How to Protect Yourself From Financial Fraud

The FTC reports that Americans lost over $10 billion to fraud in 2023 — a record high. Scams are increasingly sophisticated, targeting people of all ages and income levels. The best defense is knowing how they work before you encounter one.

Most Common Financial Fraud Types

• Investment scams: Fake opportunities promising high returns with no risk — crypto, Ponzi schemes, pump-and-dump stocks.
• Impersonation scams: Fraudsters pose as IRS agents, Social Security officials, banks, or tech support demanding immediate payment.
• Romance scams: Fraudsters build fake relationships online, then request money for emergencies or investments.
• Phishing: Fake emails, texts, or websites that steal your login credentials or financial information.
• Identity theft: Fraudsters use stolen personal data to open accounts, file taxes, or make purchases in your name.
• Lottery and prize scams: You've 'won' but must pay taxes or fees upfront to collect.
• Advance fee fraud: You're promised a large sum if you first send a smaller amount.

Red Flags to Recognize

• Guaranteed high returns with no risk — legitimate investments don't guarantee returns.
• Urgency and pressure — 'Act now or lose this opportunity forever.'
• Unsolicited contact — you didn't sign up for this call, email, or message.
• Requests for unusual payment methods — gift cards, wire transfers, cryptocurrency.
• Requests for secrecy — 'Don't tell your bank or family.'
• Too-good-to-be-true offers — free vacations, lottery wins, investment returns of 30%+ per year.

Protect Your Financial Accounts

1. 1Use unique, strong passwords for every financial account and enable two-factor authentication (2FA).
2. 2Monitor accounts weekly — set up transaction alerts via email or text.
3. 3Freeze your credit at all three bureaus (Equifax, Experian, TransUnion) if you're not actively applying for credit.
4. 4Never provide account numbers, SSN, or passwords over the phone unless you initiated the call.
5. 5Verify charities before donating — use Charity Navigator or GuideStar.
6. 6Check your credit report at AnnualCreditReport.com — you're entitled to one free report per bureau per year.

Protect Against Identity Theft

• Shred financial documents — don't just throw away bank statements or old cards.
• Use a P.O. box or mail lock if your mailbox isn't secure.
• File your taxes early — thieves file fraudulent returns using your SSN to claim refunds.
• Set up an IRS Identity Protection PIN at irs.gov — prevents anyone else from filing with your SSN.
• Be careful on public Wi-Fi — don't access financial accounts on unsecured networks.

What to Do If You're Victimized

1. 1Contact your bank or card issuer immediately to freeze or close compromised accounts.
2. 2Place a fraud alert with one credit bureau (it notifies the others automatically).
3. 3File a report with the FTC at ReportFraud.ftc.gov.
4. 4File a police report — useful for disputing fraudulent accounts.
5. 5Check if your state has a consumer protection office for additional resources.