Financial scams have been around since the dawn of time, but they are getting more and more sophisticated with each passing year. According to the FBI’s Internet Crime Complaint Center (IC3) Internet Crime Report of 2022, Americans lost $10.3 billion to financial scams.
In 2023, we will likely see an even higher number of financial scams; therefore, it is important to be aware of the potential risks.
This blog post will provide an overview of the main financial scams to watch out for in 2023. By understanding these scams, you will be ready to protect yourself and your finances.
Let’s get started!
1. The Ponzi Scheme
The Ponzi scam is a classic, and it involves convincing people to invest in a fraudulent business opportunity. Investors are promised large returns on their investments, but the reality is that there is no legitimate business behind the investment.
The scammer uses the money from newer investors to pay off earlier investors, making it appear as though the business is doing well. Unfortunately, when too many people try to withdraw their money at once, the scam collapses, and everyone loses their money.
2. The Free Trial Scam
Be aware of “free trials” that seem too good to be true. Often, these come with hidden fees you don’t realize until you’re already committed to the trial. Criminals take advantage of unsuspecting people by asking for their credit card information to begin a “free trial” period, only to bill them after the time is up.
Be wary of free trials and read the fine print before giving away your financial information.
3. The Fake Online Store Scam
In this scam, fraudsters create an online store that looks legitimate and sells products they don’t have. Then, after you make a purchase, the scammers take your money and never send you the items you ordered.
To protect yourself from falling victim to this scam, only shop at reputable stores and be sure to do your research. Check for reviews, read the store’s return policy, and ensure a physical address is associated with the store.
4. The Lottery/Prize Scam
This type of scam aims to entice victims into paying a fee for a supposed prize or lottery win.
Often, the scammers will contact victims via phone, email, or social media and claim they have won a large sum of money. To receive the winnings, they must provide personal information, pay a processing fee, or send money to cover taxes and other costs. Unfortunately, there is no prize at the end of the rainbow, and victims often find themselves out of pocket with nothing to show for it.
It is important to remember that legitimate lotteries do not require you to pay a fee to receive your winnings.
5. The Job Scam
This scam targets those looking for work by offering them a job that pays well but requires up-front payment or personal information. The person is usually promised a large sum and asked to send money in return for their new job, only to find out later that the job never existed.
To protect yourself from falling prey to this scam, never pay for a job, be wary of offers that seem too good to be true, and research the company before agreeing to any offer.
6. The Advance Fee Loan Scam
In the advance fee loan scam, the perpetrator offers a loan but requires a fee in advance for processing the loan. Often, victims are promised a loan with a guaranteed approval and no credit check. However, once the victim pays the fee, they never hear back from the perpetrator, and the money is gone.
7. The Debt Relief/Consolidation Scam
This scam is designed to take advantage of those struggling with debt payments. It involves a “specialist” offering to help consolidate debt or reduce payments. In most cases, the person will ask for an upfront fee or payment and then disappear without providing any services.
It’s important to remember that debt relief is a serious financial decision and should only be handled by qualified and reputable professionals. Research and look for red flags before entering into any debt relief agreement.
8. The Credit Repair Scam
Beware of companies that claim they can repair your credit score quickly and easily. Many of these companies make bold claims and charge high fees for their services but don’t do anything to improve a person’s credit score. Some of these companies may even damage your credit score further.
To protect yourself from these scams, thoroughly research any company you’re considering using for credit repair services.
9. The Business Opportunity/Work From Home Scam
This scam usually targets stay-at-home parents, retirees, and others looking for ways to make extra money. They promise great rewards with little effort and often don’t follow through. The scammers will ask for an upfront investment for supplies or materials and disappear once the money is sent.
Be wary of any offers that require you to invest money before getting started or promises of large returns for little effort.
10. The Fake Charity Scam
This type of scam aims to entice unsuspecting individuals to donate money to a fraudulent cause or organization. It’s becoming increasingly common for scammers to use sophisticated tactics to make their campaigns appear legitimate, such as using the names of actual charities or causes.
Using real information makes it easy for scammers to make a fake charity campaign look real. As always, if you’re asked to donate money, verify the organization’s legitimacy before sending any funds.
11. The Investment Scam
Investment scams are becoming increasingly common, and with good reason: they can be extremely lucrative for scammers. In this type of scam, fraudsters entice unsuspecting victims to invest their money in nonexistent or fraudulent investments.
These investments might appear legitimate and come with promises of high returns, but in reality, victims are only losing their hard-earned money.
To protect yourself from an investment scam, thoroughly research any potential investment opportunities and never invest money if you understand the risks involved.
12. The Cryptocurrency Scam
Cryptocurrencies such as Bitcoin and Ethereum are becoming increasingly popular. But, unfortunately, they also make it easier for scammers to take advantage of people. Cryptocurrency scams often involve the sale of fake coins, promises of guaranteed returns on investments, and other fraudulent activities.
It’s important to be aware of these scams and be careful when investing in cryptocurrencies. Only trust reputable companies and always do your research.
13. The Romance Scam
Romance scams are among the most common financial scams out there and can be incredibly difficult to spot. This type of scam involves someone using an online platform (such as a dating website or social media platform) to lure in victims.
Once trust has been built, the scammer will ask for money from the victim, often under the guise of ending up in a tough situation. Unfortunately, the scammer will not follow through on their promises and will keep asking for more money.
14. The Medical Bill Scam
Victims are typically contacted by an individual claiming to be from a medical provider or a health insurance company and told they owe money for medical bills or services.
The scammers may also request payment via wire transfer or credit card. In some cases, the scammers may even offer services such as a health plan or prescription drugs in exchange for payment.
It’s crucial to remember that if you’re contacted by someone claiming to represent a healthcare provider or insurance company, never provide any personal information or pay any money without verifying the call’s legitimacy first.
15. The Tech Support Scam
The tech support scam targets unsuspecting users by posing as a legitimate tech support company. Their victims are usually over 60 and have lost more than $724 million, as reported by the FBI.
Scammers may call you or send you an email pretending to be from a real tech support provider and then try to convince you that your computer is infected with a virus or some other issue that requires their services.
The scammer will then attempt to charge you for unnecessary services or will try to steal personal information such as credit card numbers. Always double-check any company claiming to provide tech support before making a payment or giving personal information.
Helpful resources that you should know about if you encountered any type of scam
- IdentityTheft.gov can help you protect yourself from identity theft. If your personal information was exposed in a data breach, head to this website and see what you can do.
- PhoneHistory is a database that contains more than 500M U.S. phone numbers. If someone called or texted you with a suspicious offer and you want to know who’s behind that number, just turn to PhoneHistory for help.
- TrueCaller has features of caller-identification, call-blocking, and call-recording. It helps protect you from scams, fraud, telemarketers, and more.