10 Sneaky Financial Scams You Should Avoid & Protect Yourself Against

By Sara


Last Updated: April 17, 2023


Financial scams are popping up all over the place.

In one day, you can get a call, email, and even an ad that are all scammy. It's important to be aware of some of the most common types and their red flags to protect you from falling victim to these tactics.

Here are the ten current financial scams you need to know about. 



What are some financial scams?

There are so many types of financial scams that you need to be aware of.

However, understanding the basics of these scams can help you avoid falling prey to them. 


1. Crypto & NFT Scams

Whenever something new and exciting comes out, there will surely be scams around it.

Crypto and NFT are new, but they are getting a lot of attention in the finance world - thus, people have found ways to scam you. Use a reputable website to buy and sell your crypto and NFT such as Kraken and ensure you get what you pay for. 


2. Marketplace Scams

Being able to sell your unused items for cash is amazing, but be careful of marketplace scams.

If you take cash, ask for low bills because people use fake ones. Always try to use something like Venmo for payments, where it automatically is sent to your account, or use platforms like Mercari, where payments are sent directly through the app. 


3. Zelle & PayPal Scams

Zelle and PayPal are great ways to send money to people.

There are many scams where someone says they paid you and send you a fake email. These scams try to get you to pay back because they overpaid. Always check the email confirmation to see if it's truly from Zelle and PayPal or someone else. 


4. Rug Pull Scams

Rug Pull scams are a specific type of crypto scam. These scams attract people to fund a cryptocurrency. Once they get their money, they take the investor's coins, and those investors don't get what they invested in. A lot of these scams are promoted on social media.  


5. Online Dating Scams

Online dating can be a great way to meet people and find a potential partner, but some people take advantage of those looking for love.

Some people have been scammed out of their life savings because the "love of their life" needed money. Always be cautious if someone you meet online is asking you for money. 


6. Lottery Scams

Anyone telling you that you won the lottery is probably lying, unless they know you purchased a lottery ticket with the winning number.

People will call, email, and mail you telling you that you are a lottery winner. If you didn't buy lottery tickets or confirmed yours were winning tickets, be wary of these notices. 


7. Mail Fraud

Be wary of any mail that you get that promises a prize or money for sending your information or even funds.

Often these are a scam, and you will never get the promised prize or money. 


8. Imposter scams

Someone pretending to be someone else, like the government or a local official asking for money is a common scam.

This type of imposter scam targets people who trust the names that are being presented to them. If you want to donate money or have a bill with your local state, contact them directly. 


9. Debt Settlement Scams

These types of scams promise someone who is in debt that they will settle their debts for an upfront fee.

Find a free option if you are interested in debt settlement, but don't engage if you are randomly contacted to settle your debts. 


10. Debt Collection Scams

Many people aren't aware of the laws around debt collections, and this causes debt collection scams to be easy to fall for.

Always ask for the company's name and never share information. Request a letter - because if this is a real collection agency, they will legally have to share this.

Many financial scams are successful because they prey on people who are not fully aware of their finances or have some type of struggle with their finances.

Victims who are impacted by these scams struggle with years of financial issues and even identity theft. 



What are the 3 most common scams?

Most money scams follow three common types of scams: 

Ponzi schemes

A Ponzi Scheme is a type of investment fraud.

Usually, people who fall pray for a Ponzi Scheme are promised a large return on their investment with little to no risk. These people don't realize it's a scam because they are receiving a return on their investment, but at the expense of other clients.

This term was coined after the 1920s money scam by Charles Ponzi, who promised people huge returns. He would use his investor's money to pay other clients with fake returns. Bernie Madoff ran one of the largest Ponzi Schemes in history that lasted for over 17 years in the 1990s. 


Identity theft

Most people don't think about identity theft being a common money scam, but this is one of the most common for everyday people to be involved in.

Sometimes this can happen by someone stealing your Social Security information or credit card information. Other times, you may fall prey to a scam where someone asks you for your information, and you provide it.

Checking your credit score is a good way to see if you have fallen victim to identity theft.


Phishing scams

Our emails have been shared by so many companies with 3rd parties that use our information to scam us.

Phishing scams are when someone impersonates someone else.

For example, a common phishing scam is getting an email that looks like it's from Amazon about your order or a gift card. These emails look almost identical to what a real email from Amazon would look like, but the email it is coming from is not an official Amazon email.

Usually, the goal of phishing scams is for someone to click on a link or go through with something to share personal information like passwords and social security numbers. 

While modern scams are making it difficult to identify what a scam is. People are improving at removing red flags or making it harder for someone to discern if this is a scam. It's better to be safe than sorry and not engage with anything that may be a scam. 


What are red flags of money scams?

If you find yourself questioning if something is legit or a scam, four major red flags might indicate something is wrong:


High-pressure sales tactics.

High-pressure scams make it seem like you are about to miss out on a lifestyle opportunity.

If you are getting pressure from someone that you need to act quickly on something that something bad will happen, or you will miss out on a huge opportunity, be cautious. If something is really going to happen, you will know about it in advance. 


Unsolicited phone calls or emails.

If you receive a phone call or emails you did not expect about a money opportunity, always check who is calling or emailing. You can often find the contact information of someone who is reaching out to you and verify if their information seems legit. 


Requests for personal information.

Never share personal information via phone or email, especially if you did not prompt the request.

If you are calling your bank directly and they ask for your information, this is fine to share. But if someone calls you out of the blue and asks for your social security number because they detected fraud and you didn't get any information from your bank, do not share this


Promises of unrealistic returns or rewards.

If something seems too good to be true, it probably is.

Many money scams promise huge returns, which are usually unlikely to happen. If returns exceed normal returns, do your research to see if this is real or a scam. 

If you have any unease around a situation involving money, it's better to be safe than sorry.

But, even if you don't see these four common red flags, it still may be a money scam. Scammers are aware that consumers know these red flags and are always trying to find new ways to scam someone. 



Final Thoughts 

Understanding common financial scams is one of the best ways to protect yourself from them.

First, always research investment opportunities and verify the information before you share anything personal with someone. Then, take the appropriate steps to protect yourself and your finances. 

Photo by Tara Winstead


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