💰 Don't Fall For These Top 5 Scams

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Hey Money Maniacs,

Fraud is on the rise.

In 2023, people reported losing over $10 billion to various scams—an alarming increase from $8.8 billion in 2022 and $6.2 billion in 2021.

With a median loss of $500 per incident, it’s more important than ever to stay up to date on fraudsters’ latest tricks.

Here are the top 5 most common scams and how to avoid them:

1. Imposter Scams: The Identity Thieves

Imposter scams have gotten scary good, thanks to AI.

Now, with as little as three seconds of audio, scammers can clone the voices of your friends and family. Sprinkle in some (publicly available) personal information, and you might just believe it's your boss needing banking info urgently, or your child pleading for emergency cash.

These scammers are clever—they'll keep you on the line and insist you don't hang up. They may claim they've lost their phone or are otherwise unreachable if you try to call them back directly.

But friends and family aren’t the only tools in play.

Scammers might pose as representatives from the IRS, Social Security Administration, or Medicare. They will urge you to act immediately to avoid arrest or the loss of benefits.

Tech support imposters are common too. You might receive a text, email, or a pop-up notification about a supposed issue with your computer or an online order.

The scammer will claim to be from a well-known company, ready to help you resolve the (non-existent) problem. They may ask you to download something, share your screen, or provide payment information.

The golden rule? Hang up, and call the company's official support line yourself. If they discourage you from hanging up, it's likely a scam.

Tips To Avoid Imposter Scams

1. Create a passphrase that only you and your close family or friends know for emergency situations.

2. If someone calls asking for personal or payment information, hang up and contact the entity directly through an official number.

3. Know that genuine government agencies will never reach out via call, email, text, or social media to request money or sensitive personal information.

4. Watch out for phrases like “Act now!”, “Do not hang up!”, or “Do this, or you’ll be arrested”. These are designed to create urgency and cloud your judgment.

2. Online Shopping Scams: Too Good To Be True

The risk with online shopping are those too-good-to-be-true deals. Spot an ultra-cheap luxury item or the latest gadget at a jaw-dropping price? That’s your first red flag.

While the advertisement might look legitimate, there's a good chance it’s a setup to sell you a cheap imitation—or worse, nothing at all.

But it's not just credit and debit card scams out there.

Some of the sketchiest sites might urge you to pay through a wire transfer or online funds transfer to lock in that bargain. The problem is: these methods are less secure and make it difficult to recover lost money.

Tips To Avoid Shopping Scams

1. Search the name of the store with terms like “scam” or “fraud” to look for warning signs.

2. Check for return policies, active social media pages, and reviews on third party sites. These are good indicators of credibility.

3. Always use credit cards when shopping online—they offer better fraud protection.

4. Make sure the website’s URL begins with “https”—the ‘s’ stands for secure, indicating that the site uses encryption to protect your data.

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3. Prize Scams: Did You Even Enter?

Everyone loves winning, but prize and sweepstakes scams exploit this excitement. And they do so, on average, to the tune of $907 per victim.

These scams are designed to trick you into believing you’ve won a prize. Then, they will ask for personal information or a payment to cover the taxes and fees.

Tips To Avoid Prize Scams

1. Never share your banking details or personal information to claim a prize.

2. Genuine prizes do not require payment to claim. If asked to pay, it’s a scam.

3. Be wary of unexpected prize notifications, especially if you did not enter a contest.

4. Investment Scams: Spotting Fool’s Gold

Investment related scams are the most financially damaging, with an average loss of $7,768. These schemes often involve stocks, cryptocurrencies, and real estate.

But beware, the allure of big returns can often lead you into a trap.

Types of Investment Scams:

• Phantom riches: Some scams highlight fake returns on fake investments, before urging you to invest for similar gains.

• Hidden pitfalls: The investment might not be what it seems, with many undisclosed drawbacks that come to light too late.

• Worthless ventures: Often, the opportunity involves empty promises and worthless training programs padded with fake reviews and endorsements.

• Costly learning: Initial free training or seminars may seem harmless but can lead to expensive and unproductive courses that fail to deliver on their promises.

Common Signs of an Investment Scam:

• Guaranteed returns: Be wary of any promise that offers big money, guaranteed income, or foolproof profits.

• Minimal risk: Claims that suggest little to no risk, minimal time, or effort should raise red flags.

• Lack of clarity: Vague details about how the investment works or claims of a "secret method" or "proven algorithm" are typical scam tactics.

• Pressure to act quickly: High-pressure sales tactics are designed to rush you into making decisions without proper research.

Tips To Avoid Investment Scams

1. If an investment seems too good to be true, it probably is.

2. Thoroughly research any investment opportunity before committing your funds. Look for independent reviews and analysis.

3. Only invest in things that you understand.

5. Employment Scams: Fake Job Offers

Employment scams often target job seekers with the promise of high-paying jobs or work-from-home opportunities. The catch is: these fake positions require an upfront fee or the handling of suspicious payments.

Common Types of Employment Scams:

• Fake check scams: The scammer will send you a check to pay for “supplies”, and then ask for the remaining amount back. This is a classic fake check scam. The check will eventually bounce, you will be on the hook for the full amount, and the grifter will make off with what you sent them.

• Bogus job postings: This same practice is commonly used in fake job ads for roles like nannies, caregivers, and virtual assistants. The hirer will trick you into depositing a check, keeping part of it for your supposed services, and sending the rest elsewhere. When the check bounces, you’re left owing the bank.

• Reshipping scams: In this scheme, you might receive goods to reship to a new address. However, these items were likely bought with stolen credit cards. Once you forward the packages along, your “employer” will disappear.

Tips To Avoid Employment Scams

1. Don’t pay for a job, even with a job placement service. The hiring company should bear these costs, not the job seeker.

2. Don’t bank on a cleared check. It can take weeks for a bank to uncover a fraudulent check, and you will be held responsible for any funds used or sent.

3. Don’t pay for certifications, job guarantees, or job directories to start a mystery shopping gig.

That’s all for today. If you have any questions, feedback, or topic suggestions, please reply directly to this email – I read everything.

Stay safe out there!
Daniel

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.