How to Guard Against a New Generation of Fraud and ID Theft

An older woman looks stressed as she looks at her laptop while at the dining room table.

(Image credit: Getty Images)

These days, even the most astute consumers can fall victim to identity theft schemes and financial scams.

No longer can you count on obvious red flags to spot a scam, such as a misspelled email from a Nigerian prince or a call from a robotic voice.

Now, many fraudulent websites and emails look legitimate, and scammers use personal information they've collected about you to persuade you they're the real deal — and to prompt you to act quickly, without questioning the interaction.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png

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.

Artificial intelligence has contributed to the rise of these more sophisticated and realistic schemes.

"AI has made it much easier for the bad actors to put together absolutely picture-perfect emails, texts and scripts for phone calls. We used to teach people how to detect a phishing text or email, but we don't do that anymore because it’s too hard to tell," says Eva Velasquez, CEO of the Identity Theft Resource Center (ITRC).

Making matters worse, deepfake and voice-cloning technologies have advanced, too.

In a deepfake, scammers take a video or audio sample of you or your voice and use AI to make it look and sound as though you’re speaking. A fraudulent call can be difficult to identify when the voice on the phone sounds exactly like your boss or your grandchild.

AI can also help thieves cull information about you and put it into a dossier they can use to rope you into scams, says Teresa Murray, consumer watchdog director for the Public Interest Research Group (PIRG), a consumer advocacy organization.

A scammer can more convincingly pose as a legitimate government agency, financial institution, employer or trusted family member when they already have your birth date, Social Security number or numbers for your financial accounts.

It’s worth protecting this sensitive personal information in all the ways you can control — by declining to share your Social Security number unless you're sure it’s for a legitimate reason, for example.

But at this point, most people can assume that their information has been exposed somewhere, whether as part of a data breach, through companies selling consumer information or in phishing attacks, says Jennifer Pitt, senior analyst on the fraud and security team for Javelin Strategy & Research.

According to a Javelin study, consumers lost a total of $27.2 billion in 2024 from identity fraud, a 19% increase from the previous year. The average losses are getting larger as crooks gather more information about people and gain their trust.

The losses hit people of all ages, too.

Last year, younger people reported losing money to fraud at a higher rate than older people — 44% of those ages 20 to 29, compared with 24% of those 70 to 79, according to the Federal Trade Commission.

But older people suffered more sizable losses, with a median loss of $1,000, compared with $417 for people in their 20s.

Older people tend to have higher losses because they’ve had more time to build up their accounts, says Velasquez.

An older woman covers her face while looking at her computer. She is sitting in kitchen or home office in a glassed-in room.

The steps that worked in the past to protect yourself against ID theft and scams won't always help you now. Use our guide to recognize the evolving tactics criminals are using and to protect your identity and finances.

The four types of scams below are among the most common lately. By knowing what they are and how they work, you may be able to stay out of a con artist’s crosshairs.

Next-generation impersonation scams

The Federal Trade Commission received fraud reports from 2.6 million consumers last year, and the most commonly reported scam category was impersonation scams.

Losses to government impersonation scams reached $789 million in 2024, a $171 million increase from 2023, according to the FTC.

In an impersonation scam, you'll receive a call, text or email claiming to be from a government agency — such as the IRS or the Social Security Administration — or your financial institution.

The caller may know your name, phone number, email address and the name of the institution where you have an account, and they may spoof the caller ID or send a realistic-looking email.

There's usually a sense of urgency for you to act by, say, sending them money or providing personal information that can help them take over your accounts.

A real-life example of fraud

The ITRC recently helped a retired woman who received a call claiming to be from tech support with the brokerage firm where she held her retirement savings.

"They knew her name, phone number and the name of the entity where her retirement funds were housed," says Velasquez.

The caller told her the account had been compromised and that the bad actor was moments away from stealing her money, and the caller asked her to transfer the money to an account they specified to "protect" it.

She said she'd like to go to a branch of the brokerage firm and ask about it in person, but the caller told her not to report the call because they suspected it was an inside job.

The caller asked her to download an app so they could remotely access her device, and then they showed her the supposed fraud, says Velasquez.

The woman went to the brokerage office to move her retirement funds. The representative who helped her was concerned, but the woman would not tell the representative why she was withdrawing the money.

Suspicious of fraud, her brokerage put a hold on the transfer and launched an investigation. It put the woman in touch with the ITRC, whose experts explained that this was a common scam.

Yellow warning road sign against a stormy sky saying Scam Alert

She stopped the transfer in time. (You can contact the ITRC at online or at 888-400-5530 with questions about potential scams or to get help if you've been a victim of an identity crime.)

The scammers had just enough information to sound real, which is often the case, says Velasquez. "They sound credible, so victims feel comfortable filling in the blanks and providing additional information."

Government agencies, banks and other financial institutions won't contact you out of the blue.

If you get a call from someone claiming there's an emergency with your account, log in at the provider's website or use its app to check whether a caller's claim is true, says Paul Benda, executive vice president of risk, fraud and cybersecurity for the American Bankers Association, which has guidance to help people identify phishing scams.

Grandparent and other relationship scams

Artificial intelligence has made this type of scam much more believable, with fraudsters using deepfakes and voice cloning to match the voice of, say, your grandchild or boss.

They'll typically call and say they've been in an accident and need money, or that they need you to buy something for work, for which you’ll be reimbursed.

"Because AI is starting to spoof people's voices, we think it's really important to have a family code word, like butterscotch or peppermint," says Benda. "If Grandma is panicking as she speaks with someone who is pretending to be you, she should ask for the code word. They may have birth dates and addresses, but they don't have the code word."

The National Cybersecurity Alliance has a webpage where you can hear examples of deepfakes and find resources to help protect against them.

Not a dream job after all

Not all scams are high-tech. In some cases, criminals send emails or texts impersonating a friend, family member or colleague.

Gisselle Acevedo, 26, was in her second week at her dream job in health care tech sales at an international company's U.S. office in New Jersey. She received an email that appeared to be from the vice president of sales at the company's headquarters, in Germany, that asked for her phone number.

He then texted her and said that he'd like to surprise her team with a reward for their good work. He asked her to buy three gift cards for $200 each and told her she'd be reimbursed for them.

She left work to buy the cards, and then he asked her to scratch off the numbers on the back and send a picture.

Walmart and Target app logos beside other shopping app logos on a phone screen.

"I thought this was a little weird," she says, but she believed that perhaps he needed the information because he was in Europe and she couldn’t give him the cards in person.

"I was coming up with any excuse to try to be as helpful as I could, being that this came from my VP," she says.

She became suspicious after he continued to ask her to get more gift cards, so she sent the VP a message on Slack, the internal communication platform her company uses.

He didn't answer, and when she checked his status, it said he was away.

"Then I do the math and realize in Europe it's 11 p.m., so who have I been speaking to?"

She contacted her bank and reported the scam to the police, but they couldn't get her money back because she'd authorized the purchases.

Job scams

Losses related to job scams grew from $90 million in 2020 to $501 million in 2024, according to the FTC.

Employment scams can be particularly effective "because you want a job and you're very vulnerable," says Lisa Plaggemier, executive director of the National Cybersecurity Alliance.

In a common scam, recruiters text you with offers or job postings that aren't legitimate, or they may create a fake job-search site to gather your personal information.

Some even conduct interviews and "hire" you, then ask for your bank information to deposit your paycheck, says Velasquez.

If you aren't sure a job posting is authentic, check to see whether it appears on the employer's website. If scammers have recently put up fake listings claiming to be from the company, the website may include an announcement with that info, too.

Plaggemier recently talked with a woman in her early 20s who thought she had been hired for a job. The "company" sent her a check, told her to deposit it and then asked her to wire the money to a vendor to buy a laptop she'd use for the job.

The check was from a small-town bank in the Midwest where the company was supposedly located, and it looked legitimate. She deposited the check and wired the money. But then the bank said the check was fraudulent. By that time, the money she had wired was gone.

Some scammers invest a lot of time into their schemes, working to gain the trust of their victims.

This scammer groomed her target

Brenda S., 56, who works in higher education in central Pennsylvania and didn't want to use her last name, submitted her résumé to what she thought was a well-known recruiting company so she could find some extra work to help pay for her daughter's wedding.

She received a text message claiming to be from the recruiting company that asked whether she was willing to work in a part-time, remote capacity. She said yes, and a woman called her.

The woman explained that the job would involve testing the order-processing systems of online products, and Brenda would get paid for clicking through the websites.

The woman communicated with her through private-messaging service WhatsApp, and Brenda made $187 during training, which she transferred into her own bank account. "It couldn't have been easier," she says.

Close up of a woman at her laptop using a credit card to completer and online purchase

But then they told her she would need to deposit $100 of her own money into a digital wallet to get started, and they showed her how to convert her dollars into crypto. As she did more work, they asked her to deposit more money before she could withdraw her earnings.

Meanwhile, the woman who trained her shared stories and pictures of her young daughter through WhatsApp to build a rapport and trust with Brenda.

"She totally groomed me and sucked me in," says Brenda.

Brenda finally became suspicious and investigated the pitch on ScamTracker, a searchable database from the Better Business Bureau where people share information about scams.

There, she found similar stories from other victims. The BBB estimates that ScamTracker has helped prevent people from losing $43 million.

Tax and benefit scams

Tax scammers prey upon your desire for a refund or fear of an audit. They may contact you by text, email or phone and let you know that you can receive a special tax credit or refund if you fill out a form with your personal information or bank account number.

This pitch was common when the IRS was issuing stimulus checks early in the COVID-19 pandemic and again in December 2024.

The IRS will never call, text or email you unexpectedly. For information on how to identify whether the IRS is truly contacting you, visit the IRS site here.

In another tax-related fraud, criminals use your Social Security number to file a return in your name and claim a refund. One way to protect against this form of ID theft is to get an IRS identity protection (IP) PIN, which you provide to verify your identity when you submit your tax return. You can request an IP PIN at IRS.gov.

Crooks who already have your personal information can also use it to apply for government benefits in your name.

Schemes involving unemployment benefits, for example, were especially prevalent when many people lost their jobs at the onset of the pandemic.

You may not know that someone has posed as you to claim benefits until you receive a Form 1099 or Form W-2 you weren't expecting.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.