Learn How to Recognize Common Online Financial Scams and Avoid Being Victimized

If you become informed about the most prevalent types of online financial scams and how to avoid them, you may be less likely to become a victim of unscrupulous individuals and companies waiting for their next scam victim.

Sweepstakes scams target victims

The Internet Crime Complaint Center (IC3) says victims receive instructions to send money required to initiate the process of claiming large lottery winnings from the “processing claims office.” Once the initial fee is received, either by Western Union or MoneyGram, additional fees are required to claim the lottery winnings. Sweepstakes scams are run much the same way. Sweepstakes scams frequently target the elderly, as explained in “The Elderly May Become Victims of Online Dating and Sweepstakes Scams.”

Little known scholarships are waiting for you

With the high cost of education, parents and prospective students may seek out scholarships to help defray the cost. Scammers are waiting to prey on those seeking scholarships, for a fee. The Federal Trade Commission, (FTC) explains that the victim receives a list of information that is available for free at college financial aid offices or even the local library.

The 419 scam still rakes in money

Named for violation of Section 419 of the Nigerian Criminal Code, this scam involves communication received that tells the victim the sender is a Nigerian government official who has been instructed to inform the person that their help is needed to protect millions of dollars that is in danger of being stolen and must get out of the country. For a small fee and another sum to cover taxes, the recipient can share in the millions once it is safely out of the country. Subsequent notices are sent informing victims to reply with their bank name and account number to the listed fax number.

Auction Fraud is prevalent

Auction fraud occurs so frequently that it is deemed the most prevalent type of internet crime currently associated with Romania, according to IC 3. Romania is just one of several countries where this type of online financial scam thrives. The “seller” advertises items for sale as if the seller’s location is in the U.S. The auction “winner” receives notice that the seller had to suddenly leave on family emergency and needs the winner to send the money to the country where the seller is currently. The victim never receives the item they won at auction.

Credit repair scammers seeking new victims

People who have found themselves with less-than-perfect credit may attempt to discover a quick way to improve their credit score. For a fee, the scammer company can help. Once your fee is received, the “company” instructs victims to file for an Employer Identification Number (EIN) from the Internal Revenue Service and use it to build new credit.

Learn how to avoid financial scams

The Bureau of Consular Affairs, U.S. Department of State explains, “Victims of financial scams generally do not recover any of the money they lost.” There may be some recourse, however. The FBI suggests determining where the seller in an auction wants money sent to ahead of time and to be cautious about sending money outside the U.S. You should be wary of someone claiming to be a Nigerian government official and that you should not believe you will receive large sums of money from Nigeria.

The FTC points out that individuals applying for an EIN when they do not actually own a business is a felony. The FTC has previously published consumer information and made it widely available to help prevent parents and students from becoming victims of scholarship scams. Apply for scholarships and other types of financial aid for free at the college financial aid office or public library.

It is important to realize that not only does the Canadian Lottery not exist, but that you cannot win a lottery or sweepstakes that you did not enter. Another key tip-off is misspelled words in a winning message. Most importantly, as noted by the Bureau of Consular Affairs, ” Participation in a foreign lottery through the mail or over the phone violates U.S. federal law.” Never send money overseas to claim lottery or sweepstakes winnings.

The IC3 offers links where consumers who have become a victim of financial scams online can file a complaint. The outcome may depend on several factors, on a case-by-case basis.

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