Scam artists are more prevalent now than ever. In fact, Americans reported losing $1.5 billion to fraud in 2018, up 38% from 2017, according to the Federal Trade Commission. And in today’s information age, when much of our financial life is managed through a computer, mobile phone or other electronic device, fraudsters have many tools at their disposal.
You might think that older Americans would be at particular risk, because they may not be aware of the different ways they could be swindled through what seems like an innocent or legitimate communication. However, according to the FTC, younger people were the most frequent victims, with 43% of people in their 20s reporting a loss to fraud, vs. only 15% of those in their 70s.
So, clearly, people of any age can fall prey to the increasingly sophisticated tactics employed by online criminals. That’s why it’s more important than ever to keep your guard up and protect your financial and personal information from would-be thieves.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Here are five strategies to help you avoid falling victim to a financial scam:
No. 1 – Don’t freely give out information on your identity
Share your personal information on only a “need-to-know” basis. For example, avoid giving out your Social Security number if you have any questions at all about how secure it will be. Legitimate businesses typically avoid asking for this information unless needed, and even when they do, you can question it.
Share your phone numbers or your address only if absolutely necessary to complete a transaction that you initiated. And if you didn’t initiate the transaction yourself, be extra careful — and read No. 2 below.
No. 2 – Don’t share financial information
If an unrecognizable person or entity approaches you (typically by phone call or email) asking for credit card or bank information, turn down their request. Consider it an additional red flag if they tell you that something has happened to your account and they are here to protect it. This is a scare tactic frequently employed by scammers looking to take advantage of unsuspecting victims.
If you have any questions about the security of a financial account, call your bank or other financial firm directly (and look the number up yourself — don’t use any number given to you). If you are concerned about whether your credit card information has been stolen, contact your card company immediately. Only by taking the initiative to call companies on your own can you check on the validity of any issues that are raised.
No. 3 – Don’t fall for email scams
Most of us may, from time-to-time, receive a random email requesting that we take urgent action to avoid a financial loss or capture a windfall of money. It may appear to be from a friend who claims to be in trouble and needs you to send money to a specific bank account. It may be somebody you don’t know (such as a foreign royalty or another exotically titled person) who claims you will benefit financially, but first you must send money to them. Or it may be from an entity asking you to click a hyperlink in the email, which will then ask you to pass along financial information. In some cases, the email may look authentic, with a company logo included.
In all of these cases, the best move is to ignore the message and delete the email without clicking on anything at all.
No. 4 – Don’t be casual about passwords
The increasing requirement to access websites or phone apps using a login and password adds complexity to our lives. You need to keep track of all that information. Hackers have a way to crack simple or obvious passwords. Create passwords that incorporate eight or more characters, with upper- and lower-case letters, numbers and symbols like dollar signs or exclamation points. Try to vary passwords so you have more than just a few favorites in rotation, and change them every few months.
An alternative is to use a password program that will generate strong passwords and make it easy for you to access your accounts while reducing the likelihood of being hacked.
No. 5 – Don’t fall for tax scams
A common scheme involves phone calls or emails from scammers claiming to be from the Internal Revenue Service, warning that you owe back taxes. What’s worse, by using the guise of the IRS, they will claim that you could be subject to arrest if you don’t provide them with payment. Or, they may claim that you have a refund coming. Don’t fall for it. It is just a way to obtain information so they can access one of your financial accounts. Note that the IRS does not initiate contact with taxpayers by email, text message or social media channels requesting personal or financial information. Usually, it will contact people through regular mail.
Check the IRS website to understand how to know when it is really the IRS contacting you.
Be prepared to play defense
Financial scams are all too common these days. Protect yourself and watch out for family members too, including your elderly parents and your children (especially young adults). If you have any questions about the legitimacy of any communication you receive, check with a family member, trusted friends or your financial professional.
Ameriprise Financial Services, Inc. Member FINRA and SIPC.
-
Stock Market Today: Have We Seen the Bottom for Stocks?Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
-
Is the GOP Secretly Planning to Raise Taxes on the Rich?Tax Reform As high-stakes tax reform talks resume on Capitol Hill, questions are swirling about what Republicans and President Trump will do.
-
Social Security Is Taxable, But There Are WorkaroundsIf you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.
-
Serious Medical Diagnosis? Four Financial Steps to TakeA serious medical diagnosis calls for updates of your financial, health care and estate plans as well as open conversations with those who'll fulfill your wishes.
-
To Stay on Track for Retirement, Consider Doing ThisWriting down your retirement and income plan in an investment policy statement can help you resist letting a bear market upend your retirement.
-
How to Make Changing Interest Rates Work for Your RetirementHigher (or lower) rates can be painful in some ways and helpful in others. The key is being prepared to take advantage of the situation.
-
Within Five Years of Retirement? Five Things to Do NowIf you're retiring in the next five years, your to-do list should contain some financial planning and, according to current retirees, a few life goals, too.
-
The Home Stretch: Seven Essential Steps for Pre-RetireesThe decade before retirement is the home stretch in the race to quit work — but there are crucial financial decisions to make before you reach the finish line.
-
Three Options for Retirees With Concentrated Stock PositionsIf a significant chunk of your portfolio is tied up in a single stock, you'll need to make sure it won't disrupt your retirement and legacy goals. Here's how.
-
Four Reasons It May Be Time to Shop for New InsuranceYou may be unhappy with your insurance for any number of reasons, so once you've decided to shop, what is appropriate (or inappropriate) timing?
