These are 5 scams to watch out for in 2023, according to a consumer protection expert
As financial technology protections become more sophisticated, so are fraudsters’ methods to scam you out of your money.
Scams can wreck their victims’ finances, credit scores, and emotions. Maybe the scariest part of scams is how common they are. For instance, in 2022 Americans reportedly lost almost $40 billion dollars to phone scams alone.
If you don’t want to fall victim to a scam, it’s wise to learn what to watch out for in 2023.
CNBC Select sat down with Micheal Bruemmer, VP of Experian Data Breach Resolution and Consumer Protection, to talk about the scams that will likely be most prevalent this year — and how you can protect yourself against them.
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Scams to be aware of in 2023
Bruemmer breaks down scams into two big categories: phishing and social engineering.
Phishing mostly occurs online and involves fraudulent communication purporting to be from reputable sources, such as a bank or employer. The scammer attempts to steal your personal data, such as credit card information or login credentials for financial accounts.
Social engineering, on the other hand, usually happens over the phone and sometimes in person. Bad actors use psychological manipulation and deception to gain access to your money or confidential information.
Here are five types of phishing and social engineering scams Bruemmer thinks will be prevalent this year.
1. Charitable donations scam
To get their hands on your money, scammers will stoop to any low, including exploiting your empathy.
Charity scams range from simplistic one-man operations to complex schemes run by registered nonprofits. In either case, the money you’re rushed to donate doesn’t help any cause. Instead, it goes straight to the fraudster.
This kind of scam can take the form of phishing, where a website or email letter looks like it’s from a legitimate organization. More often, however, a scammer will use social engineering and approach you over the phone or in person to play on your emotions.
Don’t allow people to prey on your generosity. Research any organization before donating and look for the Employer Identification Number (EIN) on the nonprofit’s website to ensure the money is going to the right place.
Don’t miss: Here’s how to donate your credit card rewards to charity
2. Romance scams
Another social engineering scam that can leave you not only in financial ruin but also heartbroken, is a romance scam.
These scams aren’t always as elaborate as Netflix’s “The Tinder Swindler,” and most of them happen online. The criminal meets you on a dating or social media app, sweeps you off your feet and tries to get into a relationship with you quickly. They’re experts at appearing caring, sincere and downright perfect. One common sign of a romance scammer is that they probably live far away and make plans to meet you in person — but never will.
Instead, they’ll ask you for money to pay for unexpected medical bills or to get them out of trouble. Usually, they’ll instruct you to wire money or put it on a gift card. They might keep asking you for money repeatedly until you stop sending it, at which point the love of your online life will disappear.
Victims of romance scams often find themselves in debt, legal trouble and with serious trust issues. To avoid falling for a dangerous fake, go slowly in any kind of online romance and don’t feel bad about thoroughly researching the person — especially if they seem perfect.
“If it is too good to be true… it’s probably a scam,” Bruemmer says.
3. Fitness and weight loss scams
It’s human nature to want spectacular results with minimal effort, especially when it comes to fitness goals. But scammers are taking advantage of people’s desire to shed a few pounds to try and make their bank accounts lighter as well.
On the phishing side, you might come across a fake website posing as a legitimate site that promotes some kind of fitness program. The goal is usually to get you to provide your personal or financial information.
Alternatively, someone might try to persuade you to sign up for a low-priced gym membership or a different fitness product, promising “you can get 100 pounds off in three weeks and look like new because of the program… for which you have to provide your personal details and credit card,” Bruemmer says.
The bottom line here is, if something seems too cheap or too good to be true, exercise caution and run far away from it.
4. Car warranty scams
You know a scam is prevalent when it becomes a meme.
You have probably seen pictures or videos online making fun of phone calls “trying to reach you about your car’s extended warranty.” After all, this is one of the most common robocalls Americans get.
“I have a software app on my phone that blocks calls,” Bruemmer shares. “I got seven calls for extended car warranty [last week] because they try to leave a voicemail.”
If you’re also ignoring these calls, then keep up the good work. Otherwise, you’ll most likely be prompted to provide personal or financial information. Or, the fraudster might try to sell you a fake extended auto warranty, defrauding you out of thousands of dollars.
For that reason, when you pick up the phone and hear a pre-recorded message about your car warranty, simply hang up. If you think that might be your car dealership calling you, you can call them back using their official number to double-check.
5. Gift card scams
According to a last year’s survey from AARP, 26% of U.S. consumers received a gift card with no funds on it. What gives?
There are a couple of ways scammers can drain a gift card’s balance before you use it. They might, for instance, take cards off the store rack, tamper with the protective strips and steal the bar codes. The fraudster buys similar security tape and replaces the strips to make the card look untouched. Then they enter the card’s code into a program that tracks the retailer’s website and informs the scammer when someone buys the card so they can spend the money on it or cash it. As a result, by the time the card makes it to its recipient, it’s a worthless piece of plastic.
Other fraudsters advertise gift card exchange websites or sites that offer to check your gift card balance. You’re prompted to input your gift card information, which the scammer then uses to drain the card’s balance.
When buying a gift card, take a close look at it to ensure it hasn’t been tampered with — and only buy from reputable resellers.
Don’t miss: Did you receive a gift card you don’t need? Here’s how to sell it for cash
How to protect yourself from scams
Scammers can be inventive and extremely persuasive. Luckily, you can follow a few guidelines to avoid getting caught in their schemes.
Here’s what Bruemmer recommends:
Don’t use a debit card
A debit card is linked directly to your checking account and in some cases your savings and other accounts. Debit cards don’t offer the same consumer protections credit cards do. Once someone steals your money, it might be difficult to get it back. For that reason, it’s best to use credit cards for most transactions.
The Fair Credit Billing Act (FCBA) protects you against credit card fraud and limits your maximum liability to $50, though many card issuers expand that law by offering $0 fraud liability on unauthorized charges.
Besides, you can also earn rewards with a credit card. For example, the Chase Freedom Unlimited® Card, CNBC Select’s top pick for the best cash-back credit card, earns 5% cash back on travel purchased through Chase Ultimate Rewards®, 3% back at drugstores and restaurants, including takeout and delivery, and 1.5% on all other purchases. Other cards can earn you rewards for travel. CNBC Select picked the American Express® Gold Card as the best travel card since it offers generous returns on common spending categories, including restaurants, U.S. supermarkets and airfare. Terms apply.
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Be careful about letting your credit card out of your sight
When you give someone your card, it’s all too easy for them to use a skimming device, which reads the magnetic strip of your card and stores the card’s information. While it’s unrealistic to expect the waitstaff at your favorite restaurant to let you hop in the back and swipe your own card, try to minimize the times someone swipes it out of your sight. “If they’re going to run it through a machine, it should be in front of your eyes,” Bruemmer says.
Only click links you trust
Since fraudsters are getting very creative in masking their phishing attempts, treat every link you get with suspicion.
“My rule of thumb is if somebody is going to send me something that they want me to click on, they need to call me and say ‘Hey Mike, this is what I’m sending you. This is the link, it’s legit,” Bruemmers says.
To spot phishing, check where the message is coming from — if it’s claiming to be from a reputable company but sent from a generic Gmail email address or an address that has subtle misspellings (like “amaz0n” instead of “amazon”), it’s probably a scam. Additionally, watch out for bad grammar or emails threatening you or urging you to take action. For example, a scammer might say your bank account is about to be blocked and provide a link you need to click to avoid it.
Always err on the side of caution when it comes to links and attachments. If you have doubts about whether or not an email or text is a phishing attempt, get in touch with the actual company that’s supposedly sent it using their official communication channels.
Monitor your credit
If you’ve become a victim of fraud, you might discover it on your credit report as new accounts you haven’t opened or addresses you don’t recognize. While nobody likes to see they’ve been swindled, the earlier you detect the crime the sooner you can do something about it.
To keep an eye on your credit, you can get a free credit report once a year from each bureau at AnnualCreditReport.com (due to the pandemic, you can get free reports weekly through December 2023) or sign up for a credit monitoring service.
While free credit monitoring services, such as Experian Dark Web Scan + Credit Monitoring, can cover the basics, you receive more comprehensive coverage if you put down some money. For example, IdentityForce® UltraSecure and UltraSecure+Credit offers three-bureau credit monitoring and track your information on various sites and services, including the dark web, court records and social media.
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Don’t answer phone calls from unrecognized numbers
With scammers, sometimes all it takes is you picking up the phone and saying a few words for fraud to happen.
Bruemmer says that he’s set up his phone so that all calls from numbers outside of his contact list go straight to voicemail.
“Even [when you’re] saying hello and your name, someone can grab a voiceprint and use that as a second factor of authentication with a financial institution or to authorize a transaction,” he explains.
With scams getting elaborate and preying on every facet of human nature, it may feel as though your financial well-being is at constant risk. Luckily, you can protect yourself from most scams by just staying vigilant and cautious.
If someone you don’t know is urging you to make a financial decision in a rush, question their motives. If something seems too good to be true, listen to your gut. Remember: damage from identity fraud and financial scams is much easier to prevent than fix.
Catch up on Select’s in-depth coverage of personal finance, tech and tools, wellness and more, and follow us on Facebook, Instagram and Twitter to stay up to date.
For rates and fees of the American Express® Gold Card, click here.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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