Spotting the signs: avoiding common financial scams

Scams can come from just about anywhere—your inbox, a phone call, a text, or even disguised as someone you trust. Financial scams are getting more sophisticated every day, making it increasingly difficult to spot them.

Staying informed is one of the best ways to protect yourself and your loved ones. We’ve compiled information on some of the most common financial scams out there today, as well as red flags to watch out for, and ways you can protect yourself.

Scams that prey on trust

Power of attorney fraud

What it is: A person with legal authority to manage someone else’s finances (usually an elderly or disabled individual) uses that access to steal funds or assets.
Red flag: Unexplained withdrawals or changes to accounts.
Protect yourself: Only assign power of attorney to someone you fully trust. Consider having a third party review statements.

Caretaker fraud

What it is: A caregiver, often a family member or hired help, misuses funds or convinces someone to sign over assets.
Red flag: New financial activity or isolation from family/friends.
Protect yourself: Regularly check in on loved ones—emotionally and financially. Transparency is key.

Romance scams

What it is: A scammer builds an emotional relationship—usually online—and then asks for money due to a sudden crisis.
Red flag: Refusal to meet in person, inconsistent stories.
Protect yourself: Be cautious with online relationships that escalate quickly or ask for money.

Grandparent scams

What it is: A scammer calls an older adult, pretending to be a grandchild in urgent trouble needing bail money or help.
Red flag: Caller begs for secrecy and fast action.
Protect yourself: Confirm the caller’s identity with family before sending any funds.

Employee fraud

What it is: A scammer pretends to be a bank or credit union employee and may ask you to help with an internal investigation.
Red flag: They ask for PINs, passwords, or in-person cash transfers.
Protect yourself: Financial institutions do not ask customers to take part in internal probes.

Scams that sound too good to be true

International lottery scams

What it is: You’re told you’ve won a foreign lottery—but must pay taxes or fees upfront to claim the prize.
Red flag: You never entered the lottery.
Protect yourself: Legitimate lotteries don’t ask winners for payment. If it sounds too good to be true, it likely is.

Fake prize scams

What it is: A variation of lottery fraud. Victims are told they’ve won cash, vacations, or other high-value items—but must first pay a processing fee.
Red flag: Vague prize descriptions and pressure to act fast.
Protect yourself: Never pay money to claim a “free” prize.

Advance fee fraud

What it is: You’re promised a cut of a large sum (usually from overseas) if you help transfer the money—but first, you must pay fees.
Red flag: Emotional or urgent backstory.
Protect yourself: Never pay upfront for promises of future money.

Inheritance scams

What it is: You’re told a distant relative left you an inheritance—but you need to provide personal info or pay fees to claim it.
Red flag: Generic emails and documents with errors.
Protect yourself: Research the law firm or executor. Never send money or sensitive info without confirming legitimacy.

Government grant scams

What it is: You’re told you qualify for a grant—usually through social media, email, or text—but must provide account info or pay a fee to get it.
Red flag: Asked to keep it secret or pay via gift cards.
Protect yourself: Real grants don’t require payment or account access upfront.

Scams that hit your inbox or phone

Phishing, vishing, and smashing

What it is: Scammers send fake emails (phishing), make fake calls (vishing), or send fake texts (smishing) to steal your info.
Red flag: Spelling errors, urgent language, or suspicious links.
Protect yourself: Don’t click unknown links. Verify requests directly with the organization.

Spoofing

What it is: Scammers create fake websites, emails, or caller IDs that mimic real ones to trick you into giving up info.
Red flag: URLs or numbers that are almost—but not quite—correct.
Protect yourself: Check official websites directly and never give out info unless you initiated the contact.

Social Security/IRS scams

What it is: Someone claiming to be from the IRS or Social Security office threatens arrest or loss of benefits unless you pay or verify your number.
Red flag: Aggressive tone, demand for payment by gift card or wire.
Protect yourself: These agencies don’t call demanding money.

Scams tied to money movement

Online sales scams

What it is: A scammer sends a fake check for more than an item’s sale price, then asks for the difference to be refunded.
Red flag: Requests for refund via wire transfer or gift cards.
Protect yourself: Don’t accept overpayments, and wait until a check fully clears.

Mortgage closing scams

What it is: You get an email with wire instructions during a home purchase—but it’s from a hacker, not your lender.
Red flag: Last-minute changes to payment instructions.
Protect yourself: Always confirm wire details by phone using a verified number.

Stop foreclosure scams

What it is: Scammers offer to “save” your home from foreclosure, but ask you to sign over the deed.
Red flag: Promises of guaranteed results with no legal backing.
Protect yourself: Work only with trusted, HUD-approved housing counselors.

Financial institution fraud

What it is: Someone pretends to be from your bank or credit union and convinces you to withdraw money to help catch a “crooked employee.”
Red flag: Unusual instructions or secrecy.
Protect yourself: Your bank will never ask you to test employees or move money secretly.

What you can do to stay safe

• Be cautious with your personal information. Don’t share account details, Social Security numbers, or passwords.
• Question urgent requests. Scammers often create pressure or emergencies to create panic and cloud your judgment.
• Verify before acting. Hang up and call back using a number you trust—like the one on your statement or the official website.
• Never pay to claim a prize. If you didn’t enter a contest, you didn’t win anything.
• Check links and email addresses carefully. Minor differences can signal a scam.

If you think a scam has targeted you or someone you know, report it at https://www.ftc.gov/complaint. You can also contact us—we’re here to help you protect what matters.