How To Spot A Money Scam

As each day hundreds of money scams are reported and even more which go unreported, learning how to spot a money scam is an extremely useful skill to stay safe and protect your identity and assets.  Many money scams can be spotted using common sense, such as claims of sweepstakes winnings for something you never entered or emails offering to share in a large amount of cash sent by a stranger.  Others are harder to spot, such as phishing scams and those who offer to sell a product at a great price but never deliver.  Learning the characteristics of a money scam makes spotting such scams second nature, keeping you and your money safe.

  1. Look out for non-delivery or auction fraud. According to Consumer Fraud Reporting, non-delivery and auction fraud comprised over 55% of all fraud complaints in 2008. These include companies and individuals claiming to sell goods or services then failing to deliver the items or sending items that were grossly misrepresented.  
  2. Beware of non-payment fraud. If you are selling an item, be it in newspaper classified ads or on the internet, you may come across offers to purchase the item for well over the asking price. This is a tell-tale sign of a money scam. 
  3. Don't trust your email. One of the most common forms of money scams are email money scams, also known as Nigerian letter fraud. These emails claim to offer a great sum of money in need of an owner. In reality the scammer will ask for an up-front fee for processing or similar, which is stolen, providing nothing in return. Generally any deal which involves sending money to get money is likely a money scam.
  4. Remember that you can't win if you didn't enter. Just like the Nigerian letter fraud, many email money scams will claim you have won a lottery and are eligible for a prize. These too are money scams, requiring money to be sent in for processing of the lottery or sweepstakes, with no prize in existence.
  5. Spot the fake check scam. Operating as a work-at-home job scam, fake check scams claim to offer jobs processing checks for clients. The victim receives fake checks and are required to wire a portion of the money back to the scammer. As the checks, which may look entirely legitimate, are fake, they never clear, leaving the victim out the amount of money wired back.
  6. Watch out for phishing scams. Often found on the internet, in email and by phone, many phishing scams will claim to be representing a company you do business with and ask for personal information such as passwords or credit card numbers. 99% of the time the company will always have this information to begin with and anyone claiming to need this information for verification is likely attempting identity theft. Never give out personal information or passwords unless you are 100% sure you are dealing with a trusted source, including verifying the URL of the website or phone number for a company.
  7. Verify everything. Any company or individual providing legitimate goods or services should always be willing to provide their name, company name, address and phone number. Double check these details with directory assistance to make sure everything is accurate and valid.
  8. Use common sense. As with anything, always use common sense before making a purchase or giving out any personal information. If it appears too good to be true, it likely is and one red flag to stay away.
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