It can feel like a nightmare is unfolding when you check your inbox only to see an official email from your bank. The email says your account has been compromised by an identity thief and you need to click on link to verify your account number.
The real nightmare follows when you obey those instructions. Scam artists have your bank account information in their possession and soon your account is drained down to the last penny.
Everyone will encounter an online scam artist at some point in their lives. You can spot attempts at online fraud a mile away if you know how to recognize the warning signs. Use some common sense and beware of these five common online financial scams:
Nigerian 419 letter
Nigeria is almost synonymous with online financial scams because so many scam artists set up shop in that part of the world. This scam follows a basic formula. A stranger sends you an email containing a plea for help. They need assistance in transferring funds from obtained through an inheritance from a dead relative, lottery winnings or some other means. The stranger offers a percentage of the money in return for transferring it into your account, but you need to pay a variety of fees up front.
Nothing good comes from interacting with these strangers. PC World reports that Nigerian 419 scam victims suffer an average loss of $3,000. Some victims who agree to travel to Africa to meet with scam artists often end up dead or missing.
A typical phishing scam starts with what appears to be an official email from your credit card company or bank. The email details that your account has been compromised and you need to log in and verify your account information – or it will be terminated. It looks official, but the links in the email redirect you to a fake website or pop-up window where you are supposed to enter your information.
These phishing scams are highly successful, harvesting information for identity thieves and costing banks and individuals more than $1 billion each year. These emails are nothing more than clever fakes. If your account information is compromised, your bank or credit card company will typically call you directly rather than send out an email.
Online auction scam
People take pride in thinking they can make money selling items on eBay or another third-party seller website. The problem is these places are filled with scam artists who use bait and switch tactics. They purchase an expensive item from you, replace it with a broken version and claim it was damaged in the mail. They get money back from PayPal and you get your item basically stolen out from under you.
A variation on this scam victimizes a buyer instead of the seller. You win a bid for an expensive item at a reduced price. But you are sent a different product than what you purchased or are not sent a product at all. These scams give new meaning to the phrase “Buyer Beware.”
The best things in life are not free, despite what a popular song claims. If you receive an email claiming you have won a contest and will receive a new video game console, plasma TV or smart phone as the grand prize, it is too good to be true.
Claiming these free gadgets requires providing a credit card or debit card to cover supposed shipping and handling costs. Once scam artists have this information, mysterious charges begin showing up on your card. Your free item never arrives and your money quickly departs.
Fake anti-virus warnings
These scams can strike without warning. You surf to the wrong website and boom! A pop-up window emerges and flashes a warning that a virus has infected your computer. It instructs you to download a program to get rid of viruses. And you must pay with a credit card or debit card to finish the download.
These programs actually do a few harmful things. They collect your financial information for scam artists. They also release malware, spyware and viruses of all varieties to infect your computer. It ends with you losing a ton of money and getting your computer destroyed by harmful viruses along the way. Reputable virus software is often included with your computer at the time of purchase or it can be purchased later through a retailer.