Let’s face it. Even for the most determined Luddite or those individuals who are perfectly happy being an occasional user of online and social media services—how could you not be wowed by the plethora of innovative leaps the digital renaissance has brought to our daily lives and society as a whole.
The ridiculous ease in which we utilize e-commerce and digital technology that extend speed of light access to most anything that strikes our fancy (all without so much as a blink of an eye), is indeed an impressive accomplishment of the modern age. All it takes is the simple push of a button, a casual verbal command, or a carefree wand wave of your mobile device to make things happen—and when it does, it happens effortlessly and at warp speed. The kind of stuff that nerdy, sci-fi fans once dreamed about way back in the day now actually exists in our homes, back pockets, purses, and cars. Pretty cool stuff.
However, this same digital playground, if used too carelessly, can make us more vulnerable and susceptible to identity theft and other consumer internet scams. And with this type of consumer fraud on the rise, you as a user of these online services need to exercise even more caution about what information you choose to share about yourself (and with whom you share it with), so that you can safely and securely utilize and interact in these environments.
Let’s take a look at some of the more common scams that are out there and what you can do to avoid becoming the next victim of an internet crime.
1. Internet and social media scams
Scammers are actively using websites like Craigslist and Instagram to solicit unsuspecting individuals for their debit card and PIN information. Once the scammer has obtained this information, they move in on your money by conducting ATM check deposits and cash withdrawals.
Here’s how these scams work: You’re a college student and next semester’s tuition is due, but you don’t have the money to cover it. Or maybe the holidays are about to roll around and you’re short on cash to buy gifts for your friends or family. You search online and you see an advertisement on how to easily and quickly earn between $500 and $5,000. The only requirement: To receive the funds, you’ll need to provide these individuals with your savings or checking account number, an ATM card, and the PIN (sometimes these scammers will even ask for you’re your online banking username and password, too).
Once these individuals have all of your information, they’ll mention: If by chance, your financial institution or the police contact you with questions about the sudden transaction activity on your account, you’re simply to tell them that your ATM card and PIN were stolen. This way you’re not responsible for any suspicious activity that occurs on your account. The scammer will then begin depositing checks (that are worthless) into your account at an ATM. Oftentimes, at many financial institutions, these check deposits are credited to your account before they are cleared by the Federal Reserve, which makes it easy for the scammer to immediately begin withdrawing cash from your account at an ATM.
Eventually the deposited checks are returned as worthless, but the funds in your account have already been withdrawn. As the account holder, you are now responsible for paying this debt back to your financial institution. In the end, you as the victim of this type of fraud are now left in the very awkward position of having to explain to your financial institution why your account is suddenly overdrawn by several hundred, or even worse, several thousand dollars. What’s more, you may or may not be able to recoup the loss of the funds you are now responsible for paying back to your financial institution.
- Never give, sell, or loan your debit card and PIN to anybody you don’t know or trust.
- Never give anyone your online banking information, such as your login username and password so they can ‘use’ your accounts. Don’t risk being involved in a criminal scheme. You could end up owing thousands of dollars to your financial institution, and ruining your good credit which you worked so hard to build.
2. Credit repair, bill consolidation, and loan scams
These scammers will offer to help you with the following: repair your low credit score, consolidate your bills, or find you a loan to help you with your overdue bills. In reality, these offers are just scams to get you to apply for a low-interest loan based on falsely used or fraudulent information. When all is said and done, a significant portion of the proceeds from the loan winds up going to the scammer.
And here’s the real rub. Not only have you not raised your credit score or paid off your bills, you’re now left with a fraudulent loan in your name—and one you may not be able to afford to pay back. Once again you’ll find yourself in the awkward position of having to explain to your financial institution the chain of events that led to the matter at hand.
- Never agree to allow a loan “broker” to apply for a loan in your name. This opens the door for the scammer to then use your personal information under false pretenses to secure a low-interest loan in your name.
- Never give your personal information to a loan “broker” who promises to fix your credit, help you consolidate your bills, or offers to find you a low-interest loan. If you’re having a hard time paying your bills or securing a low-interest loan, a better alternative is to seek the help of a nonprofit credit counselor. The National Foundation for Credit Counseling (NFCC) is a safe place to start.
3. Ransomware scams
In this scenario, a scammer will contact you (usually by telephone, a text message, an email, or even through a computer pop-up message) and threaten to take control of your personal computer unless you pay a ransom. Sometimes this is a bluff to trick you into sending money. More sophisticated scams will involve an actual computer virus that denies you access to your computer. In these cases, paying the ransom doesn’t guarantee that you will regain control of your computer.
- Think before clicking on unknown links or opening unknown emails and attachments.
- Get anti-virus protection and keep it updated.
- Update your computer operating system, software, and apps.
- Back up your sensitive information such as family photos or personal finance records to a separate device or the Cloud. This essentially nullifies any ransom threat.
- Create strong, unique passwords for every site and change them regularly.
- Be careful on public Wi-Fi connections, and download and stream content from proper sites only.
- Never post sensitive information on social media.
4. School grants, work from home, secret shopper scams, and eBay refunds
These scams are disguised in many ways, but basically they work like this:
The victim of this type of scam believes they’ve been hired as a secret shopper, or are owed money for a grant or refund: let’s use $500 for this example. As a condition of the employment, refund, or grant offer, the scammer requires the victim to provide them with their banking account information. The scammer will then make a deposit (by check, ACH, or wire) into the victims account for a larger amount of money: Let’s say $3,000. The scammer will immediately contact the victim claiming they “mistakenly” deposited too much money into the victims account, and ask the victim to immediately withdraw $2,500 and send it to them (oftentimes by way of Western Union, a wire, or by ACH). The victim (in most cases) will gladly accommodate the request—only to find out a short time later that the original $3,000 was bogus, leaving the victim at a minimum hard loss of $2,500.
- Never give access to your accounts to any strangers or anyone you do not completely trust. If you do, and that individual makes a fraudulent deposit into your account—you’ll most likely end up assuming the financial loss.
5. Fast and easy money scams
If it seems too good to be true, it probably is! Be wary of propositions from individuals you do not know who try to entice you with the opportunity to make some fast, easy cash.
Additionally, watch out for these red flags:
- Offerings of money or prizes.
- Extremely urgent requests or crises.
- Time limits or countdowns.
- Threats and accusations that are amplified if you ignore the offer or refuse to send money in return for a cash prize or vacation cruise getaway, etc.
Do Better with PenFed
PenFed Credit Union and its employees are dedicated every day to the mission of helping our members Do Better. Part of that goal is to help educate our readers and our membership about fraud. Knowing how to quickly identify red flags, and how to avoid the pitfalls and frustrations of becoming a victim of identity theft and fraud, is yet another step to empowering yourself as a consumer.
Internet crime is the real deal. Remaining vigilant about not sharing your personal information with people you don’t know, just met, or causally met online through a friend of a friend—not only protects your identity, but your savings, your credit, and your overall financial well-being. Protect yourself, your family members, and your assets by knowing the signs!
Learn more. Find additional information and helpful resources at these trusted websites: