The holiday season is upon us. And just as we prepare to shop, thieves prepare to steal. This Sunday marks the beginning of International Fraud Awareness Week, putting much needed attention on fraud and related issues. Consumers and businesses alike can (and should) educate themselves on tried-and-true fraud techniques as well as the latest scams to hit stores and websites. With vigilance, we can minimize the damage caused by this year’s fraudsters.
Common types of fraud
Illicit Credit Card Readers
Credit card skimming is alive and well. Some thieves opt for pocket-sized devices such as those used by waiters in upscale New York steakhouses in 2011. Others install devices in plain sight on ATM machines, capturing your information when you make a seemingly normal and safe transaction. A lesser known danger is found by exploiting a small device that attaches to any mobile phone for the purpose of processing credit card transactions. Still others exploit weaknesses in quick-pay cards that allow customers to pay by waving their card over a scanner; scammers steal account information by simply walking past the victim.
Prevention tips: If you notice anything suspicious or unfamiliar on an ATM machine, avoid using it and report your suspicions to the bank’s manager. Pocket-sized and radio frequency based devices will be harder for you to catch. Your most important defense is to keep an eye on your bank account. Log on to your bank’s website frequently, and report fraudulent activity immediately.
Telephone, investment and internet fraud
One tried and true scheme that remains alive and well involves calling victims on the telephone to solicit money for charity or disaster relief. This type of scheme always spikes in frequency immediately following a natural disaster like Hurricane Sandy.
Work-at-home and business opportunity scams convince victims to “invest” money in supplies and training materials, in return for a high payoff later on.
Investment scams continue to plague victims nationwide. Recently, Bernard L. Madoff was found to have defrauded would-be investors of $18 billion in an elaborate Ponzi scheme. On a smaller scale, individuals who keep a close eye on their finances and read their statements carefully have caught unscrupulous stockbrokers in the acts of adding unexplained fees or engaging in unauthorized trades.
Internet fraud varies widely, and includes email pleas for help from friends in your address book (whose email accounts have been compromised), as well as solicitations for assistance depositing money in U.S. banks on behalf of foreign “businessmen.”
All of the types of fraud discussed here can ultimately lead to identity theft, in which a thief uses your name, social security number and good credit for fraudulent purposes.
Prevention tips: Don’t offer any personal information, including your name, address, credit card number or bank account number to anyone who solicits it unexpectedly by telephone or email. If you want to give money to any charity or disaster relief effort, research it yourself. Stick with well-known institutions or someone you’ve done business with in the past (the American Red Cross or your place of worship, for example).
If an email plea for help arrives from a friend, it could be a scam — particularly if the email asks you to immediately wire money. If you truly believe your friend needs help, verify the situation before offering any assistance. Insist on speaking with your friend by phone, to be sure a stranger is not posing as that person.
Investments that promise an incredible payoff are too good to be true. Don’t send money to start a high paying work-at-home job. Some jobs have licensing or training requirements, but again, make sure you’re dealing with an established, reputable institution and not a fly-by-night scammer who will run with your money. If you’re investing money through a broker, use BrokerCheck to research the background of the broker you plan to do business with. Confirm that the broker’s licenses are active and up-to-date. Read all of your statements and question anything out of the ordinary.
What you can do to prevent fraud
We’ve only just scratched the surface when it comes to the many types of fraud you need to be on the lookout for. Follow a few basic safety rules on a daily basis to lower the chances of becoming a victim yourself.
- Make only one trip to your car during shopping excursions – when you’re ready to leave
- Don’t pay with cash – if a thief steals your bag, he can return those items and keep the money, leaving you virtually no recourse to recover your loss
- Keep your eyes on your credit card when paying in stores
- Don’t offer your credit card number over the telephone unless you initiate the call
- Log on to your bank’s website and check your bank account activity frequently – at least once or twice a week during the shopping season
- Be mindful of internet addresses. Check the URL every time you log in to your bank’s website, to be sure you’re not on a phishing site
- Never agree to deposit money in your bank account, to be “refunded” or forwarded to someone on a later date
- Shred your mail, including junk mail, if your name and address appears on it
- Get your credit report – and your child’s – every year and check it for fraudulent activity
- Keep a list of phone numbers for your credit card issuers handy at home, just in case you a card or your entire wallet is lost or stolen
What to do if you are victimized
- Report fraudulent bank account or credit card activity to your bank/credit card issuer immediately
- Reports of broker fraud and other investor complaints begin here
- Identity theft victims can start here
Kimberly Rotter is a writer, businesswoman and mother in San Diego, CA. She holds a Bachelor’s degree in English, a Master’s degree in Business Administration, and a Graduate Certificate in Distance Education. Kim and her husband own two homes, a couple of vehicles and a few investments, and live with minimal debt. Both are successfully self-employed, each in their own field.