These 4 costly financial scams are on the rise: How to protect your money

These scams are also sometimes conducted via phishing emails. Phishing is a form of social engineering in which threat actors attempt to steal sensitive information by posing as a legitimate business, such as your financial institution or, in this case, a charitable organization. A humanitarian relief phishing attack target will receive an email from a seemingly legitimate charity requesting donations. Once you enter your email, credit card number and other sensitive information, the scammers can use it to access your financial accounts.

Triangulation fraud

For many consumers, triangulation fraud can be more difficult to spot than other common scams. That’s because the threat actors utilize legitimate online storefronts to execute this scam.

“With triangulation fraud, someone will set up an online storefront that promises deals too good to be true, like a $50 couch,” Jabbara explained. “When you take advantage of the ‘deal’ and place an order, you usually do actually receive the goods you ordered, but there is fraudulent activity behind the scenes,” he added.

Fraudsters can access your sensitive information when you submit your credit card information and place your order. “What is happening here is that when you submit your order, the fraudster buys an actual couch with stolen credentials they harvested from previous purchases just like yours. Now, they can use your stolen card to defraud the next victim, and so on,” Jabbara said.

To make their illegitimate businesses more believable, scammers will go so far as to request positive ratings from happy customers before fraudulently using their compromised credit card information. These positive reviews boost search engine results and credibility to help perpetuate the scheme.

Because the fraudsters use stolen credit card information to purchase from legitimate businesses, triangulation scams lead to billions of dollars in losses to merchants. A recent Financial Services Information Sharing and Analysis Center report stated merchants lost $660 million during the busy November 2022 shopping season alone.

How to spot financial scams

Being a target of one of these scams is not uncommon, but you can avoid being a victim and suffering a financial loss if you know what to look for.

First and foremost, you must accept that nobody — including you — is too smart to be scammed. “Victims of scams rarely think of themselves as being the typical victim of scams,” Jabbara said. “Most of us have a level of confidence that tricks us into thinking it can’t happen to us. But these threat actors use their keen understanding of human psychology and our biases to emotionally manipulate their victims. A sense of overconfidence could get you into trouble,” he explained.

The second thing that applies to all of these scams is that the fraudsters will often frame their schemes in a way that appears beneficial to the victim. You don’t feel like you are being scammed until it’s too late.

For example, in a pig butchering scam, when the fraudsters finally ask you for money, they will make it seem as if you are doing them a favor or deepening your relationship by sending them money to buy a plane ticket so they can visit you or help to keep their finances afloat. Or, in a triangulation scam, you give a fraudster your credit card number because you see a deal so good that it makes you feel like you are the one taking advantage of them.

If something sounds too good to be true, it probably is. It seems like common sense, but Jabarra warned that victims often forget that because they don’t want to miss out on a good deal, a chance at love, a big payout or an opportunity to help those in need.

Other red flags to look for include secrecy, a sense of urgency and a request for sensitive information like your credit card number, Social Security number or online account logins. Here are specific red flags to watch out for:

• Pig butchering scams: Asking you to invest in an unfamiliar cryptocurrency or download a trading platform app, promising a large return on investment, or asking for your trust in an otherwise suspicious situation.
• Inheritance scams: A relative you’ve never heard of, or a law firm or business, requests an initial payment or financial information for you to secure the funds.
• Humanitarian relief scams: You cannot verify the charity via a third-party source like Charity Navigator, or the donation site doesn’t use a Secure Sockets Layer certificate (URL starting with “https”) to encrypt your information.
• Triangulation fraud: If a deal seems too good to be true, it probably is. If the price doesn’t make sense, it’s likely because what you are actually selling is your data.

If you don’t have access to any of these through your credit card account, there are ways to check your credit score for free through a service like Credit Karma. Most credit and identity monitoring services also allow you to set up alerts so you can receive a text or email if they identify any breaches or changes.

Setting up account notifications is also fairly simple. The exact steps for this will vary by the financial institution, but you can typically sign in to your account and go to your profile settings; there, you should see an option for “alerts” or “notifications” that you can customize to receive an email or text message whenever your card is used.

How to lessen your chances of becoming a victim

• Don’t use the same password for multiple accounts. Fraudsters can access your important accounts more easily if you reuse passwords.
• Turn on two-factor authentication on your accounts. In addition to your passwords, this secondary barrier to entry makes it that much more challenging for fraudsters to gain access to your accounts.
• Be conscious about what types of data you share on social media. The less information about your family, location or other personal information you share online, the less information fraudsters will have to create customized attacks against you.