Did you know that every year millions of people fall victim to banking scams? As technology advances, so do the tactics used by scammers.

Though the topic might sound scary, don’t worry – we’re here to help. Knowledge is power, and 1st Source is dedicated to helping you understand and avoid scams.  Here’s a list of the most common scams and tips on how you can avoid them.  Stay informed and protect yourself and your hard-earned money.

In this article we’ll give you tips on how to avoid:

Phone Scams

Your phone rings, and the caller ID shows it’s your bank calling. The person on the line sounds professional and says there has been suspicious activity on your account. With a stern tone, they explain that your account will be frozen unless you immediately verify your identity by providing your online banking username and password. Your heart races as you fear your money is at risk. What should you do?

Phone scams have been around for decades, and while they might seem outdated, they are more prevalent than ever. Here’s what you need to know:

  • Scammers may call and impersonate government officials, law enforcement, or even your bank, claiming that you owe money or that your account has been compromised.
  • They’ll often use scare tactics and create a sense of urgency, demanding that you provide personal information or make an immediate payment.
  • In some cases, they may even “spoof” the caller ID to make it appear as if the call is coming from a legitimate organization.

The key thing to remember is that reputable organizations will never demand immediate payment or personal information over the phone. If you receive a suspicious call, hang up and contact the organization directly through their official channels to verify the legitimacy of the request.

Text Scams

You receive a text appearing to be from a major retailer about an issue with a recent order you placed. The message urges you to call a toll-free number to resolve the problem right away. Thinking it’s legitimate, you dial the number. An automated voice asks you to enter your credit card number associated with the order to verify your identity. Uncertain if this is real or a scam, you hesitate with your finger over the keypad. What’s your next move?

Text scams are becoming increasingly common as more people rely on their smartphones for communication and banking. Here’s how they work:

  • You receive a text message that appears to be from a legitimate organization such as a bank, retailer, or delivery company.
  • The message typically claims that there’s a problem with your account or a delivery and prompts you to click on a link or call a phone number.
  • If you engage, the scammer will attempt to obtain your personal information or login credentials.

It’s important to remember that reputable organizations will never ask for sensitive information via text message. If you receive a suspicious text, don’t click on any links or call any numbers provided. Instead, contact the organization directly through their official channels to verify the legitimacy of the message.

Phishing Emails

An email lands in your inbox appearing to be from your bank’s fraud department. The subject line reads: “Account Breach – Immediate Action Required.” The email states that due to a security incident, you must verify your account credentials by clicking a link to log into your account. The link, email design, and wording all seem authentic. With a knot in your stomach, your mouse hovers over the link. Do you proceed?

Phishing scams are a classic – and unfortunately still effective – way for scammers to trick people into revealing sensitive information. Here’s how they work:

  • You receive an email, text, or phone call that appears to be from a legitimate organization such as your bank or a government agency.
  • The message typically creates a sense of urgency or fear, claiming that your account has been compromised or that you owe money.
  • You’re prompted to click on a link or provide personal information such as your login credentials or Social Security number.

Remember, reputable organizations will never ask for sensitive information via email. If you receive a suspicious email, don’t click on any links or open any attachments. Instead, contact the organization directly through their official channels to verify the legitimacy of the message.

Electronic Payment Scams

You’re scrolling through your social media feed when a direct message pops up. They introduce themselves as a professional crypto investment manager and pitch an exciting new opportunity. With their expert guidance and proprietary trading strategies, you’re guaranteed to triple your investment in only a few months. They’ve included sleek marketing materials and glowing testimonials from other clients. Everything looks professional and legitimate. How do you respond?

With the rise of peer-to-peer payment apps like Venmo and Zelle, as well as the increasing popularity of cryptocurrency, scammers have found new ways to defraud unsuspecting victims. Here are some common tactics to watch out for:

  • Scammers may reach out with investment opportunities or claims of lottery winnings, asking you to send money via electronic payment or cryptocurrency.
  • They may also impersonate friends or family members, claiming that there’s an emergency and they need immediate financial assistance.
  • In some cases, they may even hack into legitimate accounts and request payments from the account holder’s contacts.

When it comes to electronic payments and cryptocurrency, it’s important to exercise extreme caution. Only send money to people and organizations you know and trust, and never engage with unsolicited requests for payment, no matter how convincing they may seem.

Overpayment Scams

You’re selling a laptop on an online marketplace and receive a payment through a digital wallet app from the buyer. However, they quickly follow up, claiming they overpaid by $500 and ask you to refund that amount immediately. The payment shows as pending in your account, and the buyer says they need the refund before it fully clears. You’re eager to keep this sale, but something feels off. What do you do next?

Overpayment scams are a bit more complex, but they can be just as costly if you’re not careful. Here’s how they typically play out:

  • You’re selling an item or providing a service, and the buyer sends you a check or electronic payment for more than the agreed-upon amount.
  • The scammer claims it was an honest mistake and asks you to refund the overpayment.
  • You deposit the check or payment, which initially appears to clear, and send the refund.
  • Later, the original payment is revealed to be fraudulent, and you’re left responsible for the entire amount.

To avoid falling victim to this scam, never refund an overpayment until the original payment has fully cleared and the funds are available in your account. And remember, if something seems too good to be true, it probably is.

 

The 1st Source Bank logo in the shape of a lock, indicating bank security and fraud protection

How to Avoid a Scam

Now that we’ve discussed common banking scams, let’s look at how to avoid them. These will help you stay ahead of scammers and protect your financial information.

Be Wary of Unsolicited Requests

One of the most common threads among banking scams is the use of unsolicited requests for personal information or money. Whether it’s a phone call, text message, email, or social media message, be extremely cautious of any unsolicited communication that asks for sensitive information or requests a payment.

Legitimate organizations will never ask for personal information or demand immediate payment through unsolicited channels. If you receive such a request, verify its legitimacy through official channels before taking any action.

Monitor Your Accounts Regularly

Regularly monitoring your bank accounts and credit reports can help you catch any suspicious activity early on before it escalates into a more significant issue. Many banks now offer alerts and notifications for unusual account activity, which can be a helpful tool for staying on top of potential fraud. Additionally, you can request free credit reports from the major credit bureaus to check for any unauthorized accounts or activity.

Enable Multi-Factor Authentication

One of the most effective ways to protect your accounts is to enable multi-factor authentication (MFA) whenever possible. MFA adds an extra layer of security by requiring not only your password but also a second form of authentication such as a one-time code sent to your phone or a biometric factor like a fingerprint or facial recognition.

Even if a scammer manages to obtain your login credentials, they won’t be able to access your accounts without that second factor of authentication. Most banks and financial institutions now offer MFA as an option, and it’s well worth taking the extra step to enable it.

Be Cautious with Public Wi-Fi

Public Wi-Fi networks are convenient but also pose a security risk. Scammers can potentially intercept your data or even create fake Wi-Fi hotspots to trick you into connecting to their network. When using public Wi-Fi, avoid accessing sensitive accounts or transmitting personal information. If you must use public Wi-Fi, consider using a virtual private network (VPN) to encrypt your data and protect your privacy.

Keep Your Software Up-to-Date

Outdated software can leave your devices vulnerable to security threats, including malware and viruses that can be used by scammers to gain access to your personal information or accounts. Make sure to keep your operating system, web browser, and any other software up-to-date with the latest security patches and updates. Many software programs now offer automatic updates, making it easier to stay on top of security vulnerabilities.

Report Suspicious Activity

If you think you’ve been targeted by a banking scam, don’t wait— take action right away. Reach out to your bank or financial institution as soon as possible to report the incident and secure your accounts.

You can also report scams to authorities such as the Federal Trade Commission (FTC) or the Internet Crime Complaint Center (IC3). By reporting these scams, you’re not only protecting yourself but also helping to prevent others from falling victim in the future.

Conclusion

Knowledge is your best defense against banking scams. Be curious, question anything that seems off, and always put your personal security first, even if there’s a sense of urgency or promise of rewards. Stay informed, alert, and proactive to lower your risk. Follow the tips in this article, and if something seems suspicious, reach out right away.

We’re committed to your security! That’s why we’ve written dozens of other articles on fraud prevention. Click here for more tips and stay safe from scams.