With the advent of technological improvements also come to the risks that malevolent people bring. No matter the day and age, there will always be scams and frauds that plague society. As this is part of human nature, the best thing you can do is to learn about them and stay safe from them. Scams and frauds are largely common in different settings, but let’s talk about them in financial terms for now. Financial literacy goes a long way, and protecting yourself from scams, and fraud is a skill that you should try out. Of course, there are reputable banks out there with dependable promotions, such as a Chase sign-up bonus, but there are also promotions and advertisements that may sound too good to be true. Let’s discuss them at length in order to protect yourself from financial scams and fraud.
What are financial scams and frauds?
In a nutshell, financial scams and frauds involve people tricking other people into giving them money, personal information, or other resources under a false pretense. There are many individuals who do it, including full-scale organizations that mask themselves as legitimate and try to extort money out of you as much as they can. It’s already hard enough to earn the money that you currently have, but it’s exponentially more painful when you lose them in a meaningless way. It’s important to protect yourself from these scams and frauds for exactly that reason.
Phishing. Phishing scams are usually done through emails or text messages. Have you ever received a text message that says that you’ve won something and you should redeem it via the link posted? That’s an example of a phishing scam. They usually appear as if they come from legitimate companies, such as banks or government organizations. When you click the link, you are usually taken to a fake website that makes you input your important information, such as credit card credentials and the like. They use the information collected to either withdraw money from your account directly or even steal your identity.
Ponzi scheme. Another common financial fraud is Ponzi schemes. They are also called fraudulent investment schemes that give you the promise of high returns on your money with almost no risk at all. The way this scheme works is that people use money from the new ‘members’ or investors to pay the returns to earlier investors, making it look like the company is profitable. However, the scheme ultimately falls apart when the influx of new investors stops coming in to pay for the earlier investors. When this happens, the people who started the scheme flee right away.
Charity scam. Charity scams do exactly as the name suggests. These scams have people that pretend to be legitimate charity organizations and try to solicit donations from the public. They use your goodwill and good intentions to easily persuade you to give money, as it is easier for people to let go of their money when they think it’s going to a charitable cause. Your generosity is being preyed upon, and this is one of the main reasons why charity scams are particularly evil. However, the collected funds are not used for charitable purposes at all. Most of the time, the perpetrators keep the money to themselves and use it for their personal gain.
There are a lot more financial scams and frauds that you have to take note of. Particularly, some of these scams are work-from-home scams, investment scams, and even lottery scams. The thing to keep in mind is that when something is too good to be true, it often is. As grim as this may sound, the reality of the world involves some people exploiting others. You should try your best to protect yourself from these, as your hard-earned money should be yours to enjoy.