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10 Money Scams To Watch Out For

10 Money Scams To Watch Out For
Candice Elliott Sep 14, 2018
Want to Earn Some Extra Money?

No longer just Nigerian princes, there are all kinds of scams out there. These are 10 money scams to avoid.

Scams Everywhere!

When you hear about some money scams, you can’t believe that anyone would fall for them, they seem so obvious! But there is a good reason for that.

Money scammers don’t want to work hard; they want to pick only the low hanging fruit. If a scam is evident to you, you’re not going to fall for it. That means the scammers are wasting their time to try to hook you.

But not everyone is quite so savvy. If someone falls for the first step of something that seems to most people to be an obvious scam, the scammers can proceed because the victim has proven themselves an easy mark.

There are even lists available for sale on the dark web of people who are easy prey for money scams. Things like the old Nigerian prince scam are still happening because they work on a small number of people. But a small number of victims is all a scammer needs.

But we know our Frugal For Less readers are unlikely to fall for what are clearly scams, so we’re going to make you aware of some more subtle ones.

1. Skimmer Scammers

If you were to lose your wallet or have it stolen, you would know it right away and could cancel all of your credit and debit cards before too much, or any damage was done. But if you’re the victim of a card skimmer, you probably won’t know it until it’s too late.

A card skimmer is a tiny device that is hidden in places like ATMs and gas pumps. They’re hard to spot, just a bit of plastic over a regular card swiping slot but there is a tiny computer inside that reads the information on your card when you swipe it.

Some of these scammers also install small cameras near the keypads so they can record your PIN as well.

To help avoid this money scam, only use ATMs inside your bank. The doors are locked at night, and there are likely cameras around which makes these ATMs a much less attractive target than the ones in places bars and convenience stores.

When you enter your PIN, cover the keypad with your hand to block any camera that might be watching.

2. Work From Home Scams

With more and more people looking for the opportunity to make some money on the side, work from home scams have become more prevalent. But there are plenty of legitimate ways to make money working from home so it can be hard to separate the scams from the legitimate opportunities.

Any job promising pay that seems too good to be true is. You can make extra money working from home, and there are some jobs that even offer full-time employment with benefits. But no work from home opportunity is going to make you rich overnight.

You shouldn’t have to pay for anything to work from home. No legitimate job asks for money from employees. Would you pay to go to work at a brick and mortar job? No, you wouldn’t. A work from home job should be seen no differently.

3. MLM Schemes

If you have a Facebook account, you probably have at least one “friend” raving about the benefits of some kind of patch or drink that has helped them lose weight or feel more energetic. These are multi-level marketing schemes; they used to be called pyramid schemes.

The people involved in these scams post glossy photos of their “free” trips to low rent tourist destinations for “sales conferences” and of the brand new luxury car they were awarded for meeting some sales goal.

The sellers are encouraged to buy boxes and boxes of whatever miracle product is being flogged and then to annoy everyone they come into contact with into buying some of it or better yet, selling it themselves.

While money can be made from these money scams, it’s only the people at the very top who manage it. What happens to everyone else is that they end up with a garage full of product they’ve bought and paid for but can’t sell. These things have ruined marriages and family relationships. Stay away!

4. The Chinese Consulate Scam

This scam is perpetrated by robo-calls. If you live in an area that has a significant Chinese population, you might get calls from someone speaking Mandarin telling you they’re from the Chinese Consulate and you’re being investigated for some kind of financial crime in China.

If the person on the other end of the line takes the initial bait, they’re eventually transferred to a live person who instructs them that if they wire money to a bank in Hong Kong, the case will be resolved.

I have been getting a ton of these calls. I live in New Orleans which doesn’t have a sizeable Chinese community but my cell phone number is still my New York City number, and that’s why my number is on the scammer’s call list. I don’t speak Mandarin and never answer calls from unfamiliar numbers, but the caller left a voicemail and when I checked it and heard Mandarin, I did some research, and this is what turned up.

This goes for any phone related scam, if you don’t recognize a number, don’t answer it. If you do answer it, you’ve been marked as an active number.

At best you will end up getting dozens more scam related calls, at worst, the person on the other end may actually get some kind of sensitive information out of you.

Ignore these calls when they come in and block the number.

Another thing to point out is that if you’ve ever registered your phone number to the Do Not Call Registry, the registration never expires. Some people have been getting emails purporting to be from the FTC telling them they need to re-enroll their number.

This is just a ploy to get people to provide their phone numbers for more things like the fake Chinese Consulate!

5. Phishing Scams

Various types of phishing scams have been around for ages but there is one that has become more prevalent lately. I’ve been getting these for a while; they always end up in my junk mail though so I know immediately that they’re a scam.

Phishing means trying to get personal information from you like bank account information or passwords.

The one I’ve been getting lately is from iTunes but it really isn’t. It’s an email with a fake invoice attached that shows I’ve recently purchased an App and telling me I need to click on the included link because there is a problem with my payment and I need to re-enter my payment information.

No one legitimate, the IRS, your bank, or your credit card company are going to send you an email asking for your account passwords or account numbers. Don’t even open these emails if you’re at all suspicious.

Call whatever company is claiming to have sent the email and verify if they actually did. Or just ignore it.

6. Jury Duty Scam

Getting a jury duty notice isn’t my favorite piece of mail (I just got one last week), but I know it’s part of being a good citizen to show up on the appointed day and keep my fingers crossed that I get dismissed early.

I’m currently 3-0 so hoping to continue my streak now that I’m in New Orleans!

I’ve never just ignored a jury duty notice, but if you have, you might get nervous when a U.S. Marshall gives you a ring and threatens to arrest or fine you for skipping out.

The fake marshall may even give the name and badge number of a real marshall and ask you to wire money to pay the fine or buy a pre-paid debit or gift card and use it to pay the fine. Once you buy the card and give the caller the code, they can use the card.

Now, I think most of us are unlikely to fall for the gift card part of this scam but the money wiring part maybe so beware. And go to jury duty the next time you get a notice!

7. Student Loan Scam

Tens of millions of us have student loan debt, so it’s an area ripe for scammers. The scammers claim to be with the government or one of the well-known student loan servicing companies like Nelnet or Great Lakes.

They offer to reduce or even eliminate your student loan debt through programs you’re pre-approved for.

It can cost hundreds of dollars to enroll, and you’ll be asked to pay the entire fee up front. Once you pay the fee, guess what happens next? That’s right, nothing. The scammer has your money and disappears into the night.

If you’re struggling with your student loan debt, you may be eligible for one of these legitimate programs, or you can look into refinancing through LendKey, another legitimate option.

8. Debt Collection Scams

If you have past due debts, they may be sold to a third party. The third party tries to collect on the debt and get to keep any money they recover. If you do have past due debt, it can be hard to tell a legitimate debt collector from a scammer.

You knew you owed money to Company Y, but the debt was sold to Company Z. On top of that, some legitimate debt collectors use rough, high-pressure tactics similar to scam debt collectors making it doubly hard to separate fact from fiction.

You have the right to ask for proof of the debt under The Fair Debt Collection Practices Act. Doing so may scare off most scammers immediately.

You can also look at your credit report and see if the debt is listed although keep in mind that past due accounts drop off your report after seven years so even if it doesn’t appear, it may be legitimate.

A real debt collector won’t ask you for payment via a non-traceable method like a wire transfer. If the collector threatens you with prison if you don’t pay the debt, that’s another definite red flag. We don’t have debtor’s prisons (yet).

9. Online Shopping Scams

Nearly 80% of Americans shop online which means there is a big pool of potential targets for scammers. The most common scam is ordering and paying for something that just never arrives. In other cases, you might receive an inferior product to the one you ordered or even an empty box!

Only buy from companies you’ve heard of. Yes, Suzy’s House of Pillows might have pillows cheaper than Amazon, but you don’t know Suzy! If you do choose to shop on an unfamiliar site, make sure the address starts with “https.” It’s the “s” that’s important.

It means the site uses an extra layer of security called an SSL, a Secured Socket Layer.

If you use Google Chrome as your browser, they have recently made it very easy to tell if a site uses encryption which helps protect your data. On the far left side of your search bar, you’ll see “Secure” on sites that do use encryption and “Not Secure” on sites who still don’t.

Another way to protect yourself from online shopping scams is to use a credit card rather than a debit card to pay. If you don’t receive anything or something other than what you ordered, you can dispute the charge.

The credit card company takes care of the rest. I’ve had to do this a few times, and the credit card company always found in my favor and refunded my money.

Some debit cards offer this too but when you pay with a credit card, it’s the credit card’s company money, when you use a debit card, it’s your money. These disputes can take a few days or weeks to resolve, and you may not be refunded your cash until it’s settled.

10. Out and About Scams

Some money scams happen in person rather than over the internet or phone. But your money is still at risk. If you come to New Orleans, here is a classic to avoid. Someone will walk up and say, “I betcha I can tell where you got them shoes.”

The correct answer is “On my feet.” If you don’t answer correctly, you owe the guesser $5.

Avoid anyone handing you anything, a CD, a bracelet, a trinket of some kind. There are “monks’ all over the High Line in New York City doing this one. They offer you a “blessing” while jamming some kind of cheap bracelet onto your wrist and then ask for a “donation.”

This is another big city classic. You’re walking in a crowded area, and someone bumps into you which causes them to drop a bag or a box. You hear glass tinkling.

When you think back later, you’ll realize it was the sound of already broken glass hitting the sidewalk which sounds very different than an intact glass object shattering.

But at the moment, you’re flustered because the person who bumped you is yelling and making a scene. Accusing you of having just broken whatever object is in the bag and demanding payment to buy a replacement.

The best way to avoid these kinds of scams is just to ignore the person and keep walking. Don’t take anything being handed to you and if you do take it out of reflex, drop it and then walk away.

Just like every other scammer, these people are looking for easy, compliant marks who are just going to hand over the cash to escape an awkward situation.

The Good News

While these money scams can do serious damage, they are pretty easy to avoid. There are just too many ways to ferret them out. Whenever I get a call from a number I don’t recognize, I Google it.

Often the number will come up on a site where other people have reported getting calls from a similar number and confirming it’s a scam.

If you do get taken in, banks and credit card companies have protocols in place to protect you. Check your statements regularly. You might very well be savvy enough to avoid most money scams, but everyone is vulnerable to things like skimmers.

As long as you report fraudulent activity as soon as you spot it, you won’t be held responsible for it. At most, you’ll only be responsible for the first $50 in fraudulent credit card charges.

I have had both my debit and credit cards hacked in the past, and I was reimbursed for all of the unauthorized activity. The whole thing didn’t even take that long. I had new cards within a few days.

You should also regularly monitor your credit score and report for any changes. If you have an account with Credit Sesame – which is free – they will send you notifications each time a new credit account is opened under your name.

So be smart and when even that isn’t enough, be vigilant. You don’t want these scammers taking five-star vacations on your dime!

Candice Elliott

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