a huge red flag!
Trust your gut
I spoke with someone a few months ago who was in a panic because they received a call from a debt collector demanding immediate payment from a debt that was allegedly from several years ago. They had not received anything in the mail regarding this debt – another red flag. They could not recall ever doing business with this company.
We took a step back and went through the following steps to flush out if this was real or a scam:
- Pull your credit report – if this was a real debt, it would show up on your credit report. In this case, it was not on the report.
- Ask the creditor to identify the name, address and phone number of the company they are calling from – if it is legitimate, they will provide this information without hesitation. If not, they may avoid providing this information. Even so, do not discuss this over the phone! Request a validation notice be sent via mail – which they are required to do.
- Ask them for the last four digits of the debtor’s social security number. If they provide that information – huge red flag! Real debt collectors are not allowed to do that by law.
After taking these steps, we spotted the scam and saved this person thousands. Trust your gut and ask questions!
By following the tips provided, you can protect yourself as much as possible from scams that are out there. Being diligent is the key and safeguarding your information makes it much harder for scammers to victimize you.
Stay safe out there!