7 Red Flags That Will Help You Avoid Financial Scammers

August 20, 2024   Written by  Cynthia Measom  Money / Financial Planning

You can’t be too protective of your money and personal information. Financial scams are running rampant.

According to our recent “Keep Your Money Safe” survey, when victims of financial scams were asked what type of scam they had experienced, 27% said they had been the victim of phone scams (robocalls, texts, false impersonators, bots).

Additionally, 11% said they were victims of money transfer or mobile payment service scams — 20% on Cash App and 17% on PayPal. Online shopping and phishing scams were also common, with 25% of respondents claiming to have been scammed on Facebook and 13% on Instagram.

Here are the red flags you should look for to help you avoid financial scammers.

Unknown Sender

Approximately 34% of respondents to the GOBankingRates survey said that receiving communication from an unknown sender is what tips them off most regarding a potential scam.

Todd Redding, founder of Probity Investigations, said that scammers often initiate contact through unexpected emails, phone calls or messages.

“These unsolicited communications frequently request personal information or prompt urgent actions,” he said. “It is crucial to be cautious when receiving such contact, especially if it comes from unknown sources. Always verify the authenticity of the sender or caller before providing any personal details.”

Misspelled Words or Bad Grammar

Receiving communication that is written poorly or contains bad grammar is another red flag that 14% of respondents said tips them off to a scam.

Ryan McEachron, a security and risk management expert and CEO of ISU Insurance Service ARMAC Agency, said that unprofessional communication with typos, grammar issues or an inconsistent story indicates a scam.

“Legitimate companies have skilled communicators and consistent, transparent messaging,” he explained. “If something seems too good to be true, it probably is. Trust your instincts — if an offer makes you feel uncertain or uncomfortable, pass on it.”

Approximately 12% of survey respondents cited a strange email address or phone number as a tip that something is amiss.

Mark Shyani, lawyer and managing attorney at Pacific Attorney Group, said that he’s seen many red flags, but one that stands out to him is the “referral from trusted source” scam.

“In this scam, criminals pretend to be someone you know — often an esteemed colleague or long-time client — who wants to send a client or opportunity your way,” he said. “They do this because they understand that people are more likely to take notice of referrals made by people they trust.”

Shyani continued, “Once, when I was running my practice, I got an email, apparently from a prominent lawyer who was referring a big case to me. It looked legitimate; everything about it mirrored this attorney’s typical messages, right down to the sign-off. However, certain things seemed slightly off: The email address had been changed subtly, and the sender requested an upfront ‘referral fee,’ which struck me as strange.”

He concluded, “This scam’s ability to exploit preexisting trust and professional relationships makes it so dangerous. To avoid being duped by it yourself, make sure you cross-check every referral with your trusted source directly using other means of communication (like calling them on the phone) before taking action.”

Requests for Specific Information or Specific Amounts of Money

Around 9% of survey respondents said that if someone requested specific information or specific amounts of money, they would suspect a scam.

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