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How to Spot and Avoid Financial Scams

By Kate Rockwood | April 28, 2020 | Rally Health

Difficult situations often bring out the best in people, and the current pandemic has sparked everything from federal relief programs to heartwarming stories of volunteers and everyday heroes. But hard times can also stir up a number of financial scams. 

“Scammers are doing what they always do: using headlines as opportunities to steal money or sensitive personal information,” says Frank Abagnale, a fraud expert and author of “Scam Me if You Can.” 

Financial fraud is nothing new. In 2019, over 1.7 million fraud cases were reported to the Federal Trade Commission, and a 2018 study from the FINRA Foundation found that 23 percent of Americans and Canadians who were targeted by a scam and reported it ended up losing money. Fear and uncertainty makes people vulnerable, says Abagnale. 

“The stimulus funds and other efforts to help people during the pandemic are perfect opportunities to confuse us,” says Linda Sherry, director of national priorities at Consumer Action. “It’s a great time for scammers to pounce. They’ve shown this response during hurricanes, terrorist attacks, and now the pandemic.”

But it is possible to protect yourself and your pocketbook. These tips can help:

1. Don’t be rushed

Scammers want to rush you so that you don’t think too hard before making the decision to hand over your bank account information or credit card number, says Sherry. They may call with a variety of urgent-seeming stories: asking you to donate, telling you you’re late on bills, or even that you’ve won a prize that you need to move quickly to claim.

Before giving any personal information to a caller, stay calm and think through the request. Do a quick Internet search, or ask them for additional information and for some time to think before committing. If they keep pushing, it may be a scam. Just to be safe, the Consumer Financial Protection Bureau suggests saying no to anyone who “asks for your Social Security number, bank account number, credit card information, Medicare ID number, driver’s license number, or any other personally identifiable information by phone, in person, by text message, or email.”

2. Check the source

In an effort to earn your trust, many scammers will impersonate respected entities, such as government agencies, charities, or even your friends or family. Double-check the email address or URL of any message claiming to be from the government: Legitimate addresses will end in .gov, Abagnale says. Scammers may also use names that are similar to those of real government agencies or charities. The Consumer Financial Protection Bureau, for example, warns about calls claiming to be from the nonexistent “Consumer Protection Bureau.`” Do some quick research to ensure that the organization contacting you is legitimate.

And though you may want to help good causes during the pandemic, “be on the lookout for requests for donations to help people affected by the coronavirus,” Abagnale says. “Ask the caller to send you information by mail, and defer any decision to give a donation until you've researched the cause.” He suggests using Charity Navigator or Give.org to vet organizations.

3. Hang up on robocalls

If you answer the phone to a recorded sales pitch, hang up and report it. These calls are illegal and often illegitimate, according to the Federal Trade Commission. The Federal Communications Commission has already seen COVID-19 related robocalls claiming to offer work-from-home opportunities, student loan repayment plans, and debt consolidation offers. These are all fraudulent. 

“My best advice is to hang up or hit delete on any unsolicited attempts to contact you,” Sherry says. “Then, if you still have questions, call a trusted source, such as the public health department or governor’s office, to ask if what you received is true.”

And when navigating the variety of relief programs available for those struggling during COVID-19, seek them out directly to avoid getting scammed. Call your bank or lender to ask about lower interest rates or payment deferrals, and go to government agencies such as the IRS or U.S. Small Business Association for information about federal programs. 

4. Protect your account info

As the federal government begins to roll out stimulus payments to individual Americans through the CARES Act, financial scammers may be trying to get their hands on those dollars. 

“Scammers are making phone calls saying they need your bank account information to deposit your stimulus checks,” Abagnale says. But real government agencies will never call or text you to ask about personal information or money. And for anyone who submitted a 2018 or 2019 tax return, the IRS won’t need any additional information in order to send your deposit.

Similarly, some scammers may pose as the Social Security Administration (SSA), asking for account information to inform you of a change in your payment amount. This is a scam, says the Consumer Financial Protection Bureau — the SSA will not change your payment amount during COVID-19. 

5. Don’t buy into COVID-19 cures

Be wary of anyone peddling a COVID-19 cure — if it sounds too good to be true, it probably is. Abagnale has seen fraudulent offers for everything from fake COVID-19 testing kits to air duct replacements that promise to keep COVID-19 out of homes. “This is a flat-out scam,” he says. These fraudulent offers may be after your cash or even your insurance information, which can be used to submit false claims in your name, says Abagnale.

Legitimate COVID-19 tests are not delivered to homes, and there are not yet any vaccines or cures for COVID-19. If new solutions do become available in the future, the best place to find information about them will be from trusted health organizations, such as the CDC and WHO, not a robocall or door-to-door salesperson.

“Remember, if there is a medical breakthrough, you won’t hear about it for the first time through an email, online ad, or unsolicited sales pitch,” the U.S. Attorney’s Office for the District of Oregon said in a statement.

6. Report scams

If you think that you’ve been contacted by scammers, report it right away. This can help law enforcement shut down scamming operations and protect others from becoming victims, says Sherry. Consumer Action recommends the Federal Trade Commision as the best place to report any type of financial fraud, but you can also report it to your state or district attorney’s office. Abagnale also suggests using the AARP’s Fraud Watch Network Helpline, which can help answer questions if you think you or a loved one has been a victim of fraud.

Note to our readers: This information is being made available as a free resource to the public. It is not an endorsement of any of the Finance-Related Resources listed in this article — financial consultants, planners, services, organizations/associations, websites, tools, lenders, credit unions, or banks. None of the Finance-Related Resources listed have solicited Rally Health to be included, and Rally Health receives no compensation from the Finance Resources mentioned in this article.

Kate Rockwood
Rally Health