Consumer Comeback Blog

How to Avoid Scams: 10 Tips to Keep Your Money Safe

Written by Jeffrey Trull

avoid-scamsScams aren’t a new problem, but with the proliferation of the Internet, they’re a growing one. The Internet Crime Complaint Center received more than 300,000 complaints in 2011, with a total value lost of $485 million.

Including other types of scams, like those that that happen off-line, and other bad deals consumers encounter, this number is much higher. In 2011, 1.8 million complaints were filed with the Federal Trade Commission (FTC).

The experts say information is the key to preventing scams and keeping your money out of the hands of criminals. With this in mind, here are 10 tips for avoiding scams.

1. Use caution wiring money

Wiring money is now associated with many different scams. Notably, Craigslist users have been ripped off, prompting the site to place a warning against wiring on almost every page.

Be careful when sending money to people you don’t know in exchange for goods or services. Conduct transactions in person when possible, and use more secure methods to send money, like PayPal or a credit card, to decrease the chance you’ll lose money in cases of fraud.

2. Search for reviews

Reviews aren’t just for finding the best deals, products, or service. They also help avoid scams from businesses that may rip you off.

A wide variety of sites provide reviews and feedback from other customers about their experiences with a certain business. Check with Yelp and Google Places to see what others have to say.

For scams specifically, check the Better Business Bureau website to see if complaints have been filed. Or try a Web search for the business name with “scam” to see if others have reported problems.

3. Be wary of solicitations

A red flag that you’re at increased risk of being scammed is when businesses come directly to you asking you to buy. Think mail, email, phone calls, or even a person showing up at your door. There may be a reason they’re targeting you, and they may be looking to take your money and run.

Never feel pressured to make a decision on the spot or hand over any money. Instead, take extra care to research these businesses before handing over any money.

4. Check on nonprofits, too

Many nonprofits provide trustworthy help to those that may be most desperate for aid. Unfortunately, scammers have used the trust placed in nonprofits as a way to steal money from unsuspecting consumers.

Because of this, it’s not safe to assume that all nonprofits can be trusted without question. Many nonprofits exist to serve and help, but do your research just like with normal businesses to make sure you’ve found a reputable organization.

5. Be careful of guarantees

Watch out when businesses offering financial help make big promises that may sound too good to be true.

One example — debt relief agencies that guarantee that they can get creditors to forgive debt, sometimes even promising specific amounts. This goes for credit card debt, your home mortgage, or any other personal debt that you may contract professional help for.

To keep your money safe, ask questions and make sure companies follow FTC guidelines, which are outlined in this article on hiring a debt relief agency.

6. Guard your personal information

An easy way to get scammed is to give financial predators access to your accounts and steal your identity.

Be careful when handing over any account information to anyone, whether it be in person, on the phone, or online. Common “phishing” scams involve fake emails appearing to come from a trusted institution that ask for your sensitive financial information including access to bank accounts, credit cards, and email addresses.

When in doubt, don’t give up sensitive information to anyone that calls or emails you directly. Instead, look for the proper contact info on the company’s website or your statement and initiate the contact on your end.

7. Stay current on scams with the FTC’s advice

The Federal Trade Commission (FTC) is the federal department in charge of tracking and dealing with scams. They have information on many of the tricks mentioned in this article and more. Check the FTC “Scam Watch” website to stay up-to-date with common scams, like:

8. Check your statements and credit report

One of your best defenses against identity theft and scams includes regularly checking your billing statements and credit reports for fraudulent activity. When you do this, you’ll be able to spot problems early and report them to creditors.

Use to get a free credit report from all three credit bureaus each year, and check credit card and bank statements monthly to look out for mysterious charges.

9. Carefully research investment opportunities

No matter where or from whom you hear of an investment opportunity, investigate it throughly first.

Victims have been sucked into scams with friends and family when scammers deliberately infiltrate social circles, preying on other’s trust to steal money. One victim lost more than $100,000 when he took advice from a nephew on an investment in what turned out to be a Ponzi scheme.

Before investing in anything, check for red flags using the steps above.

10. Trust your gut

The primary message for this article and avoiding scams: Trust your gut when it comes to trusting others. Some scams may be harder to spot than others, but use your judgement when something sounds too good to be true or seems out of place.