Financial scams are ever-evolving, with scammers using sophisticated methods to exploit people’s trust, create urgency, or take advantage of confusion. We’ve been hearing a lot of first hand accounts from our customers about various financial scams and wanted to post this to help others be aware of them.

Here are some of the most common scams to be aware of, including details on how they operate and tips to recognize and avoid them:

1. Advance Fee Scam (also known as “419 scam” or “Nigerian Prince Scam”)

• How it works: The scammer contacts the victim, often with a story about needing a small payment (an "advance fee") to unlock or release a large sum of money. They might claim that this money is an inheritance, a charitable donation, a lottery win, or even an investment return. The scammer will usually provide a fake backstory or show fake screenshots of a bank account, payment slip, or deposit that supposedly holds the large sum. They’ll say that if the victim pays a small fee—often for "processing," "taxes," or "administrative" reasons—they can release the funds. After the victim sends the initial "small fee," the scammer might disappear, or they may come back with additional demands, asking for more payments under various pretenses before releasing the funds, which, of course, never arrive.
• Spotting it: Someone reaches out to you through unofficial means, like Facebook, Instagram, TikTok, Whatsapp, Snapchat, email, or other social media apps saying they have a large sum of money for you. You may or may not have ever heard of the person or business before.
• Prevention: Be skeptical of “too good to be true” offers, verify the legitimacy of the claim independently by not relying on screenshots or images as proof and don’t pay any fees upfront. Legitimate businesses, especially banks or reputable institutions, do not require small upfront payments to release money.

2. Phishing Scams

• How it works: Phishing scams typically arrive via email, text, or phone calls, with scammers posing as legitimate entities like banks, tech companies, or government agencies. The goal is to trick the target into providing sensitive information, such as passwords or credit card numbers, by clicking a link that leads to a fake website resembling a genuine one.
• Spotting it: Look out for unusual URLs, misspelled words, or generic greetings like “Dear Customer.” Genuine organizations will usually address you by name and avoid pressuring you into immediate action.
• Prevention: Avoid clicking links or downloading attachments in unsolicited messages. Use multi-factor authentication and regularly update your passwords.

3. Investment Scams

• How it works: Investment scams involve fraudsters convincing individuals to invest in bogus schemes, such as Ponzi schemes, fake stocks, or non-existent projects, by promising high returns with little to no risk. They often target inexperienced investors but can prey on anyone.
• Spotting it: Promises of “guaranteed returns” or pressure to act quickly are major red flags. Legitimate investments rarely, if ever, guarantee returns, especially high ones.
• Prevention: Research investments thoroughly, consult with financial professionals, and be skeptical of deals that seem too good to be true.

4. Tech Support Scams

• How it works: Scammers posing as tech support representatives from well-known companies, like Microsoft or Apple, contact victims claiming their computer has a virus or some other issue. They may ask the victim to install software that gives the scammer remote access to the device, allowing them to steal information or install malware.
• Spotting it: Real tech companies typically won’t reach out unsolicited to report issues on your personal device. Also, be cautious if asked for payment in unusual forms, like gift cards.
• Prevention: Hang up or ignore unsolicited tech support calls. Don’t give control of your computer to anyone unless you’ve verified their legitimacy.

5. Romance Scams

• How it works: Romance scams often occur on dating websites or social media. Scammers create fake profiles and build relationships with victims over time. Eventually, they ask for money for an “emergency” or a personal crisis, often appealing to the victim’s emotions to manipulate them.
• Spotting it: Be cautious if an online acquaintance quickly professes love or has excuses to avoid meeting in person. Requests for money, especially in situations that prevent them from meeting or explaining in detail, are red flags.
• Prevention: Avoid sharing personal details or money with someone you haven’t met in person. Take time to verify the person’s identity and intentions.

6. IRS or Tax Scams

• How it works: Scammers impersonate tax authorities like the IRS, claiming the victim owes back taxes and demanding immediate payment. They often threaten arrest, deportation, or other legal action if the victim doesn’t pay right away, usually through wire transfers or prepaid debit cards.
• Spotting it: Tax agencies generally communicate through official letters, not phone calls or emails, and they won’t ask for payment via unconventional means like gift cards.
• Prevention: Never provide personal information or payments over the phone. If in doubt, contact the IRS or relevant authority directly using an official number.

7. Lottery or Prize Scams

• How it works: Scammers tell the victim they’ve won a large prize, but to claim it, they need to pay a fee or provide personal details. These scams aim to either get the victim to hand over money or gather information for identity theft.
• Spotting it: If you’re asked to pay a fee for a prize or if you never entered the lottery or contest, it’s almost certainly a scam.
• Prevention: Legitimate lotteries don’t require fees to claim winnings. If it sounds suspicious, avoid providing any information.

8. Charity Scams

• How it works: During times of crisis, scammers exploit people’s goodwill by setting up fake charities or impersonating real ones. They may solicit donations for fabricated causes or disaster relief efforts.
• Spotting it: Look for vague organization names or lack of information about how funds will be used. Be cautious if contacted through email or social media rather than official channels.
• Prevention: Verify the charity’s legitimacy through platforms like Charity Navigator or the IRS website before donating.

9. Online Marketplace and Shopping Scams

• How it works: Scammers either pose as buyers or sellers on online marketplaces, offering fake products or sending counterfeit checks. In some cases, fake online stores lure people into purchasing non-existent items.
• Spotting it: Deals that seem too good to be true, requests for unconventional payments (like wire transfers), or sellers who avoid providing specific details about the product are all red flags.
• Prevention: Stick to reputable sites, and only make purchases or payments through secure, traceable methods.

General Tips to Avoid Financial Scams

• Stay skeptical: Question unsolicited communications, especially those that require urgency or secrecy.
• Verify: Independently verify any request by contacting the organization directly through official channels.
• Secure your devices: Keep security software updated, enable two-factor authentication, and create strong, unique passwords.
• Report suspicious activity: Report scams to local authorities, consumer protection agencies, or the Federal Trade Commission (FTC) in the U.S.

Staying informed and vigilant is your best defense against financial scams, which increasingly rely on social engineering and urgency to succeed.

Remember that ClearCheckbook will never reach out to you asking for any private information such as bank account or credit card numbers, or promising to deliver you money of any kind.