10 Ways to Avoid Financial Fraud

ways to avoid financial fraud

Anyone can be a victim of financial fraud, so it's best to pay attention and find ways to protect yourself. The reality is that it's very easy to fall prey, especially when you have no idea what to look out for. The best defense is built on knowledge, so by gathering information, you stand a better chance of surviving a financial fraud attempt.

Ten Ways To Avoid Becoming A Victim Of Financial Fraud

Phone Calls

Have you received a phone call lately from someone you do not know saying that you just won a free trip?

Find out who you're talking to. Don't just give people your money or your personal information.

It's important to establish who you're dealing with exactly. What are this person's claims? Can these claims be corroborated? Why would such a person contact you? Always look at the contact's details. There are a lot of tools online that you can use to conduct an investigation.

Of course your other option is to simply hang up the phone.


Don't click on email links -- even if they seem legitimate.

Some scams take advantage of people not reading their links properly before clicking on them.

Let's say you receive an email saying your Paypal account has been hacked. The email comes with a link to Paypal that supposedly will help you regain your security if you go to it and enter your user name and password.

Look closely and see if the link actually takes you to the Paypal site, and not something that looks like it, such as "Paypa1", for example.

It's better to type in the URL you commonly use (or the one you bookmarked) instead of a link from some unauthenticated email designed to phish for your valuable financial information.


Always stay up to date with your financial reports. Read your bills as soon as they come in.

It's a common practice to ignore the items on your credit card statement, but the truth is that this can be risky. You run the risk of paying for something somebody else purchased, i.e. credit card fraud.

The same is true of your credit report. Stay updated, read these reports, and you should be able to spot immediately if there's trouble brewing.

Related:  Identity Theft: 10 Ways to Protect Yourself

Due Diligence

Ask questions. Don't just blindly accept what people tell you.

It's very important to think on your feet. Sometimes, you may find yourself speaking to someone who is so charismatic and you find yourself believing them. For example, have you ever been to one of those real estate investment seminars that teach you how to buy a house with no money down? Scary!

Either through charm or intimidation, scammers will find ways to prevent you from looking too closely at their house of cards. This is why you need to be vigilant and ask questions, no matter what happens.

Email Scams

Never send money to strangers.

There are a lot of scams like these out there. The most famous are the "Nigerian prince" scams that you receive via email, but there are other variations, too.

There are the "lottery winner" scams, that claim you won some foreign lottery.

These scams all have one thing in common: to receive the "prize" they offer, you must first send money to them. The reasons are varied, but rest assured that they simply want to defraud you. Do not fall for these no matter how desperate you are for money. You will always lose.

Here is a copy of a scam email I just received. If I follow their instructions I could be rich, right?

avoid financial fraud

Risk Free

The word "risk-free" is a red flag. Remember that nothing is without risk, especially where money is concerned.

It's important to remember that offers that use these exaggerations should actually scare you, even though they are intended to make you feel comfortable.

Financial Documents

Get into the habit of shredding bank statements, any old unused cheques, and any outdated insurance documents. Things like tax returns need to be kept for a certain number of years, but after that they too should be shredded.

Do Your Research

The Internet is wonderful, in that practically anything you might need is already on it. If you've been invited to invest in a particular product\business, or property, do your research first. Do online searches for any nasty information. Always check the Better Business Bureau.

Remember that finding nothing at all is just as much of a red flag as finding nasty stuff.

Know When to Walk Away

If it's too good to be true, walk away. As they say, a fool and his money are easily parted. You need to remember that if someone offers you something that seems too "good", it probably is a trick. Walk away.

It Could Happen to Anyone

Accept that it could happen to you. A lot of people often dismiss the possibility of financial fraud, thinking that they cannot possibly be targets. They believe that only the wealthy will be targeted by these scam artists. The unfortunate truth is that anyone can be targeted.

In fact, some of the most common targets are pensioners. Elderly fraud is a serious problem, and it shows that anyone -- even senior citizens with meager retirement income -- can be the victim of unscrupulous financial scumbags.



    • Laurie @thefrugalfarmer

      Laurie @thefrugalfarmer 09/26/2013 6:08 a.m. #

      Love the part about doing your due diligence, Sicorra. It's so important to not trust anyone until you're sure you know what they're up to. It's amazing how scammers use several different techniques to get to your heart strings, sense of fear, or whatever, and before you know it you're shelling out information that you shouldn't. Great post!

      • Sicorra

        Sicorra 09/26/2013 3:59 p.m. #

        It is amazing and smart on their part because unfortunately there will always be someone that will fall for these scams based on their situation. Sad, but true.

    • Corina Ramos

      Corina Ramos 09/26/2013 6:58 a.m. #

      I get those emails all the time, they're so annoying, aren't they? The sad part is there are folks out there in much need of money that they are willing to risk it all by acting on those emails.

      I've been guilty of clicking on links without reading the email all the way through...it's that fast-paced world we live in. Bottom line, we have to slow down and pay attention what we're reading and signing.

      I've seen news reports of elderly folks getting scammed and that just burns me up...taking advantage of them like that is horrible. Goes to show those creeps of a scammer have no heart.

      Great eye-opener girlfriend! Thanks for sharing this. Catch up with you later today!

      • Sicorra

        Sicorra 09/26/2013 4:02 p.m. #

        Hey Corina, that is so true - we do need to slow down and pay closer attention to protect ourselves and our money. Scammers are able to come at us from many different directions these days and they know it too.

    • Michelle

      Michelle 09/26/2013 8:14 a.m. #

      My sister was almost defrauded recently. Someone kept calling and saying that she owed them money. I looked up the number and it was a scam!

      • Sicorra

        Sicorra 09/26/2013 4:03 p.m. #

        Too many people have been taken just through a simple phone call. Good for your sister for not falling for it.

    • Shannon @ The Heavy Purse

      Shannon @ The Heavy Purse 09/26/2013 10:29 a.m. #

      Great tips, Sicorra. Sadly, there are lots of people who prey on innocent people and sometimes desperate people. You have to be extremely careful these days when you give personal information. As you mentioned, it's the smart move to go directly to the business link you know if you get an email saying their site has been hacked and you need to update your password information. Some of those emails look really official. Plus, you can always call customer service to confirm too.

      • Sicorra

        Sicorra 09/26/2013 4:07 p.m. #

        Excellent point Shannon! Calling the customer service department is a quick and easy way to confirm that you are speaking to the right people.

        Many years ago my husband received a call on a Saturday morning about his Visa. The person said that they were calling from our bank and said that some visa numbers had been compromised and that they wanted to issue him a new card. But first they wanted him to confirm all his information. I got nervous and said that I thought it was a hoax, but it did in fact turn out to be our actual bank calling.

    • krantcents

      krantcents 09/26/2013 6:32 p.m. #

      Marketing has become so aggressive and criminal at times. I tend to reject all marketing because of it.

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