Spotting and Avoiding Major Bank Scams
Scammers are busier now more than ever. In fact, the most recent figures from the Federal Trade Commission found that in 2022, consumers lost a total of $8.8 billion to fraud.
If you have a bank account, you should be mindful of bank scams and familiarize yourself with them, as they can cost you your time, money, and sanity. Let’s take a closer look at the most common bank scams and how to stop them in their tracks.
Phishing Scams
In phishing scams, fraudsters use fake emails, text messages, or websites to trick you into revealing personal or financial information.
“Phishing scams are becoming more frequent due to their straightforward nature and success rate, with about 90% of cyberattacks starting this way,” says Abhilash Garimella, Vice President of Research and Security Operations at Bolster.
How the Scam Works
In a phishing scam, you’ll likely receive an e-mail or text from a scammer that appears to be from a bank. The email will ask you to provide personal identifying information. Then, the scammer will use the information to open new banking accounts or hack your existing banking accounts.
“Email remains the most common method, though social media phishing is also on the rise, with threat actors impersonating reputable organizations to attack individuals and organizations,” explains Garimella.
How to Avoid This Scam
To avoid phishing scams, simply don’t respond to emails or texts that ask for personal or financial information.
Pay attention to each email you receive and look for telltale signs of phishing-related emails, like generic greetings, misspellings, or unusual email addresses. If something looks suspicious, go with your gut and delete the email instead of clicking on the links and responding.
Card Skimming
Card skimming occurs when scammers place devices on ATMs or card readers to capture your card details and PIN. You may see these devices at gas stations, grocery stores, and convenience stores.
“The FBI estimates skimming results in more than $1 billion in annual losses. Criminals can easily acquire and install hardware to skim card numbers at gas stations, ATMs, parking meters, and other unattended payment terminals. These devices are placed over the card slot but aren’t always obvious,” explains John Wilson, Senior Fellow of Threat Research at Fortra.
How the Scam Works
Credit card skimmers are usually illegally installed on payment terminals, ATMs, and gas pumps. If you fall victim to credit card skimming, you’ll swipe your credit or debit card, and the device will then “skim” or read your confidential card details. Through card skimming, thieves can make unauthorized purchases, withdraw cash from ATMs, create counterfeit cards, or even sell your data to someone else.
How to Avoid This Scam
Before you swipe your credit card, inspect the payment terminal, ATM, or gas pump. Look for pieces that look out of place and feel them to determine if they seem to be coming apart. If you’re at the gas pump, ensure the security seal is intact, as broken seals may indicate skimming.
It’s also a good idea to compare the payment terminal, ATM, or gas pump to other devices around you. If yours appears different, go somewhere else to pay. In addition, use contactless card wallets or mobile wallets, such as Apple Pay or Google Pay.
Fake Check Scams
Fake check scams have been around for quite some time and may occur when you try to sell something, usually online. During a fake check scam, a scammer will send you a fake check, usually in the form of “overpayment,” or more than you asked for, and pretend they want to buy your product or service.
How the Scam Works
Let’s say you sell a watch online. If you fall victim to a fake check scam, you’ll receive a check from the buyer for more than the asking price. Then, the buyer will ask you to refund the difference. However, the check will eventually bounce, forcing you to pay them out of pocket.
“Scammers have upped their game on stealing checks. In previous years, fraudsters would steal paper checks and wash them with chemicals to erase the amount and payee but keep the signature so they could endorse a check for a new name and amount,” explains Alix Robinson of ConsumerDirect, a software development company focused on consumer credit, financing, and privacy.
“In check cooking, thieves can alter digital pictures of stolen checks and deposit them using a bank’s mobile app,” he adds.
How to Avoid This Scam
Any time you make a sale, never accept overpayment and send the money back if you believe the check is fraudulent. Also, before you withdraw or transfer funds from your account, make sure the checks are fully clear.
In addition, if you receive a check from an individual or company you don’t know or it looks suspicious because of missing information or typos, be cautious. More times than not, it’s a scam and not worth depositing.
Account Takeover
In a bank account takeover, scammers gain access to your bank account by stealing login credentials through methods like phishing or malware.
“While not a new form of fraud, account takeovers are something that every individual should be aware of,” says Fang Yu, Co-Founder and CPO of DataVisor.
How the Scam Works
Here’s how an account takeover usually unfolds: “Once a fraudster accesses your account, they will change your password to lock you out. Then, they will either make unauthorized payments, transfer funds, or even open new credit cards in your name, often before you even realize that your account was compromised,” explains Yu.
How to Avoid This Scam
To protect yourself from account takeovers, ensure strong, unique passwords and enable multi-factor authentication wherever possible.
Also, if you receive a random text or email urging you to check your bank balance or confirm your account and you didn’t initiate the request, don’t click or respond to it. Additionally, you may want to bookmark your bank’s actual website and login page and regularly update security software on your devices.
Fake Bank Phone Calls (Vishing)
Fake bank phone call scams are similar to email phishing scams that utilize brand impersonation. They involve bad actors who gain access to your phone number and may call and pose as your bank. This scam is often referred to as vishing.
How the Scam Works
In a vishing scam, a fraudster will call you and pretend they’re from your bank’s fraud department. Then, they’ll ask you to verify your account number and PIN for “security reasons.” The scammer might also convince you to tell them your Social Security number, username, password, and online banking security questions and answers,
“The fraudster will usually come up with an urgent matter that requires your attention and leads to them asking for highly confidential information that is later used to gain access to your account,” says Robinson.
How to Avoid This Scam
The simplest way to avoid fake bank phone calls is to hang up immediately and contact your bank directly. Keep in mind that a legitimate bank or financial institution will never ask you for sensitive information over the phone. If you find that the caller uses urgent language to try to rush you and create panic, you can be confident that you’re facing a scam.
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4 Tips to Protect Yourself from Bank Scams
It’s your responsibility as a banking customer to be proactive and take preventive measures that allow you to avoid bank scams. Here are several tips to keep on your radar.
Be Skeptical
Always question unexpected communications from your bank, especially those requesting personal or financial information. “To avoid falling prey to banking scams, it’s crucial to remain skeptical and vigilant,” says Shawn Waldman, CEO and Founder of Secure Cyber Defense, a cybersecurity consulting firm.
“Always verify the legitimacy of any suspicious details by contacting the involved parties directly, using a trusted phone number — not by replying to the email,” he adds.
Monitor Your Accounts
Regularly check your bank accounts for unauthorized transactions and enable account alerts. Depending on your bank, you may be able to set up account alerts that will inform you via text or email any time a fishy transaction has been made or suspicious activity has been detected.
Secure Your Information
To protect your personal information, use strong passwords that are unique, random, and at least 12 characters. Change them regularly every few months or on a quarterly basis. Also, if you have to log into your bank account while you’re out and about, avoid public Wi-Fi. Lastly, invest in and install reputable security software that will notify you of potential scams.
Educate Yourself
When it comes to avoiding bank scams, knowledge is power. Stay informed about the latest scam tactics. If you come across a scam or fall victim to one, share the information with friends and family to keep them safe. Don’t hesitate to file a complaint with the Federal Communications Commission (FCC) or the Federal Trade Commission (FTC).
Stay Vigilant and Recognize Bank Scams
The reality is that scammers are unavoidable and becoming more sophisticated with each passing day.
The good news is that you can defend against them by staying informed and vigilant. Contact your bank whenever you’re unsure whether a communication from your bank is legitimate.
In the event you know you’re facing a suspicious incident, be sure to promptly report it to the bank.
