6 Red Flags Of A Financial Scam


Financial scammers have gotten savvier and more aggressive in their pursuit of your money and identity. So what should you look for when you think you're getting a deal, but aren't sure if it's really a rip-off? Here are seven red flags of a financial scam, so you can avoid them.

Email From Someone You Don't Know

You've likely heard of the Nigerian email scam that asks you to deposit money to an overseas account. Ignore email if you don't recognize the sender, particularly if there's an attachment that could send a virus to your computer. If a bank or business contacts you, don't reply to the email or click on any link - just visit the bank or business website to see if there's anything that requires your attention.

Callers Asking For Personal Information

If someone calls saying he or she is with XYZ Bank, it must be true, right? Don't assume the person calling is being truthful, particularly if this person is asking you for information like account numbers or passwords. Politely end the conversation, and call your bank. When in doubt, go to the source.

Guaranteed Approval For Your Loan

Here's how this scam works: a telemarketer will tell you that for a fee ranging from $25 to several hundred dollars to apply for a loan or credit card. Customers are told they get this fee back, but they don't - it's all a scam. Another scheme like this one is the scholarship scam, where a company or advertisement promises to find you scholarships for a fee. Scholarships searches and credit repair are things you can accomplish on your own for free. Don't be fooled!

Promises To Fix Credit Problems

These companies promise to dispute any false things on your credit report, which is something you can do for free. Some credit repair companies even suggest people with bad credit get an EIN (Employee Identification Number - like a social security number), which is actually against the law. While there are legitimate companies that do offer credit repair help, make sure that you perform the necessary research prior to getting involved.

No Value, No Product

Work from home, make thousands a week! It sounds so good, you're thinking of calling after another bad day at work, right? These promises are hollow, and the scams often have you recruit more people to post ads, and so on - a pyramid scheme. If an advertisement is vague about the work, and sounds like they're selling you something, it's probably a scam.

No Sales License

There's this smooth salesperson, maybe it's even someone you know personally, who is trying to sell you insurance or investments. It sounds really good. He or she promises high returns, low risk. But is this salesperson licensed? Ask - some of the biggest scams right now involve sales of unlicensed securities by unlicensed sales people. If there's no license, avoid the deal.
  1. No results found.
Related Articles
  1. Investing

    What Is Phishing?

    Find out more about this scam and how to avoid it.
  2. Taxes

    Tax Imposter Scams on the Rise This Tax Season

    A growing scam is the tax impostor one, according to the Better Business Bureau.
  3. Investing

    CEO Email Scams Cost $2 billion

    CEO email scams cost a pretty packet, according to the FBI.
  4. Investing

    Common Scams Targeted At Teens

    Teens should be aware of these scams, which include scholarship frauds and fraudulent investments.
  5. Financial Advisor

    How to Avoid the Top Financial Advisor Scams

    Investors need to be wary of financial advisor scams. Here are the most common and how you can protected yourself.
  6. Small Business

    Stop Scams In Their Tracks

    Find out how to protect yourself and your loved ones from financial fraudsters.
  7. Personal Finance

    10 Tips For Steering Clear Of Credit Scams

    The recession has made many vulnerable to credit-fixing scams. Don't be fooled!
  8. Financial Advisor

    10 Tips To Avoid Common Financial Scams

    Remember that "don't talk to strangers" rule from childhood? Well, don't wire them money either. Or fall for these other tricks.
  9. Personal Finance

    Life Lesson No. 1: Avoid College Scholarship Fraud

    When families get desperate to scrape together college funds, they may fall prey to scammers.
  10. Investing

    How To Avoid Becoming A Fraud Victim

    Be aware of your rights as a consumer, and know how scammers work so you can protect your money.
Hot Definitions
  1. Wealth Management

    A high-level professional service that combines financial/investment advice, accounting/tax services, retirement planning ...
  2. Assets Under Management - AUM

    The market value of assets that an investment company manages on behalf of investors. Assets under management (AUM) is looked ...
  3. Subprime Auto Loan

    A type of auto loan approved for people with substandard credit scores or limited credit histories. There is no official ...
  4. Racketeering

    A fraudulent service built to serve a problem that wouldn't otherwise exist without the influence of the enterprise offering ...
  5. Federal Debt

    The total amount of money that the United States federal government owes to creditors. The government's creditors include ...
  6. Passive Management

    A style of management associated with mutual and exchange-traded funds (ETF) where a fund's portfolio mirrors a market index. ...
Trading Center