According to Federal Trade Commission data, approximately 2.8 million Americans reported fraud losses of more than $5.8 trillion in 2021. This is up 70% from 2020. Those losses include fraud affecting bank accounts. Although banking technology and security has improved, fraudsters still cheat people of their money.
It is important to keep your bank account funds safe. Unlike fraudulent charges on a credit or debit card, you have no recourse if money is taken from your bank account. The Federal Deposit Insurance Corp. doesn’t cover money lost due to fraud or scams in banks. Credit union members can also get National Credit Union Administration insurance. It’s almost like giving away cash; it’s unlikely that it will be recovered.
You can take steps to ensure your funds are safe. These are the three most common bank scams, and how you can avoid them.
1. Scams with automatic debit
A scammer uses your checking account information, including your routing number, to take money from your account.
To obtain the information, the scammer might contact you via email, text, or phone. They will then set up automatic payments from your account, much like subscriptions and monthly services.
Avoid automatic debit scams. Don’t divulge or confirm your account routing numbers to anyone who contacts you. To verify that the request is genuine, contact your bank’s official number.
2. Scams of job or contest entries
A scammer may also contact you to claim that you have won something. They will ask you to pay for shipping and processing. Similar schemes may also appear in the form of a job that requires you to purchase gift cards using your money. You’ll then be asked to give your boss at the fraud company the PIN to redeem gift cards. No reimbursement will be given.
Avoid fake job and contest scams: Do not give away your money or spend it on something too good to be true.
3. Fake check scams or overpayment
An overpayment scam is when someone buys something from you and sends a fake check for more than it should. They will then ask for your refund. If it works, they will ask you to send the money. But, when it is too late, you’ll find that the check they gave was fake.
Similar to the check-cashing scam, someone may give you a cashier’s or personal check to deposit, and then ask you to transfer some money to a third person. You’ll be able to send the money while the check is still pending in your bank account. However, they will not have sent the original fake check.
Avoid overpayment and fake check scams Never accept a check that you aren’t expecting, or for an amount that is greater than what you requested.
Avoiding any bank scam
You can avoid getting sucked in by following certain steps
Paul Benda, senior vice-president of operational risk management and cybersecurity at The American Bankers Association (a trade association for the banking industry), says that sharing information with people you don’t know is the first step.
Do not give out personal information to anyone who contacts you, even if they have your address. An institution of finance will never ask for you to confirm your password.
Never click on any links in emails or text messages claiming to be from your financial institution. They can easily set up email addresses, phone numbers and websites that look legitimate. These communications may even appear in a Google search. Instead, log into your account or call your bank’s phone number to confirm that the request is genuine.
Benda advises that you only initiate contact with your financial institution if you initiated it. Scammers can spoof caller IDs to make them sound convincing. They can also have access to a lot of your information so they seem legitimate .”
If someone calls you claiming that your financial institution needs information verification, do not respond. Call your bank’s phone number. This can be found on the bank’s website or on the back of your debit cards. Not just via a Google search span>
Never place pressure on someone to make a financial transaction. Benda states that a legitimate bank will never pressure you into doing something.