4 Financial Scams to Avoid

Zions Bancorporation’s Financial Crimes Risk Strategies Manager Catheryn Eisaman-Avalos shares strategies for avoiding common financial scams.

Nicola McIntosh Jul 29, 2020

Eighteen-year-old Gideon Gren was just trying to set himself up for success as he prepared to embark on the next chapter of life: boot camp in the U.S. Marine Corps and serving a religious service mission.

While looking for a loan to purchase an inexpensive vehicle, he was referred through social media to a website that appeared legitimate.

“I believed that he was honest. I now know he wasn’t,” Gren says. “When the money was put into my account I thought the whole $2,000 was a loan for me, but I got a phone call at 4 a.m. saying that someone else was in need and I had to take $1,500 of it and send it to another person. I did what he asked and purchased three gift cards and sent them.”

The next day, Gren received a phone call from Zions Bank notifying him that the $2,000 deposit was fraudulent and that his account had been frozen. And because he had already sent the requested funds to the third party, he found himself with a negative balance on his account that he was obligated to repay.

Unfortunately, this type of “money mule” scam happens every day, according to Catheryn Eisaman-Avalos, who manages financial crimes risk strategy for Zions Bancorporation, the parent company of Zions Bank.

Eisaman-Avalos highlights four common financial scams to avoid.

Catheryn Eisaman-Avalos
Catheryn Eisaman-Avalos

Financial Scam #1: Money Mule

Eisaman-Avalos says the most common money mule schemes involve online romances and work-from-home offers.

“With romance schemes, the victim becomes intertwined in an online romance and they believe that this person truly cares about them and the reality is that they don’t,” Eisaman-Avalos says. “When you’re in a regular romance and you’re meeting with someone face-to-face you see the good, bad and ugly. But when it’s an online relationship the person only sees the good.”

Eisaman-Avalos says the fraud usually starts with small amounts of money to get the victim “hooked” and then the perpetrator starts asking for bigger things.

“The reason that’s so effective is that once you’ve invested a little bit you will continue to invest because psychologically you don’t want to admit you’re a victim,” Eisaman-Avalos explains.

College students can be vulnerable to work-from-home schemes. Eisaman-Avalos says the jobs are often advertised as “logistics” and they pay up front. “They’ll send you too much and ask to have a portion of that money sent back or sent somewhere else,” she explains. “People believe it’s an accident.”

  • Tip: Don’t send money to anyone you’ve met online. “It doesn’t matter how long you’ve known them. If you’re in a dating relationship make sure you’ve had multiple face-to-face interactions.”
  • Tip: Vet job opportunities thoroughly. “Legitimate jobs should have a legitimate interview process,” she says. “If your job is to transfer money, that’s not a job.” 

Financial Scam #2: Grandparent Scam

Fraudsters impersonating the victim’s grandchild call to say that they are in jail and need money sent to their “attorney” in the form of a gift card. Eisaman-Avalos reminds consumers that a legitimate attorney would ask for payment in cash, check or cashier’s check – not a gift card.

Scammers use social media and other avenues to research the victim in order to realistically impersonate a family member.

“You can get just about anything from records online,” Eisaman-Avalos says. “I can Google your address see what your house looks like and what your car looks like. Looking at social media accounts, you can see if they have kids or grandkids and how old they are. All of that info is readily available.”

  • Tip: If you receive a phone call saying that a family member is in jail or being held for ransom, hang up. Verify the information by calling the family member directly. Keep your social media accounts private and avoid disclosing personal information in your posts.

Financial Scam #3: Credit Repair

Eisaman-Avalos says she expects these types of schemes to increase in the next six to 12 months due to the economic impact of the COVID-19 pandemic. “A lot of credit repair businesses are scams,” Eisaman-Avalos says. “You don’t have to pay to repair your credit.”

Some credit repair businesses will dispute everything they find on a credit report to help the client obtain for which they wouldn’t ordinarily qualify. If loans are obtained based on false credit reporting, Eisaman-Avalos says the consumer could  be charged with bank fraud.

Tip: Don’t pay to repair your credit. Instead, order your credit report and make disputes as needed. Only dispute items that are inaccurate. TransUnion, Equifax, and Experian will all provide you a free credit report on a weekly basis until April 2021. Eisaman-Avalos also suggests signing up for credit monitoring to receive alerts when new accounts are opened in your name.

Financial Scam #4: Unemployment Benefits

This scam is on the rise thanks to a surge in COVID-19-related unemployment that makes it easier than normal for bogus claims to be pushed through an overwhelmed system.

The U.S. Secret Service reports that impostors using stolen identities have received hundreds of millions of dollars in fraudulent unemployment benefits in states across the country. Criminals file unemployment claims using Social Security Numbers and other personally identifiable information belonging to identity theft victims.

Besides the fact that these schemes take money out of state treasuries, they can also impact individuals. Someone applying for unemployment benefits may be told that they are already receiving them, although the money was funneled to a scammer in another country. In another situation, a victim may be told by the IRS that they owe taxes on unemployment benefits they received in 2020, even if they didn’t file for or receive benefits.

If you are affected by one of these schemes, it’s also a signal that your personal information has been compromised by identity thieves, so it’s wise to follow the Federal Trade Commission (FTC) guidelines related to identity theft.

  • Tip: Be on the lookout for any correspondence from your state’s unemployment office. If you receive a letter mentioning a claim you didn’t make, or if you receive a letter regarding a claim from another state, take immediate action. Contact the initiating state’s unemployment agency to notify them that the claim is fraudulent.

Above all, remember that if something seems too good to be true, or just feels wrong, it probably is.

“Trust your gut if anything seems suspicious,” Gren says. “When they asked me to give back $1,500 of the money for emergency reasons, it seemed kind of suspicious.”

Gren says next time he needs to make a major financial life decision, he’ll rely on input from trusted family members and financial professionals, and Eisaman-Avalos says that’s the right approach.

“Don’t be afraid to engage with your banker. You may be embarrassed, but do it anyway,” she says. “We’re in the best position to help.”

If you have questions about financial scams, contact your local Zions Bank branch

Nicola McIntosh is Social Media manager for Zions Bank.

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