5 Ways to Keep Your Finances Safe and Avoid Financial Fraud
Did you just receive a suspicious text message about IRS back taxes or a bank alert? So did 59.4 million other Americans. While this is just one way scammers are trying to get access to bank accounts and sensitive information, it has gotten so bad that the IRS has to regularly update its tax scams and consumer alerts site.
In 2021, American consumers reported losing more than $5.8 billion to fraud – more than a 70% increase from 2020. Almost 3 million consumers filed fraud reports, with around 25% of the scams leading to financial loss, with the average person losing $500. While financial fraud has always been a major concern of Americans, it has increased significantly during the COVID-19 pandemic.
In 2021, the most common text scams revolved around delivery services, COVID-19, banking, Apple sweepstakes and healthcare. In general, the top financial scams relate to charity, debt collection, foreclosure or mortgage relief, lottery, wire or money transfer, and even imposters. Diving in further, Latinos and people of color are more often targeted by scammers. A 2021 survey from AARP found that 40% of Black and Latino adults have been targeted by online scams and fraud. While financial fraud will always be an immediate concern to Americans, there are many regulations and precautions being put in place to help combat these issues and remediate the effects.
Most recently, the Consumer Financial Protection Bureau announced it is planning to issue guidance compelling banks to repay customers who have fallen victim to money transfer scams through apps such as Zelle or Cashapp. Fraud rates among mobile payment apps are 3-4x higher than traditional payment methods.
While financial institutions have measures in place to combat financial fraud and scams, consumers can always take it a step further by being mindful and ensuring their own financial freedom and security. Below are five ways you can ensure financial safety and security and minimize fraud.
Five ways to ensure your financial safety
- Do not share account information with anyone you don’t know or trust
- Be sure to keep any contact details of the person or financial institution you’ve dealt with and keep your receipt until a transaction is finalized
- If you receive a direct message, email, text, or phone call from a number or person you do not know or are not expecting, do not respond in any way
- When using a mobile payment app or digital wallet, enable security features such as two-factor authentication or PIN usage
- Review the security protocols put in place before using a new online financial tool
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