Updated: May 22, 2023

5 Most Common Money Scams to Watch Out For

Thieves have evolved their schemes when it comes to fraud. There are many types of scams out there and identity swindlers are always looking for their next victim.
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Thieves have evolved their schemes when it comes to fraud. There are many types of scams out there and identity swindlers are always looking for their next victim.

We've compiled a list of scams you should be aware of. These scams have stolen millions from consumers and your first line of defense against them is knowing what they are and how you can be affected.

1. Billing schemes

This popular scam has stolen millions from consumers and businesses. Extortionists will send a sophisticated invoice that is indistinguishable from any ordinary invoice and request a certain amount of money. The outreach is wide enough that many consumers overlook the bill and pay the amount that is claimed to be due.

According to the Consumer Sentinel Network, 9.7% of all fraud related complaints reported in 2012 contained some sort of billing scheme.

Users will either ask you through these letters to open a new account such as a utility to extract your information or send unauthorized charges on an existing account. Be sure to thoroughly check the billing source before shelling out any money.

2. Credit repair scams

Scammers have begun emailing and paper-mailing offers to repair credit for a fee. Many of these services are free and can be done on your own. There are others that are completely illegal and are attempting to scam you into paying the fee for no help at all.

It is illegal to erase any negative information on your credit history. You can work to solve and alleviate any of your credit problems through obtaining your credit report and looking at detailed inquiries. Suggestions that you can create a new credit history are illegal and false.

3. Check fraud

This type of scam can affect a business or individual in many different ways. Scam artists have been well-documented in resorting to forgery, counterfeiting or alterations, and paper hanging -- which is a form of check fraud. Wikipedia explains, "Specific kinds of cheque fraud include cheque kiting, where funds are deposited before the end of the float period to cover the fraud, and paper hanging, where the float offers the opportunity to write fraudulent checks but the account is never replenished."

Forgery typically takes place when an employee issues a check without authorization. The employee will then use it for personal use or sell the check to another scammer for their use.

Counterfeiting is the process of duplicating or copying authentic checks. Using fairly simple editing and publishing equipment on computers, scammers create precise and detailed checks for to use for themselves. Alterations primarily involve using chemicals or other editing equipment to change numbers or various data on checks. The modifications these criminals make can be very costly.

Paperhanging is an old tactic where criminals purposely write checks on closed accounts and constantly reorder them. The victim is then questioned by the bank as to why checks have been written on a closed account, unaware of any fraud.

4. Skimming

This sophisticated scam has become a very popular gateway to identity theft and stealing debit and credit card data from consumers. A skimmer is an electronic device that is placed over an ATM card reader. Every swipe of a card is read, recorded and stored onto the device. Scammers will also place a virtually unnoticeable camera to read pin numbers. They then print the information onto a card and begin to either withdraw cash or charge various expenses.

To avoid this, be sure to double check the swiping machine at places like random ATM machines and gas stations. If it looks rickety or shoddy, chances are someone has tampered with it.

5. Phishing

Scammers have taken kindly to this method as the most effective weapon of choice. Fraudsters will send an email posing as a website you may use. They will inform you that there is some outstanding issue with your account and ask you to relieve the situation. You will then be prompted for all your user information for the site. The scammer will then attempt to use your information on the site you provided it for as well as any other sites you may use.

The “Nigerian 419” scam also prompts you for your information as well as thousands of dollars after informing you that you have inherited a large amount of money. The amount promised is usually in the millions to entice their victims. The scammer will ask the victim to transfer the funds to a U.S. account and in exchange will receive a percentage of the funds. The victim in these cases will open the account and make it available to the scammers for withdrawal. Scammers take the money and are not heard from again.

Always be vigilant about these types of scams and when it doubt, never give your personal information, such as credit card numbers, social security numbers or bank account numbers to anyone. Also, never ever write anyone a check or give them money.

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