Finance 101 How to Spot 2020 Scams and Fraud

by Karen Gibbs | July 07, 2020

I thought I was scam-savvy. After all, I write about scams and fraud. But I was wrong.

After clicking on what I thought was a reliable link from a friend, my computer started shutting itself down with no warning. Then it crashed. I didn’t listen to my own advice: NEVER click on a link in an email.

Scammers are clever, and they are only becoming more sophisticated. They steal personal information with bogus phone calls, hijack your computer with seemingly trustworthy links and trick you into sending them money with the promise of a job. 

But they’re only successful if you take their bait. Here are nine of the latest scams to watch out for and tips on how to avoid falling for them.

1. Imposter scams

How they work: This is the #1 fraud complaint according to an April 2020 Federal Trade Commission (FTC) Consumer Sentinel Network Report. Posing as Social Security, IRS or other government agencies, scammers will phone, email or text requesting personal information or demanding payment using money orders, gift cards or cryptocurrency.

What to do: Never respond to these communications. The government will never make such requests. As with any scam that involves your personal info, report the incident to the FTC complaint assistant. If you believe you have fallen victim to this scam, immediately contact your bank or credit card company so that it may attempt to secure your account and recover any available funds.

2. Online shopping fraud

How they work: Bogus companies “sell” items online without delivering them or deliver an item different from the one advertised.

What to do: Contact your bank or credit card company and stop payment on the item, provided goods were never received. If you ordered from a recognized online site or retailer, file a complaint with that company and the Better Business Bureau.

3. Romance scams

How they work: Scammers attempt to develop online romances with individuals via email, dating sites and apps, social media and chat rooms. Typically after gaining trust with the individual, a scammer will ask for gifts or money. According to the FTC, reports of these scams have tripled since 2015 and losses in 2019 amounted to $201 million.

What to do: If an online love interest asks for money, do not respond — it is most likely a scam. Terminate the e-relationship and mark the address as spam. Immediately contact your bank or credit card company so that it may attempt to secure your account and recover any available funds if you suspect you were a victim of this scam.

4. Bank impersonations

How they work: A scammer calls, spoofing your bank’s phone number — it will appear as your bank’s number on Caller ID. The scammer poses as a bank employee calling about suspicious fraudulent activity on your account. The thief then asks if you have made a certain purchase. When you say no, he/she will subsequently ask you to verify your address, birthday and debit card number. Once in possession of the information, the scammer will tell you your card needs to be reissued and he/she needs to verify your PIN number. The thief can now use your card for purchases and cash advances.

What to do: Your bank will rarely, if ever, request personal information or account details over the phone, explains Juan Benavente, who heads up the Cyber Fraud Fusion Center and Intelligence Strategy at Citi. If this happens to you, hang up and immediately call your bank directly with the number listed on its website or on the back of the debit or credit card — this step is especially important if you accidentally revealed personal information to the scammer.

5. Package delivery scams

How they work: A thief sends a text from a recognized delivery service requesting package delivery preferences. When you click on the link, it may download software that could compromise your cell phone’s security or redirect you to a phishing website that typically asks for personal information or money to claim a “prize.”

What to do: Legitimate companies will never use a text message to ask for personal or financial information. Call the customer service number on the company’s website to verify the text. You can also copy the contents of the text message and forward it to a spam reporting system adopted by several major U.S. wireless carriers (the number to message is 7726 — it spells SPAM).

6. Phony emails

How they work: Scammers hack into and take over the email account of a business or other legitimate entity. For example, a real estate law firm. By searching information in past emails, the hackers can identify clients who are about to buy a house. The scammer, then using the lawyer's email account, will request that the potential home buyer wire the down payment for the house to the "lawyer" (aka: the thief). 

What to do: Never respond to an email, text, message or phone call that asks you to wire money without first directly verifying the request with the party involved. Report the scam to the businesses/persons involved and to the FTC. If you believe you have fallen victim to this scam, immediately contact your bank so that it can attempt to secure your account and recover any available funds.

Hand holding a smartphone showing a malware screen that comes with email

7. Malicious apps

How they work: Malicious apps spoof legitimate apps and appear on ads and banners on legitimate sites. People unwittingly download them if they click on these ads and banners. Once installed, the fraudulent app enables thieves to install malware, secretly steal your personal information, or hijack your mobile device and download and install other apps without your permission. Fraudsters get paid by app developers for every app they install — the more installations an app has, the higher its ranking.

What to do: Read customer reviews before installing an app. If they complain that the app drains the battery, stay clear of it. Review the apps on your phone regularly. Follow directions in your phone’s app store to officially uninstall the ones you did not select and report the problem to your carrier and the FTC.

8. Account takeover fraud

How they work: A thief uses stolen account information from a merchant you shop online with to access your account’s online portal and scam you. For example, the thief logs into the account, changes the shipping address, and then orders items using the debit or credit card linked to the account.

What to do: Monitor activity on your accounts every day. One monitoring method to consider is to set up automatic transaction notifications through your credit and debit cards that go directly to your phone or email. Immediately report suspicious activity to your bank or credit card company and the FTC. Consider opting for a biometric form of authentication, such as facial recognition, which is available on most smartphones.

9. Money mule scams

How they work: Money mule scams involve sending you a check and then asking you to send gift cards or money orders to someone else. One such example is the “car wrap” scam. It works by targeting individuals, most commonly college students, offering to pay $250-$350 a week to drive around with advertisements on their car. The victim receives a check in excess of the victim’s pay for this purported gig from one of the scammers involved, deposits it and then makes payments (in cash or money order) to a “specialist” (another party who’s also in on the scam) to apply the car wrap. It takes two to three days before the bank notifies the student that the check is a fake. Meanwhile, the student is out the money that was sent to the “specialist,” aka the thief.

What to do: Say no to any “money mule” scam that sends you a check, then asks you to send gift cards or money orders to someone. If a job seems too good to be true, it probably is. Report the scammer to the FTC. Those who believe this scam struck them should immediately contact their bank or credit card company so that the institution can attempt to secure the account and recover any available funds.

One thing these scams all have in common is that the individuals or groups behind them know how to take advantage of our trust and, sometimes, our fear. It is impossible to keep up with their ever-changing devious schemes; however, by staying alert and informed on their tactics and techniques you can better protect yourself, your finances and your peace of mind. 

4 ways to protect yourself from scams

Juan Benavente, Head of the Cyber Fraud Fusion Center and Intelligence Strategy at Citi, shares easy tips to safeguard your identity, personal information and money.  

1. Never click on links or open attachments that arrive unexpectedly.

2. Never give sensitive information to anyone who asks for it through calls, emails, texts or social media. Call the institution back, using a valid phone number, to verify the authenticity of any request for information.

3. Never send cash, money transfers, gift cards or cryptocurrency in response to a request by phone, email, text, message or social media.

4. Never act without checking out the story with a trusted person first.

Karen Gibbs

is a freelance journalist, regular contributor to and content creator for brands such as Procter & Gamble and Bed Bath & Beyond.