How To Avoid Financial Scams & Protect Your Money

What comes to mind when you think of financial scams? Poorly written emails from foreign princes? Phone calls from people asking for funds so they could send you your prize money from a sweepstakes you never entered? 

In the past, it was easy for financially savvy individuals to spot the obvious attempts made by scammers. Unfortunately, financial scams have become increasingly sophisticated over the past few years. 

Falling victim to financial scams threatens your financial security, your peace of mind, and the confidence that comes from knowing your wealth is protected. 

You’ve worked too hard to build what you have only to lose it to someone who’s betting you won’t ask the right questions at the right time. Understanding their tactics is your best defense.

This guide will help you recognize how modern scams work and what you can do to protect yourself.

Awareness Matters More Than Ever 

Financial scams have evolved into sophisticated, well-funded operations run by people who are extremely good at what they do. They’re not amateurs hoping to get lucky anymore. They’re professionals targeting people like you who have something real to lose.

The level of detail some scammers have access to might alarm you. They can spoof caller IDs to make it look like your bank or the IRS is calling. They can send emails that mirror legitimate correspondence down to the logo and signature. They often know your name, personal details, and sometimes even the names of your family members.

Since scam calls don’t always look like scam calls anymore, the best protection is an awareness of what to look out for.  

Common Types Of Financial Scams 

Financial scams can come in many forms, so it’s important to stay alert when something doesn’t feel right. Here are a few of the most common scams you can keep an eye out for. 

Impersonation Scams

This is when someone calls, emails, or texts claiming to be from your bank, the IRS, or another trusted institution. The message usually involves suspicious activity on your account, a locked account, or an “urgent” need to verify your information.

The caller ID might show your bank’s actual number. The email might look identical to ones you’ve received before. However, they’ll often imply a sense of crisis that wouldn’t typically come from a professional institution. 

If there is urgent language such as, “You’ll lose access to your account unless you comply” or, “Authorities will be notified if your payment is delayed,” it’s best to do a little digging before you panic. 

How to protect yourself: 

Never give account information, passwords, or verification codes over the phone unless you initiated the call yourself. If someone contacts you claiming to be from your bank, hang up. Then call your bank’s number directly from their website and ask if they’re trying to reach you. 

If your financial institutions offer verbal passwords or challenge questions, set those up. It’s an extra layer of protection that can help verify who you’re actually talking to.

Family Emergency Scams

You may get a frantic call from someone claiming to be your grandchild or another family member. They’re in trouble (arrested, in an accident, stranded somewhere) and they need money immediately. 

The voice might sound similar enough to be convincing, especially when they’re speaking quickly and emotionally. They may even use correct names for themselves or other family members. 

They will also likely pressure you to respond immediately. “Don’t tell Mom and Dad, they’ll be so upset. I just need you to send money right now.”

How to protect yourself: 

Always confirm through a second trusted contact. If someone claiming to be your grandchild calls asking for emergency funds, hang up and call their parent directly. Or call the person back at another number you already have saved for them.

Remember that caller ID can be spoofed. It’s not the phone number calling that matters. Be sure to verify the actual story with someone you know and trust.

Consider setting up verbal passwords with close family members to use in case of an emergency. Or ask challenging questions that only your real family member would know: “What’s the name of my dog?” or “What color is my car?”

Phishing & Account Takeovers

When you receive an email or text asking you to log in to reset your password, verify your account, or confirm suspicious activity, it’s best to have a critical eye. The message might include a link that looks legitimate but actually directs you to a fake website designed to steal your login credentials.

Once scammers have your username and password, they can access your account, change your information, and potentially drain your funds before you even realize what happened.

How to protect yourself: 

Use two-factor authentication (2FA) on every account that offers it. Banking, investment accounts, and your email account should all offer this additional security option. This way, a scammer can’t access your account without the second verification code, even if they get your password. 

Never click links in emails you weren’t expecting. Instead, go directly to the website by typing the URL into your browser yourself. Or copy and paste the link from the email into a text document first to see the actual destination URL.

Use a password manager to create strong, unique passwords for each account. If one account gets compromised, the damage stays contained to that single account rather than spreading across every site where you’ve reused the same password.

How Scammers Manipulate Your Emotions

Scammers succeed by triggering emotional responses that override your rational thinking. Understanding their tactics helps you recognize when you’re being manipulated.

Urgency: Phrases like, “You must act now or risk losing everything,” shut down critical thinking and create panic. “Your account will be frozen,” “Your grandchild is in danger,” or “This offer expires in 10 minutes” are all designed to rush you into a decision before you have time to think it through.

Confusion: The caller may overload you with details, technical jargon, or fast-talking scripts. “This is Agent Johnson from the Fraud Division. We’ve detected multiple transactions tied to a suspicious IP address associated with your social security number…” Their goal is to make you feel lost and dependent on them for guidance.

Authority: They pretend to be from trusted institutions like the IRS, Social Security Administration, or your bank’s fraud department. Spoofed phone numbers and official-looking emails make it seem legitimate.

Isolation: “Please don’t share this information while we monitor the situation.” They want to keep you from checking with others who might spot the scam immediately.

Empathy or Pressure: They play on your fear or use your real concern for your loved ones. The “grandchild in trouble” scam relies entirely on your natural instinct to help family members in crisis.

What To Do When Something Feels Off

When you’re on a call or have opened an email that doesn’t feel right, you don’t need to worry about immediately knowing if it’s real or not. You just need to remember a few clear actions you can take to protect yourself.

• Pause and breathe. The moment you feel rushed or confused, slow down.
• Ask challenging questions. Real representatives can verify specific account details scammers won’t have.
• Hang up and call back. Use the number on your card or account statement, not one the caller provides.
• Don’t share information on calls you didn’t start. Legitimate institutions won’t ask for full account numbers or passwords when they’re the ones who called you.

Real Life Examples

Mac recently got a call from what appeared to be American Express. The caller ID showed their actual number. The person knew his first name and the last four digits of his credit card. They asked about a recent online purchase, then the call started cutting out, which created frustration. 

When they “reconnected,” they asked if he had made a recent gas station charge in Tennessee. When he said no, they asked Mac to confirm his expiration date and then his full card number in order to “cancel the card” and protect against further fraudulent charges. 

That’s when he stopped. Something felt off. He hung up and called the number on the back of his card. American Express confirmed no one from the company had called him.

In another case, fraudsters intercepted emails between a victim and their bank. They had access to sensitive information, including when a security token was expiring. They spoofed the bank’s caller ID, called while impersonating a familiar bank contact, and referenced real details from the intercepted emails. 

Because they had insider knowledge like specific dates, account details, familiar names, they sounded completely legitimate and convinced the victims to provide updated authentication credentials.

Even when someone has all the right details, verifying through a second channel is an important step. End the call or close the email and reach out to your financial institution through a method you initiate yourself.

Final Thoughts

Educating yourself about common scams is one of the most effective ways to protect your financial security. While you shouldn’t live in fear of every phone call or email, it’s helpful to develop a healthy skepticism and a few simple habits that keep you safe.

Stay calm. Think things through before acting. And if you’re ever unsure about a message, a call, or a request, take 30 seconds to check with someone you trust.

You’ve worked hard to build your financial foundation. A little extra awareness can go a long way in making sure it stays protected.

At SK Wealth, our financial advisors have been helping clients protect their financial security for 25 years. Through our Integrated Financial Advantage™ process, we create personalized strategies that address not just your investments, but your overall financial well-being and peace of mind. We’re here when you need us.