7 common banking scams (and how to avoid becoming a victim)

You check your email and see an update about a new bank account in your name. Or perhaps you view your checking account statement and find unauthorized debit card transactions listed. Whatever the case, being the victim of a banking scam is a terrible feeling.

Bank scams are common, and with increased use of technology and digital-savvy fraudsters, the problem is getting worse. In fact, the Federal Trade Commission (FTC) reported that consumers lost more than $10 billion to fraud in 2023.

Despite the prevalence of fraud, you can prevent it from happening to you by learning how common bank scams work and taking steps to protect your information.

Bank scams can take many forms, and criminals are adept at leveraging new technology and trends. These are some of the most common bank scams happening in 2024:

Some scammers create legitimate-looking bank websites with attractive interest rates and low fees that appeal to customers looking for a new bank account. Or they’ll create phony copies of established banks to trick you into attempting to sign in to your account. In either case, the goal is to get you to enter your personal information, including your bank login or Social Security number, which they’ll then use to steal your money or identity.

What to do: You can verify a bank’s legitimacy through BankFind.

Apps and browser extensions can be helpful tools. But before agreeing to a new app or extension’s terms, be sure to read the fine print and only download reputable apps. Some apps and extensions are malicious, designed to track your device usage and access your passwords and personal details.

What to do: Think twice before downloading any free apps or extensions. Only install apps released by reputable financial institutions, and use anti-virus and anti-malware software to protect your devices.

We’ve all gotten that call or email: “Your account has been compromised; contact the bank right away to verify your information.” If you’re dealing with someone via text or phone, the caller ID details may even look legitimate. But these contacts are fraudulent, with phonies impersonating your bank to get your banking information.

What to do: While it’s important to take action quickly, don’t respond to the email, text, or phone call. Instead, visit your bank’s website in a separate browser and contact their customer support department directly via the contact information listed to verify whether there really is an issue with your account.

Even though checks are a less common payment method than they were in the past, check fraud is rampant. According to the Financial Crimes Enforcement Network (FinCEN) the number of reported check fraud cases nearly doubled between 2021 and 2022.

With check washing, criminals steal checks from post office drop boxes and residential mailboxes. Using chemicals, they wash away the ink, giving themselves a blank check to fill out as they wish.

What to do: When possible, pay your bills through electronic bill pay. If you need to mail a check, drop it off at the post office in person or at the in-lobby drop box and use a pen with permanent ink to write out the check. Additionally, review your bank statements at least once per month. If you see any unauthorized transactions, contact your bank immediately to dispute those charges.

If you sell an item, the seller may pay you via check. With a check overpayment scam, they may write the check for more than they owe you, asking you to send them the difference. But after you’ve sent the money, the check bounces — leaving you without the funds. Plus, you may be on the hook for return payment or overdraft fees.

What to do: Insist on cash when selling items. And if you need to accept a check, call the issuing bank to ensure the check is valid and that sufficient funds are in the account before you cash it.

As more people look for remote work, employment scams are increasingly common. With these scams, the “employer” may ask you to transfer money in and out of your account, claiming it’s necessary to pay vendors. But once they have your account information, they can drain your balance.

What to do: Keep in mind that reputable companies have their own bank accounts and vendor accounts to process payments; they don’t need to use employee bank accounts. Also, search for the company on sites such as Glassdoor and the Better Business Bureau to ensure they’re legitimate employers.

Some fraudsters will use your personal information to open a bank account in your name. An unauthorized bank account may not seem like a big deal, but the thieves can use the account to bounce checks and apply for loans and credit — and ruin your good name in the process.

What to do: Use multi-factor authentication — such as using both a password and a text code — to log into your bank accounts. The extra step can make it harder for criminals to access your private information.

If you think your information has been compromised, request a report from ChexSystems — a consumer reporting agency that provides information about deposit accounts — to find out what deposit accounts are opened under your name. If there are any unauthorized accounts, contact the banks to close them.

Fraudsters evolve with the latest technology, and some bank scams are sophisticated and convincing. However, there are some red flags that can help you spot a potential scam:

  • You feel pressured to act now: Scammers depend on people acting immediately out of fear or confusion. They want to convince you to take action — and give them information or money — before you can do any research or think twice about their request. If the contact urges you to make a decision or send money right away, that’s a clear sign it’s a scam.

  • You’re asked to send money: Genuine banks and employers don’t ask you to transfer funds or provide them with your bank login information, so steer clear from any company that asks for those details.

  • They want payment via gift cards or cryptocurrency: Scammers typically ask you to pay them with less common methods, such as gift cards or crypto, because they’re more anonymous than credit card payments or bank transfers and nearly impossible to reverse.

  • You receive unusual communications: If you receive a call, text, or email out of the blue from your bank, credit union, or wire transfer service, be wary. Before clicking on any attachment or logging in through the provided link, open a separate browser window to look up your bank’s website and call them from the number listed on the site.

If you’ve fallen for a banking scam, don’t panic. You can end the fraudster’s access to your information and prevent further unauthorized transactions by taking these steps:

  1. Use the FTC’s Identity Theft Recovery Plan: The FTC has a tool you can use to enter details about your situation. Based on the information you provide, the FTC will create a customized identity theft recovery plan with step-by-step instructions on what to do next, from contacting your bank to filing a police report.

  2. Contact your bank or credit union: If you notice unauthorized transactions or think your information has been compromised, call your bank right away. The customer service representative can help you close your current account, freeze your debit card, or dispute fraudulent transactions.

  3. File a police report: Although a police report isn’t always necessary, it can be helpful since some financial institutions will ask for a police report to remove disputed transactions or waive overdraft fees resulting from unauthorized transactions.

  4. Set up a fraud alert with the credit bureaus: If fraudsters have gotten a hold of your personal information, including your Social Security number and bank details, they may use that information to take out loans or open credit cards in your name. To prevent that from happening, contact the three major credit bureaus and place a fraud alert on your credit report. A fraud alert will require creditors to take extra steps to verify your identity before approving new credit applications. You can place a fraud alert online for free:

5. Place a security alert on your banking file: Fraud alerts only work for your credit report; they don’t prevent thieves from opening bank deposit accounts in your name. To stop that problem from happening, set up a security alert with ChexSystems.

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