5 Scams to Avoid

5 Scams to Avoid by Paul Davis

Financial scammers are always attempting to find new and interesting ways to get access to your money. While scammers often make little mistakes that show their hands to their targets, you might find yourself already in communication or even scammed before you catch on.

To help you stay safe and anticipate possible scams, here is a list of five that we have heard about from different banks, government agencies, and more that you should be aware of.

1. The “Pay Yourself Scam”

This was brought to our attention by Bank of America but it is a variation on a common theme. In this scam, someone will spoof your bank via text and send you a fraudulent security alert.

The text could look like this:

Bank of America: Did you pay $100 to Alibaba Travel in Cairo, Egypt? Click Link to resolve this issue.

Of course you did not pay money to whatever store the text is asking you about so you click the link. At this point, the scammer asks you to prove your identity by sending money through Zelle, Paypal or another app. The apps may vary but the end goal is the same: getting access to some or all of your finances.

Once you enter the information into their app, they get either access to your bank or a large amount of money.

Resolution Tip

Never click links in texts from official sources like banks, the IRS, Social Security, or the Sheriff’s Office. These links can look official but be used to gain important personal information the scammers can use against you or sell to other scammers.

Always find a number or email address independently of any information that was sent to you. For example, if you think your bank has sent you a text, go to their website, find their customer contact information and call them to ask if they have reached out to you.

This helps verify whether something is legitimate and does not expose you to data harvesting by interacting with a spammer’s text or email.

2. The Tax Preparer Scam

In 28 years of business, we have seen many people come to us for help after messing up on taxes. It gets worse when the taxpayer has been scammed by either well-meaning and underqualified tax preparers or by a thief posing as a tax preparer.

This scam can result in your tax refund being deposited into someone else’s account, it can result in someone falsely claiming certain deductions in order to increase their percentage-based fees, or it can result in your identity being completely stolen.

Resolution Tip

The IRS has a list of items to check when you are looking for a tax preparer. These include looking up your tax preparer’s certification and a number of other tips.

Obligatory self-mention: Danielle Hoyles and Melynda Rushing both meet all the IRS’s recommended tips for picking a tax preparer.

3. The Get Out of Jail Scam

You receive a phone call or text:

Los Angeles County Sheriff is trying to find you to enact an arrest warrent against you for failure to apear at a recent court case. Please text or call this number to resolve this urgent issue.

The urgency of having some law enforcement agency like a Sherrif’s Department or the IRS coming after you is used to convince you to give the scammer important information, access to your bank accounts, or just $500 in Walmart cards.

Resolution Tip

If you have ever dealt with legal issues, you will remember that requests like this (warrants, restraining orders, etc.) have to be delivered by certified mail. In addition, the same tips apply from the pay yourself scam. If you have any questions, find a contact number from a different source and reach out to the named agency directly.

Finally, if something sounds too good (or too bad) to be true, it usually is not true. If you receive a phone call saying you just won $1,000,000 and you have not entered Publisher’s Clearinghouse or bought and registered a winning lotto ticket, the phone call is a scam. Likewise, if you receive an arrest warrant text from a locality you have never been in, it is probably a scam.

4. The Forward Some Money Scam

This is another scam that can be enacted by a friend or by a thief. Either way, the basic principle is asking you to send them money that they will pay off via some means. This can be a payday scam (please send me $100 that I will pay you tomorrow on payday), a starting business scam (I am sending you a $2000 check, $1000 for you and $1000 for another contractor. Can you send him the $1000 so we can get started?).

The basic principle is that the well-meaning or nefarious scammer is using interpersonal issues to drive urgency while not having the means or intention to pay you back.

Resolution Tip

If it’s a friend, realize that “you’re never really helping someone who’s incompetent with money by simply handing them cash.” ~Dave Ramsey

If it’s a customer or other stranger, don’t do any financial or labor commitments until you have cleared the payment in question.

5. The Classic Pyramid Scheme

Is your distant relative who is selling the newest at home opportunity working on starting a small business or a victim of a pyramid scam?

These have varied from annoying chain letter scams to Wolf of Wall Street levels of corruption, but all true pyramid schemes have one thing in common.

The only thing they sell is the money-making opportunity.

Resolution Tip

A salesperson sells something more than the opportunity to sell the opportunity to sell. A multi-level marketing business opportunity has to have something that it is selling in order to be a legitimate business: cosmetics, health-food, and more are all common legitimate industries that use peer-to-peer and multi-level marketing to grow.

But if all that your cousin’s niece’s best friend is selling is the opportunity to make a lot of money by signing up a lot of people, you are most likely looking at a scam.

Stay Focused to Avoid Them All

Scammers use our fears, anxieties, and sometimes greed to distract us from living our normal lives. Don’t lose focus on living your life by people interrupting you with urgent-sounding but improbable information.

Take time to research and choose your tax preparers. Reach out to your bank if you are worried about account security.

Stay safe, and remember that we are open all year round to help you deal with taxes no matter the time!