Learn to spot financial fraud and common scams

Know Fraud When You See It

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Fraud is on the Rise

A routine activity like opening an email or text message, answering a call, or visiting a website can leave you vulnerable. Recognizing fraud and scams isn’t always easy, but knowing what to look for can help you avoid becoming a victim. Below are some common fraud scenarios to help you understand what to be on the lookout for.

Trending Fraud Schemes

With all the fraud out there these days, you can add Cryptocurrency scams to the list. Confused about Cryptocurrency? You’re not alone.

What is Cryptocurrency?

Cryptocurrency is a type of digital currency that generally exists only electronically, like Bitcoin, Ethereum, Solana and Litecoin to name a few. But, there are many different cryptocurrencies and new ones popping up all the time.

Bitcoin and most other cryptocurrencies are supported by a technology called blockchain, which acts as a digital ledger that records the transaction. Individual units of cryptocurrencies can be referred to as coins or tokens, depending on how they are used. Some are intended to be units of exchange for goods and services, others are stores of value, and some can be used to participate in specific software programs such as games and financial products.

How is cryptocurrency different from U.S. Dollars? First and foremost, cryptocurrency accounts are NOT government backed and are NOT insured by a government like U.S. dollars deposited into an FDIC insured bank account. The FDIC does not insure assets issued by non-bank entities, such as crypto companies. If your cryptocurrency company goes out of business, or your account is hacked, the federal government has no obligation to help get your money back.

Why cryptocurrency is ripe for scammers. Cryptocurrency has a number of characteristics that are appealing to fraudsters. The lack of a middleman is a key trait. Instead of funds being transferred from one person’s account to another person’s account—with a banking institution acting as a shepherd for the transactions— Cryptocurrency is sent person to person. The digital ledger is then verified by a network of computers rather than by a regulated entity like a bank.

Watch out for These Red Flags

What to watch out for. With a decentralized platform, there are few safeguards in place to say who is a good actor and who is a bad actor. However, there are numerous red flags common in U.S. cryptocurrency scams :

Anonymous or fake identities present a lack of protocols ripe for money laundering schemes.
Romance scams, typically involving long-distance or digital relationships in which one party pressures and convinces the other to buy or give money for new crypto.
Digital collectibles and games enticing newbies to buy newly minted coin or token for a game. If enough people run up the price, scammers have the opportunity to sell all their holdings and disappear in what’s called a “rug-pull”
Projects that aren’t audited by a reputable firm. New forms of crypto are constantly being minted, and when new coins hit the blockchain, it’s known as an initial coin offering (ICO). But ICOs are also opportunities for scams. A company or individual may say they have a once-in-a-lifetime opportunity to invest in a new form of crypto with extraordinary, guaranteed returns. They may then pressure you into depositing a bunch of new coins into a digital wallet that’s been compromised or “pump and dump” by buying up the coin and selling when the price explodes.
Phishing scams, in which rogue emails purporting to be from reputable companies seek to induce individuals to reveal personal information, have been around for a while, but the introduction of crypto present new implications. Scammers send emails attempting to lure recipients into clicking links and inputting personal details — including crypto wallet key info. But unlike most passwords and usernames, you only get one private key to your blockchain wallets. This is part of blockchain’s decentralized design, ensuring that one entity cannot control your information, but it poses an issue if you ever need to change your key.

Demanding crypto-only payments is most likely a scam. Credible institutions aren’t going to accept crypto. So if a seemingly credible person or retail establishment claims they cannot accept any form of currency other than crypto, be wary.

Remember the basic rule, “if the numbers are too good to be true, probably, in some way, it is.”

To learn more about avoiding cryptocurrency scams or to report one, visit https://consumer.ftc.gov/articles/what-know-about-cryptocurrency-and-scams/

Learn More About Preventing Fraud

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Fraud Prevention List

Phone Scams or Vishing

What to look for: A call from someone who is trying to get money or sensitive information from you. Scammers can spoof the number they're calling from so that it seems realistic.

Other signs of fraud include: The caller may claim to be from a high-profile company like the IRS or your bank, urging the need for personal information and/or payments. The caller may have bits of information about you that are true or at least familiar. Vishing callers also make other claims of high-stakes urgency like a sweepstakes or lottery win and ask for the fee necessary for you to collect winnings. Always remember that a Mechanics Bank representative will never call you and ask for your debit card number, pin, or your Online Banking Password.

Phishing or Email Fraud

What to look for: Fraudulent emails typically imply urgency, attempting to get you to act quickly before you have time to carefully read and examine the message. They often don't address you by name and contain obvious grammar and/or spelling errors.

Other signs of email fraud: If you hover over a link in a fraudulent email (don't click it), it will usually show you that it's pointing to a site different from the one stated in the message. The goal is to get you to click through to a web page where you'll be asked to provide personal information or open an attachment that may be malicious.

Smishing Fraud

What to look for: As with fraudulent emails, fraudulent text messages often suggest urgent action, attempting to get you to act quickly before you have time to carefully read and examine the message. They often don't address you by name and contain obvious grammar and/or spelling errors.

Other signs of text message fraud include: Promises of free gifts in exchange for your personal or bank account information. Never click a link in a suspicious text message: It could result in malware being loaded to your phone that sends your personal information to a scammer. Visit the FTC page about text message spam.

What To Do If You Are A Victim Of Fraud

If you think that you or someone you love have been the victim of fraud or identity theft, time is of the essence.

Take Action

Recognizing Malware

What is Malware: Malware is short for "malicious software." It includes a wide range of online threats such as viruses, worms, spyware and Trojan horses. Fraudsters use many methods to try and get malware onto your computer including e-mail, instant messages, fake Web sites and by offering a desirable download such as free songs or virus scans.

What are the signs of Malware: Most malware tries to stay unnoticed, either by actively hiding or by simply not making its presence known to the user. Some types of malware will cause a few noticeable differences in your computer. A computer may be infected with malware if it:

Slows down or displays repeated error messages
Behaves strangely, such as spontaneously rebooting, won't shut down or restart correctly
Displays Web pages or programs you didn't request
Sends e-mails you didn't write

What you can do to prevent Malware: You can both protect yourself from and avoid malware from getting onto your computer. Many attacks can be avoided with the help of security software and some basic online safety tips.

Install anti-virus and anti-spyware security software from a well known company and keep it up-to-date. Set it to automatically install updates.
Use a firewall to protect your computer from unauthorized access and configure it to block unsolicited requests for outgoing communication.