Financial scams are fraudulent schemes designed to steal money, personal information, or both from unsuspecting victims. They cover a fair share of ground as scammers continually develop new tactics to exploit people’s trust and desperation. These scams can target anyone, from individuals looking for quick financial solutions to seasoned investors seeking profitable opportunities. Here on our scam site, we touch on financial scams across payment platforms, gift cards, cryptocurrency, and more. In this article, we’ll round up several others, all of which call for a closer look, and offer tips on how to identify and protect yourself from these deceitful schemes.

Types of financial scams

Here, we highlight some of the most common types of financial scams, how they work, and what you can do to protect yourself from falling victim.

Credit repair scams

A reputable credit repair service can fix errors and correct fraudulent entries on your credit report, ultimately improving your credit score. Yet many scammers prop up phony services that target people looking to repair their credit. Scammers will make false promises to negotiate with creditors and reduce the debt a victim owes. With it comes an upfront fee, usually a large one, to get the process started, which is illegal. Over the course of the scam, victims share all kinds of personal and financial info, which the scammers then use to commit identity theft and fraud.

Avoiding credit repair scams

  • Watch out for emails, phone calls, and texts that come out of the blue promising to repair your credit. Instead, rely on trusted companies with a strong rating from the Better Business Bureau.
  • Also watch out for upfront fees. According to the Consumer Financial Protection Bureau, the federal Credit Repair Organizations Act prohibits credit repair companies from requesting or receiving payment until they’ve completed the services they’ve promised.
  • Another sign of a scam is when a credit repair service promises to fix what can’t be fixed — negative credit info. If you have a black mark on your credit that’s legitimate, no service can remove it.

Tax scams

These scams fall into a category all their own. Scammers send emails, texts, and social media messages that appear to be from the Internal Revenue Service (IRS). Or they might pose as an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System. Either way, they try to steal personal info, whether by saying you have an unclaimed refund or that you’ve been targeted for an audit. In their online messages, scammers attach phony tax documents, like W-2 and 1099 forms. Clicking on them opens the door to malware attacks, like spyware and ransomware. Another form of tax scam is the rogue tax preparer. Some of these return preparers have been known to skim off refunds or charge inflated fees with the false promise of getting you a larger return. Rounding it out, there are tax software scams. Ads for bogus tax prep software abound during tax season, typically offering a low price or a deep discount. Once on the scam site, victims enter their bank or debit card info, get charged, and get nothing in return. In some cases, the scammers use that info later to commit identity theft and fraud.

Avoiding tax scams

  • Be suspicious of emails and phone calls claiming to be from the IRS. The IRS typically contacts people by mail, not by email. You can refer to this list of ways the IRS will contact you for more details.
  • Never give out personal info on the phone. The IRS or any government agency will never call to ask for personal info or money over the phone. Payments demanded in money orders, gift cards, and online payment platforms other than IRS.gov are an absolute red flag.
  • Go straight to the source instead of clicking on links in emails. Verify all websites and emails, even when it looks like they come from a trusted tax consultant or partner.
  • Use online protection that sniffs out scams. Features in our McAfee+ plans can help you spot scam sites and texts. Our Web Protection and Scam Detector alert you if a link might take you to a sketchy site. It’ll also block those sites if you accidentally tap or click on a bad link.
  • Put preventative measures in place. Check your credit report for unusual activity, keep your social media privacy settings tight, and set strong, unique passwords on your accounts. Features in our McAfee+ plans can help you do all of that, all in one place.

Loan scams

Along the same lines of the credit repair scam, scammers offer fraudulent loans with no intention of providing them. Instead, they gather sensitive personal info, collect upfront fees, or request collateral. Once they have it in hand, they’re gone — and use it to commit fraud or identity theft.

Avoiding loan scams

  • Look out for lenders who contact you directly. Yes, legitimate lenders might do this. Yet your best bet for getting a loan is going through a lender registered in your state’s attorney general’s office or through your current bank or credit union.
  • Keep an eye out for shady pitches. Signs include guaranteed approval without a background check and few, if any, lending requirements. It’s another case of ‘if it sounds too good to be true …” It is a scam.
  • Also keep an eye out for offers with urgency. Scammers typically use it to get people to act quickly for fear of missing out on a deal. Any offer that pressures you with an expiration date is probably a scam.