How to Avoid Being a Victim of a Financial Scam

For both private individuals and small business owners, the threat of financial scams is all too real. Every year, billions of dollars are lost to criminals who have perfected various scams. In many cases, once your money is gone, recovering it is almost impossible. Along with the embarrassment that comes with being conned, you or your business may face extreme financial hardship. To avoid becoming the next victim of a financial scam, remember these important tips.

Only Give to Verifiable Charities

Whether you want to help animals or people, make sure you donate only to charities you and your CPA can verify are legitimate. Should someone come knocking at your door asking for cash donations for a charity, chances are it is a scam. To be safe, only give to charities you already know and trust.

Guard Your Company's Credit Cards

As a business owner, you should guard your company's credit cards very carefully. To do so, only authorize those who absolutely need to use the cards as authorized users with the credit card company. Otherwise, you could find yourself with one or more employees who are using your company's credit cards to fund a very extravagant lifestyle for themselves.

The Home Repair Scam

When warm weather arrives or following a natural disaster, home repair scam artists are on the prowl for unsuspecting victims. Should someone stop by your home offering to do various home repairs, don't take them up on their offer. In these scams, the scammers ask for payment before they do any work, use high-pressure tactics to force you into making a quick decision, and make sure nothing is in writing. If you need home repairs, always use those who are willing to provide references, are in good standing with the BBB, and have been in business for many years.

Install Malware Protection

If you have a business with an e-commerce site, installing malware protection and other online security protection will help you sleep much better at night as a business owner. Should cybercriminals be able to hack into your system, they can potentially steal personal information from your customers, as well as your company's financial data. When this occurs, this sets the stage for identity theft on a grand scale.

If It Sounds Too Good To Be True…

Like most people, you'd like to have as much money as possible. Scammers know this, which is why they often come up with investment scams that claim investors can get rich quick. But as you and your CPA know, if it sounds too good to be true, it usually is. Thus, before you ever invest any of your money, get everything in writing and discuss it with your CPA before moving forward.

Don't Disclose Personal Information

For many scammers, the easiest way to get credit card numbers, Social Security numbers, bank account numbers, and other vital information from people is to simply call them up on the phone. Remember, the IRS and most reputable banks, agencies, and other organizations will never request this type of information over the phone.

Don't Open Suspicious Emails

In your business, you and your employees receive a large number of emails each day. While most are legitimate, others may be scams. Should a link be opened within a suspicious email, it can unleash a virus into your company's IT network, leading to identity theft or even having your data held hostage, which occurs with ransomware. While mistakes can happen, do all you can to inform your employees on how to handle emails that look suspicious.

Shred Old Documents

For both business owners and individuals, investing in a paper shredder can prevent plenty of headaches down the road. Whether it's old bank statements, tax returns from years and years ago, or other documents that contain personal or financial information, shredding these documents is always recommended. Should you simply toss them in a trashcan, it is much too easy for others to retrieve them and begin the process of identity theft.

Don't Send Money to Nigeria

If you are a grandparent, you may get a call from someone who is claiming your grandchild or other family member is stuck in jail, has been involved in an accident, or is stuck in another country and needs immediate cash. Known as the "Grandparent Scam," the caller will insist that you wire thousands of dollars to them immediately. Rather than fall for this scam, use your common sense and ask the caller questions only your immediate family would know. Once they realize you are on to them, they will hang up.

Update Your Operating System

At your business, always make sure you have an IT operating system that is up-to-date. This should include not only using the latest software for accounting and other financial tasks, but also make sure your system is updated as frequently as possible. Should you let this lapse, it becomes much easier for your system to be hacked, allowing cybercriminals to plant malware and other viruses that will start stealing your company's data.

You've Won the Lottery (Not)

While it's always nice to dream about what you would do if you won the lottery, this is also another chance for scammers to cheat you out of your money. First, remember that you can't win the lottery unless you've actually bought a ticket. Also, lottery winners never have to pay taxes before collecting their winnings. Finally, if you are lucky enough to win a lottery, the lottery folks themselves will not notify you. Rather, this will be your responsibility. Thus, if you get a call or email stating you're an instant millionaire, it's unfortunately a hoax.

While it can feel overwhelming when you think about how easily you can become the victim of a financial scam, it's actually very easy to avoid becoming a victim. Along with shredding documents, giving to well-known charities, and staying clear of suspicious emails, talking to your CPA and using common sense will keep your money safe every time.