11 Ways to Avoid Financial Fraud

Michael Bennett
June 30, 2017 - 823 Views

These days, there are many types of financial fraud that you need to watch out for. Some of the financial fraud involves old-fashioned check writing, and others involve online financial fraud, and still others involve complex investment fraud. Whichever you are the victim of, it can really wreak havoc in your life.

To minimize chances of financial fraud wrecking your finances and credit, be sure to follow these tips:

#1 Watch Your Investments and Verify Them

If you have a stockbroker or an investment advisor, you should verify your investment holdings independently, and do not rely just on the statements you receive from your advisor. Did you know that Bernie Madoff got away with his massive financial fraud for years because he had fake statements made and sent to his investors?

Check your monthly statements carefully and verify any withdrawals made.

#2 Beware of N0n-Stop High Investment Returns

You could be invested in a Ponzi scheme if your rates of return seem just too good to be true. For example, if you are getting 20% returns regardless of what is going on in the market, something fishy could be going on. There are legitimate financial instruments that offer solid returns with low risk, such as some types of annuities, but these are usually backed up by a well known company.

Of course, the chances of being taken in a Ponzi scheme are minimal if you only invest with well known companies and brokerages. You are not assured of a high return, but you know that most likely you are dealing with legitimate investments.

#3 Be Careful with your Pin

Always make sure no one can see your PIN number when you are in public, and do not tell anyone what it is, or send it online or in email. Remember that no bank or police official is ever going to ask you for your PIN, either.

#4 Protect your PC

Many forms of financial fraud come through stealing of personal information on PCs. Keep that computer protected with the latest anti-virus software.

#5 Write Few Checks

Some of us still write checks, and while there are times it might be necessary, remember this: A check has your full name, address, phone number, your bank’s information, your account number and signature. A dishonest person may be able to use that information to draft on your bank account.

#6 Don’t Put Checks in the Mailbox

Some people, especially the elderly, still pay their utilities with checks. If you do, do not put it in your mailbox and put the flag up – that is encouraging fraudsters to steal your check and your identity. If you want to write checks to pay bills, take the letters to mailbox at the post office.

#7 After a Disaster, Give Only to Well Known Organizations

Fraud prospers after a natural disaster, such as a hurricane or tornado. Only give to a well known charitable organization that has been around for years.

#8 Be Careful When Wiring Money

Wiring money is sending people cash, so use caution. Many con artists insist upon bank wires for transactions. It is almost impossible to reverse money wires once they have been completed, and hard to trace. Be sure that you are dealing with a legitimate organization if you are wiring money. Many scammers use Craig’s List or another anonymous Internet website, and tell you to wire money to buy a product or service. Never do this.

#9 Talk to Your Doctor Before Buying Health-Related Products

Inquire about any research that backs the claims of a product you may purchase. Also, you should buy prescription drugs only from a licensed pharmacy i the US. There are many counterfeit drug products on the market outside the US that are expired, fake or mislabeled.

#10 Never Reply to Emails Asking for Personal Information

Legitimate companies do not ask you in an email to provide your Social Security number, account PIN or bank account information. They only would collect this data on a completely secure website. The URL for that site should be one that is easily recognizable, such as www.amazon.com or www.bestbuy.com. If the URL looks different in any way, it probably is a scam.

#1 Do Not Repond to Foreign Lottery Emails

This is a well-worn but effective fraud that continues to dupe people every year. Emails will claim that you have won a foreign lottery (which you never entered, and probably does not exist). You are told you have to pay taxes and fees to collect your winnings. If you have to send any money, it’s a fraud.

Keep these tips in mind to avoid being scammed by financial fraud.

Sources:

Michael Bennett

About Michael Bennett

Michael Bennett is Editor-in-Chief of Consumer Protect.com. Since 1999, he's worked across a multitude of areas of consumer protection including defective products, environmental issues, identity theft, predatory lending and more. His mission with Consumer Protect.com is to promote & support competition in all industries but not at the expense of the consumer. If you find his articles helpful please share them with your readers.