Global fraud is on the rise, and young adults are particularly vulnerable — but knowing what to look out for can help keep them safe.
People in their 20s may seem more technologically savvy compared with older generations, but as it turns out, this age group also reports losing money to scams at significantly higher rates. In a recent Federal Trade Commission study, for example, individuals ages 20 to 29 accounted for 44% of fraud reports compared with just 20% from people ages 70 to 79.
College students are at risk for a few reasons, says Michael Steinbach, head of global fraud prevention at Citi. "Often, this is their first experience living on their own and making financial decisions without help from parents or guardians, which can make them targets of criminals," he says. On top of that, "many in this age group have been conditioned to listen to authority figures like parents, teachers and coaches, so when they're contacted by a fraudster posing as, say, a member of law enforcement or a bill collector, they may be inclined to follow instructions unquestioningly."
And while it may seem counterintuitive, their comfort level with technology is another factor, says Steinbach. Today's college students have grown up with smart phones and other digital devices playing a part in practically all aspects of their lives. "Buying and selling goods or services and transferring money has always been done with a few quick clicks or swipes," he says. Because digital functionality is so ingrained, college students can be less vigilant than other digital users. "They may tend to ignore basic security protocols, finding passwords 'annoying' or looking at free, public Wi-Fi as a 'score,'" says Steinbach, rather than something to be wary of.
All of that can make them more prone to falling for scams, and especially those targeted to students. To help the college kids in your life protect their accounts, share this advice on how to spot — and handle — seven common schemes.
How they work: Preying on students in a time crunch to find a place to live, these schemes start with an offer of a room or apartment vacancy. Scammers posing as the management company or individual renting the property tell the student they must wire funds or use common peer-to-peer (P2P) payment methods to make a deposit upfront to secure the place, even before seeing it.
What to do: Research the address online and don't give in to pressure to pay a deposit upfront before touring it and getting a lease signed by you and the property manager, says Steinbach. If you can't see the place yourself, ask someone you trust to check it out for you to confirm that it's for rent and matches up with what is advertised. Another precaution to take: "Before providing personal information such as your current address or Social Security number, make sure you verify the identity of the individual requesting it," he says. "If the deal seems too good to be true, it probably is."
How they work: Scammers find college students subletting a room and pose as a prospective applicant. When they send in a check for the deposit, they make it out for a much larger amount than requested and then ask the student to refund the difference via a P2P payment method. The check later bounces.
What to do: Decline sending back a portion of the check. Overpayment scams are prevalent, says Steinbach, so if this scenario comes up, your best bet is to return the check and request a new one for the correct amount.
How they work: Scammers send an official-sounding award of a scholarship or other financial aid via phone, mail or email. The notice includes instructions to provide some personal information, such as your credit card number "to confirm eligibility," or pay a deposit or application fee to proceed.
What to do: Research any scholarship offers online to ensure they're legitimate, and complete aid applications only through FAFSA (the Free Application for Federal Student Aid form).
How they work: The student receives a seemingly legitimate phone call or notice of unpaid tuition or other outstanding fees that, if not remedied immediately or by a certain date, will impact their enrollment.
What to do: Before paying any invoice, verify it by calling or visiting the university's financial office and/or logging into an official, password-protected online student account, says Steinbach. (For added oversight, parents can typically request access to these accounts through the student, he notes.) Keep in mind that the school would typically send a paper bill before requiring immediate payment.
How they work: Knowing that many students try to cut costs on expensive required college textbooks, scammers set up fake websites offering deeply discounted books or used books. However, once a student pays, they never receive the books.
What to do: Be wary of textbook deals that seem too good to be true. The safest way to purchase both new and used books is through official university bookstores.
How they work: In some cases, the student receives a fake credit card offer (by phone, email or text) that prompts them to provide personal information such as their Social Security number. In other cases, the offer the student receives is for an actual credit card but the language is misleading, and it includes unfavorable terms, fees or interest rates.
What to do: Be wary of generic emails that include unspecific information, and before filling out an application for an unsolicited credit card offer, contact the bank or credit card issuer directly to verify the terms. The best way to ensure you're making a good decision on a credit card, says Steinbach, is to go through your current bank or do your own online research for the card that best fits your needs.
How they work: Scammers know college students need cash, so with this type of scheme, they offer ways to make a quick buck (as an assistant or dog walker, for example). The catch is that the job posters either ask for money upfront or mail checks for their work and request a portion to be paid back through a P2P method. These offers may also be a veiled way for fraudsters to collect personal and banking information.
What to do: Before accepting a job, conduct online research on the company, including searching for the company's name plus words like "scam" or "complaint." Decline any offers that require paying money upfront.
Beyond these potential pitfalls, fraudsters can take things even further, offering students money to deposit bad checks or enticing them to set up bank accounts to transfer funds, as unwitting "money mules." It's important to understand that in these scenarios, the students are no longer the victims but are now complicit in committing a felony; they're also at risk of negative credit ratings and the inability to open a bank account in the future.
Overall, one of the most effective ways to protect your college student is to communicate this information clearly and, ideally, in advance of their freshman year, adds Steinbach. Talking with them about behaviors that make their age group susceptible and sharing potential signs of common scams can keep them on guard — and keep their finances safe.
For up-to-date information on the latest scams and expert tips to protect your finances, visit citi.com/fraudprevention.
The content reflects the view of the authors of the article and does not necessarily reflect the views of Citi or its employees, and we do not guarantee the accuracy or completeness of the information presented in the article.