Source: 2019-20 Consumer Sentinel Report
Finance and banking scams are designed to deceive people into giving over sensitive banking information like PINs and credit card information or even facilitating remote access to your home computer to access your online banking via saved passwords.
Many scams are designed to steal money, making banks and financial institutions the primary end target. However, banking scams can often be part of broader schemes like identity theft, brand or government impersonation, or even "tech support" scams.
Some of the most common banking and finance fraud events involve credit cards, debit cards, and mortgage payments.
Credit cards are used as the primary transaction tool for online shopping and most in-store transactions. Most people will be familiar with the experience of lost, stolen, or compromised credit cards. Many stolen credit card numbers are for sale on the dark web.
Credit card details are vulnerable in many ways:
Home loans and mortgages are the largest single transaction that a customer will perform with the bank. As such, they provide an opportunity for scammers to try and intercept communications and get the settlement funds diverted to their own "escrow" accounts.
Debit cards that are linked to savings accounts pose a massive financial risk. For example, if you only have a single savings account and use a debit card for transactions with this account, the loss or compromise of a debit card (in the same way that credit cards are compromised) can expose your entire savings.
Direct attempts to defraud banks are widespread and mainly involve loans for things that don't exist, loans for items that have been overvalued, or loans for things that other banks have already loaned money for.
There are many sophisticated and terrifying techniques that people use to defraud banks. Examples include a couple featured on American Greed, whose plan was to use multiple banks to finance mortgages of the same value on the same property at the same time—all without any of the banks knowing each other's financing agreements.
Over $50 million in loans was stolen from local banks.
Many people who are involved in this type of fraud live by John Paul Getty's maxim:
John Paul Getty
If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem.
Scammers often use the overpayment technique in online transactions on auction websites where they act as a purchaser to send a check for more than the agreed sale price. They wait for you to notify them of the error, and they ask for a quick return of the overpayment.
When you cash their check, the bank will take a few days and realize their check is fake or canceled, but you have already sent the money.
It's almost impossible to avoid being the target of an invoice or banking scam, but there are certainly best practices you can follow to keep your money safe.
Using credit cards, PayPal, and some other payment methods offer pretty good protection against scams and fraudulent activity. Most requests for payment via wire transfer, such as MoneyGram or Western Union, should be met with caution.
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