‘Fraud is at a crisis level,’ says expert: 5 financial scams to watch out for in 2024 (2024)

‘Fraud is at a crisis level,’ says expert: 5 financial scams to watch out for in 2024 (1)

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'Fraud is at a crisis level,' says expert: Five financial scams to watch out for in 2024

Personal Finance

Artificial intelligence tools and sophisticated technology are making it harder for consumers to spot scams.

Fraud cost U.S. consumers more than $7 billion during the first three quarters of 2023, according to the Federal Trade Commission. Those figures are up 5% compared to the same period in 2022.

"Fraud is at a crisis level in this country," said Kathy Stokes, director of fraud prevention programs at AARP.

Perpetrators of these types of crimes may be organized gangs or transnational criminal enterprises with employees who have scripts they follow to lure victims."They have the money, they have the time and they've got the playbook to get you into that heightened emotional state," Stokes said. "It's us against them."

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The most crucial step to avoid being scammed is knowing what could happen and discussing it with family and friends. When people are aware of a specific scam, they are 80% less likely to engage with it, and if they do engage, are 40% less likely to lose money or sensitive information, according to the FINRA Investor Education Foundation.

Here are five of the top financial scams you should look out for in 2024, and ways to avoid becoming a victim.

1. Grandparent scams

Playing on people's emotions by targeting personal relationships and posing as someone they care about is a starting point for many fraud schemes.

The grandparent scam is becoming a more damaging version of imposter scams with advanced technology. Thieves can capture a voice recording and then generate an imitation version of your voices that can be used to impersonate you.

Fraudsters may call and pretend that they are a family member in immediate jeopardy — for example, that they have been arrested or are dangerously ill — and urgently needs money. Fraudsters frequently try to isolate their victims by concocting some reason the victim cannot consult with friends, family or law enforcement, such as saying the case is under a "gag order."

"Elder fraud and elder abuse are reprehensible crimes," U.S. Attorney General Merrick B. Garland said in a statement to CNBC. "I urge all Americans, particularly older Americans, to be on the lookout for potential scams, to pause before turning over personal information, and to report fraud and abuse when it occurs."

Some scammers may have a third conspirator pose as a courier and go to a grandparent's home to pick up the money.

How to avoid grandparent scams:

"Don't answer any emails or phone calls from unknown persons," advises Michael Bruemmer, vice president of global data breach and consumer protection at Experian. "All they need is less than a 10-second voiceprint."

  • Choose a "safe word" or "password" to share with a grandparent, family member or loved one and say that word when you call in an emergency situation so they know it's you.
  • If you get a call or text from someone claiming to be a loved one but using an unfamiliar number, call or text the usual number that you use to reach that person to confirm they called.
  • Confirm emergency financial requests with other family members. Don't fall prey to a scammer who tells you to keep their initial call or text a secret.

2. Romance scams

Romance scams have been a common way to use new, but fake, relationships to steal people's money and they are growing in popularity. These scams often start with private messages on social media or dating apps, after thieves review the information posted on these accounts.

Once the new "love interest" gains your trust, they may claim that someone close to them is sick, hurt or in jail. They may claim to be in the military or need help with an important delivery. After telling the lie, they'll ask for money or a purchase made on their behalf.

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Scammers will often ask for payment in ways that are harder to trace and reverse, such as gift cards and peer-to-peer services such as Venmo and Zelle, said Ted Rossman, a senior industry analyst at Bankrate. "Be very suspicious if someone that you don't know asks you for one of these payments."

Another frequent lie from an online "love interest" is an offer to help invest in cryptocurrency. While many victims of romance scams send money with a gift card, the most significant dollar losses — more than one-third of losses to romance scams in 2022 — were in cryptocurrency, according to the FTC.

How to avoid romance scams:

  • Talk to friends or family about a new love interest and pay attention if they're concerned.
  • Don't share with a love interest any personal information, usernames, passwords or one-time codes that others can use to access your accounts or steal your identity.
  • If someone you've just met tells you to send money because they're in trouble or to receive a package, the FTC says you can bet it's a scam.

3. Cryptocurrency scams

Investment-related scams are the most costly type of financial fraud with total losses of more than $3.8 billion in 2022, according to the FTC. The median loss was $5,000.

Scammers use cryptocurrencies because they don't have the same legal protections as credit or debit cards, and payments usually can't be reversed. With investment scams, crypto is central in two ways: It can be both the investment and the payments that can't be reversed.

Besides claiming to be a love interest who needs you to send them money, crypto scams may start with an "investment manager" calling you out of the blue with a tip that seems too good to be true or a scammer claiming to be a celebrity who can quadruple your money.

How to avoid cryptocurrency scams:

  • Don't mix online dating and investment advice. If you meet someone on a dating site or app and they want to show you how to invest in crypto or ask you to send them crypto, that's a scam.
  • Know that a legitimate business or government entity will never email, text or message you on social media to ask for money, and will never demand that you buy or pay with cryptocurrency.
  • Don't pay anyone who contacts you unexpectedly demanding payment with cryptocurrency.

4. Employment scams

Business and job-related scams are another top category of financial fraud, and with companies laying off workers, these schemes are likely to continue in 2024.

Some scammers use enticing, hard-to-detect tactics to lure victims through interviews with a company that may seem legitimate. Then this fake employer sends you a fake email to collect personal information, or says they're using a third party, which is also fake, to do a background check. Once they have your personal identity information, it's an easy step to get into your bank account.

Other job scams may promise guaranteed or easy income if you purchase a program they offer, or you'll see job opportunities that involve receiving or sending money to another account.

How to avoid employment scams:

  • Look up the name of the company or the person who's hiring you, plus the words "scam," "review" or "complaint." See if others say they've been scammed by that company or person.
  • Never click on a link from an unexpected text, email or social media message, even if it seems to come from a company you know.
  • Don't ever pay a fee to get a job. If someone asks you to pay upfront for a job or says to buy cryptocurrency as part of your job, it's a scam.

5. Online account tax scam

In this scam targeting individuals, swindlers pose as a "helpful" third party and offer to help create an online account at IRS.gov to pay taxes. Bad actors can use the taxpayer information in such accounts to file a sham taxreturn where the scammer gets the refund. The information can also be used for other financial fraud or identity theft, such as to get a loan or open a line of credit.

"Any of the process that you'd go through to set up an account or check on a refund or just to look at payments that you've made, all of that would start at IRS.gov," said IRS spokesperson Eric Smith. "If someone contacts you saying, 'We'll help you set up an IRS account and send us all of your information,' that's bogus."

How to avoid online account tax scams:

  • Set up a taxpayer's IRS Online Account at IRS.gov yourself. Do not use third-party assistance for that task.
  • Don't store financial records and information in an email account.

"If a criminal gets in there, they have a roadmap to everything," said Haywood Talcove, CEO of LexisNexis Risk Solutions' government group.

If you do get caught in a scam, report it to local law enforcement, the FBI, the state attorney general where the fraud took place, AARP and the FTC.

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As an expert in the field of financial scams and fraud prevention, I bring a wealth of knowledge and experience to shed light on the alarming rise in scams, particularly in the use of advanced technology to deceive consumers. With a profound understanding of the intricacies involved, I aim to provide insights into the concepts discussed in the article you've shared.

The article emphasizes the escalating crisis of fraud in the United States, citing a staggering $7 billion in losses during the first three quarters of 2023, a 5% increase from the previous year. The use of artificial intelligence tools and sophisticated technology by organized criminal enterprises has made it increasingly difficult for consumers to identify and avoid scams.

Now, let's delve into the key concepts and scams highlighted in the article:

  1. Grandparent Scams:

    • These scams exploit personal relationships, posing as family members in distress.
    • Advanced technology enables fraudsters to capture voice recordings for impersonation.
    • Prevention tips include avoiding unknown calls, establishing a "safe word," and verifying emergency calls.
  2. Romance Scams:

    • Scammers initiate fake relationships on social media or dating apps to steal money.
    • Victims are often targeted for financial assistance under false pretenses.
    • Recommendations include discussing new love interests with friends or family and avoiding sharing personal information.
  3. Cryptocurrency Scams:

    • Investment-related scams, especially involving cryptocurrencies, are highlighted.
    • Scammers may pose as investment managers offering lucrative opportunities or celebrities promoting investments.
    • Advice includes not mixing online dating with investment and being cautious of unsolicited payment demands in cryptocurrency.
  4. Employment Scams:

    • Job-related scams involve fake companies luring victims through deceptive tactics.
    • Scammers may request personal information for background checks, leading to identity theft.
    • Precautions involve researching companies, avoiding unexpected links, and never paying upfront for a job.
  5. Online Account Tax Scams:

    • Scammers pose as helpful third parties offering assistance in creating online IRS accounts.
    • Victim information is then used for fraudulent tax returns or other financial fraud.
    • Prevention measures include setting up IRS accounts independently and avoiding third-party assistance.

In conclusion, the article underscores the critical need for awareness and proactive measures to combat the increasing sophistication of financial scams. By staying informed and adopting preventive strategies, individuals can significantly reduce the risk of falling victim to these fraudulent schemes. If you have any specific questions or require further details on these concepts, feel free to ask.

‘Fraud is at a crisis level,’ says expert: 5 financial scams to watch out for in 2024 (2024)


‘Fraud is at a crisis level,’ says expert: 5 financial scams to watch out for in 2024? ›

Here's what to look out for. AI deep fakes, identity theft and fake charity schemes are among the biggest scams targeting either individuals or businesses in 2024, according to a new report from credit reporting agency Experian.

What is tax refund fraud in 2024? ›

Tax season fraud is set to spike in 2024 as AI enables cybercriminals to generate lifelike images and make convincing videos that impersonate taxpayers to steal their refunds. Why it matters: Victims of tax-related identity theft wait an average of 19 months for the IRS to correct and send their refunds.

What are the phishing scams in 2024? ›

As scams become increasingly sophisticated, with tactics like AI-powered voice cloning, staying vigilant and aware of evolving threats is crucial to protect yourself in 2024. Some of the top scams in 2024 to look out for include easy online job scams, government account takeover scams, and deepfake and AI scams.

Is fraud org legitimate? ›

Fraud.org is the product of decades of consumer education and advocacy related to fraud prevention. More than 100,000 unique visitors come to Fraud.org each month. Thousands of consumer complaints are collected by the Fraud.org and shared with our network of more than 200 law enforcement partners.

What are the current scams? ›

Common Scams
  • Advance Fee Scams. ...
  • Tech Support Scams. ...
  • Phishing. ...
  • Emergency Scams. ...
  • IRS or Government Imposter Scams. ...
  • Foreign Money Exchange Scams. ...
  • Counterfeit Cashier's Checks. ...
  • Bogus Debts.

Has the IRS started issuing refunds in 2024? ›

Tax season began on Jan. 29, 2024, when the IRS started accepting and processing 2023 tax returns. As of the week ending March 8, the agency has processed about 62 million returns and issued more than 43 million refunds. To date, the average refund issued in 2024 is $3,145.

Does the IRS count weekends as processing days in 2024? ›

The Internal Revenue Service says it processes about nine out of 10 tax returns within 21 business days. That estimate does not include weekends and holidays.

Should I be worried if a scammer has my phone number? ›

Instead of you receiving these codes, scammers who have your phone number can get them. The consequences can be severe. They could block accounts, send fake messages, or make purchases without your consent. They could also get your financial statements or messages from these accounts.

What are the three most common scams made online? ›

Below are some of the most common.
  • Copycat government websites. Some scams involve websites designed to look like official government websites such as HMRC. ...
  • Dating and romance scams. ...
  • Holiday frauds. ...
  • Mandate fraud. ...
  • Pharming. ...
  • Phishing emails.

What are some scammer phone numbers? ›

THE DIRTY DOZEN: These are the 12 numbers to get comfortable with and then block.
  • 865-630-4266.
  • 469-709-7630.
  • 805-637-7243.
  • 858-605-9622.
  • 863-532-7969.
  • 904-495-2559.
  • 312-339-1227.
  • 917-540-7996.
Oct 2, 2023

How do you verify a scammer? ›

How to check for scams
  1. Don't click on any links until you verify it's safe. ...
  2. Check for spelling and grammar errors. ...
  3. Use Google to research the person or organisation. ...
  4. If someone calls you unexpectedly to sell financial products, hang up. ...
  5. Ask the person to leave their information and return next week.

What is the world's largest anti fraud organization? ›

The Association of Certified Fraud Examiners (ACFE) is the world's largest anti-fraud organization delivering best-in-class training, offering the CFE credential and fostering a dynamic, global community of anti-fraud professionals.

Do banks refund scammed money? ›

If you paid by bank transfer or Direct Debit

Contact your bank immediately to let them know what's happened and ask if you can get a refund. Most banks should reimburse you if you've transferred money to someone because of a scam.

What is the meaning of tax refund fraud? ›

Tax refund fraud involves identity theft, fraudulent W-2 forms and the online filing of an illicit tax return for the purpose of receiving a tax refund for deposit into the account of the fraudster or a money mule acting on behalf of the fraudster.

What are two examples of refund fraud? ›

Fraudulent actors use fake or altered receipts to return stolen items, items purchased on sale, or items bought from a different store, in order to receive a full refund or store credit.

Will refunds be bigger in 2024? ›

So far in 2024, the average federal income tax refund is $3,011, an increase of just under 5% from 2023. It's not entirely unexpected: To adjust for inflation, the IRS raised both the standard deduction and tax brackets by about 7%.

What is the tax law for 2024? ›

For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600 for 2024, an increase of $750 from 2023; and for heads of households, the standard deduction will be $21,900 for tax year 2024, an increase of $1,100 from the amount for tax year 2023.

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