How to Avoid Online Scams
The Ultimate Guide

Avoiding Online Scams: The Ultimate Guide

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How much money do you think is lost each year due to internet fraud? A million dollars? Ten million dollars? Nope.

According to the U.S. government's Internet Crime Complaint Center (IC3), scam artists stole over one billion dollars from their victims in 2015 (the most recent year for which data is available). Given this shocking statistic, it's no surprise that one of the main concerns on people's minds these days is how to avoid online scams.

The internet is a minefield of scam artists and hackers looking to steal your money and information. However, they most often go after easy targets. By familiarizing yourself with their tactics and methods you may be able to avoid online scams.

If you know what to look for - whether you're looking for love on dating sites or simply shopping online - you can keep yourself from falling prey to internet fraud. The best part: I'm going to give you the tools you need to maximize your chance of success in terms of protecting yourself.

Identity Theft

Identity theft is one of the fastest growing crimes in the U.S. and it's important to be aware of the warning signs. You might be turned down for something based on your credit score, you may start getting notices from the bank or even the IRS because of irregular activity with your accounts or credit score.

It's important to monitor your credit score, credit card bills and bank accounts regularly to check for strange activity. The best way to do this is by using an identity theft protection service. You can also compare identity theft protection services with our comparison tool here.

If you do notice something irregular, it's important to act right away. If you notice that something is wrong early, you may be able to mitigate damage. If you do notice discrepancies, follow this step by step process:

  • Call the organization where the fraud happened. If your credit or debit card was stolen, call the card company and report it.
  • Check your credit report and get a copy of it. Place a fraud alert on it to let people know not to trust your potentially fraudulent score.
  • Report the identity theft to the Federal Trade Commission.
  • Finally, file a report with local law enforcement, especially if the theft occurred locally.

Here's what you need to know: while you absolutely should file a police report if your identity is stolen, understand that local law enforcement officials don't typically have the training and resources to solve these cases. In addition to filing a report with the FTC, you can also contact the Internet Crime Complaint Center. The IC3 offers more information on its website.

Read More: Your identity may be at risk, but if you have a child, their identity is just as capable of being stolen. You and your child need to do everything you can to protect your child with our guide on preventing child identity theft.

Avoiding Online Scams: The Ultimate Guide

Tech Support Scams

One of the most common ways scammers operate is to, ironically, pose as someone who is offering security or antivirus software. These scammers create false alerts to scare you into thinking that you need to have them scan your computer for viruses and malware. In some cases, they sell you software that doesn't do anything or they'll sell you a copy of software that is otherwise free. However, in many cases, these scammers use malicious software - a.k.a. malware - to steal information.

Sometimes these scammers will even call you posing as associates of a well-known security company. Once they feel that they've gained your trust they may try to have you give them remote access to your computer, sell you a false computer maintenance program, ask for credit card information, trick you into installing their malicious software or direct you to their websites.

If you receive a call like this and you are interested in security services, hang up and look up the number for a reputable company and call them directly.

Hacked Email

Email hacking and social media hacking is often used as a way to use your name to defraud people who trust you. None of your friends and family would click on a mysterious link or buy into a strange service normally, but if you tell them it's a good idea, they might be inclined to give it a try. If you or your friends notice that strange messages coming from your email address, or if you can't log in to your account, you may have been hacked.

If you suspect that your email or social media account has been hacked, there are a number of things you should do:

  • Make sure your security system is up to date and delete any malware or strange programs.
  • Change the password on the affected account. This will sometimes solve the problem because it locks out the hacker. Make sure the password is unique and something you've never used before.
  • Look for strange applications and delete them. This is especially helpful on sites like Facebook that allow you to connect with third party apps.
  • Read through any advice or forums provided by your email provider or social network provider. Your problem may be something they are aware of and they may have more information on how to solve it.
  • Send your friends a quick update letting them know you've been hacked and that they shouldn't trust anything that appears to come from your email address.

Related: Buyer's Guide to VPN Services

Text Message Spam

Have you ever received a text message full of internet links promoting some service? Well, if you have, there is a good chance that it was sent illegally. Sending emails or texts or promoting a commercial product or service without your permission is illegal.

Often, these messages are pushing fraudulent services looking to infect your phone with malware such as spyware, which will require virus removal techniques and tools. They may also be attempting to generate online traffic to a spammy website. If a text message from an unknown source is promising free gifts or cheap services, don't click on any links they send you.

Related: How to Protect Your Phone from Hackers

If you receive a text message like this, delete it. A real company won't ask for sensitive information like passwords or credit card information via text or email. Don't reply to the message or click on links and never send any information like your social security number, credit card numbers or passwords.

Phishing

Phishing, which we delve further into here, is when a hacker or fraudulent individual poses as a company or an organization in order to get your information. This can come in the form of an email or text message claiming to be your bank asking for you to confirm your identity by entering in a pin or social security number.

On the internet, it can come in the form of false login pages that get you to reveal your password and username. Text and email scams can be very tricky forms of fraud because they try to look as legitimate or convincing as possible.

These can be difficult to spot at times but they sometimes have some telltale signs. First of all, just like with text message or email spam, never send passwords or personal information via email. A legitimate site would never ask you to give away personal information like that. Instead, they would normally ask you to enter that information into the company site.

To spot fake login pages or phony websites, take a look at the URL. If it has https in the web address that means it is a secure site. However, this secure signature can be forged as well. Another thing you can do is look at the address length.

A login page for a legitimate site might have https:// and then the domain followed by something like /login. If there is a long string of strange text following the domain name, this might be a false site. Try entering in the web address yourself or calling the company to make sure the site is legitimate. You can also equip yourself with antivirus software that features anti-phishing tools.

Money Transfer Scams

Wiring money can be dangerous when you are not completely sure who is on the other end. Although they are convenient and quick, those exact traits can cause you to send money and lose it before you realize you've made a mistake. If you are wondering whether or not you should use a wire transfer, here are a few red flags you should look out for:

  • You have never met the recipient in person.
  • The recipient is insisting on a wire transfer and won't accept other kinds of payment.
  • Someone is advertising a home or apartment is looking for a wire transfer payment.
  • They claim to be a relative in trouble and ask you not to tell anyone else in the family.

Online Dating Scams

Online dating sites often successfully bring together two people who are looking for romantic relationships. Unfortunately, they can also bring scammers and victims together. Scammers often pose as potential dates that live overseas and try to get you to send them money in order to cover travel or other expenses.

Some warning signs are when the person you are talking to claims to have fallen in love with you quickly, when they want to move communication from the dating site to another form of communication instantly and when they are outside of the U.S. and are prevented from visiting. The may also claim to be from the U.S. and they are traveling outside the country for military service or business.

Online Penny Auctions

Online penny auctions are more akin to gambling than a traditional auction. In an auction, you spend money only if you win the item you are bidding for. In online penny auctions, you pay to bid which means you might spend more money than you thought you would without receiving anything in return. If you do win the item, the final cost of the item will be the cost of each of your bids, the final bid price and the cost of shipping and handling.

These companies claim to be legitimate online businesses. Some may be, however, the FTC says the problem is that many use misleading tactics to generate online traffic, and then charge hidden fees to boost profits.

Tax-Related Identity Theft

When identity thieves target your social security number and begin filing false tax returns or using it for other crimes, they can pose a serious threat. If you get a notice from the IRS because you supposedly filed more than one tax return or you were paid by an unknown employer, those are some red flags.

Identity thieves use SSNs to get jobs, file false tax documents, and open accounts. If you suspect that your SSN has been stolen, contact the IRS Identity Theft Protection Specialized Unit right away.

Work-at-Home Scams

Make money online by doing minimal work without leaving the comfort of your home. It sounds too good to be true because it is. Advertisements often offer the opportunity to be your own boss or be a part of America's fastest growing industries all while earning serious amounts of money from home. However, these projects are often promotional work that involves materials such as paper copies, printer ink or other supplies and you do not get reimbursed for these materials.

They may also charge you for starter kits or useless licenses or certification. In the worst case scenario, these scammers might take your credit or debit card information or other personal information.

There are many forms of work at home scams but they do have some red flags in common. If they claim that you will make a lot of money but offer no basis for that claim, they may just be scammers attracting job seekers with the prospect of a high salary.

You should also ask, who pays your salary, whether it is a salary or commission, when you get your first paycheck and what is the total cost of entering the program.

Weight Loss Claims

Weight loss claims are one of the most common internet scam ads. They'll claim that all you need is a pill or patch or some other simple buyable item and your fat will just melt away.

However, these are often scams playing on your hope for a simple fix for a weight problem. There there is no such thing as a permanent solution to fat without changing your behavior with diet and exercise.

Lotteries and Sweepstakes Scams

Another common banner ad, touting less than genuine offers are lottery and sweepstakes advertisements. If you've spent enough time on the internet you've probably seen a big flashy banner saying "You've won!" However, it's rare that someone ever gives something away for free and if you haven't even signed up for a lottery or sweepstake, it's a safe bet that anything telling you've won is a scam.

However, you should also be aware that lottery scammers will also use offline methods like a phone call and direct mail to entice you to enter sweepstakes or collect a prize. Legitimate sweepstakes exist but they are usually promotional in nature and only require you to like a Facebook page or answer a survey. They shouldn't ask for personal information or require you to pay to collect a prize.

Fake Check Scams

It's never a good idea to deposit a check from someone you don't know and offer to wire the money back. This often results in the check bouncing and you owing back anything that you withdrew. Scammers will often prey on people selling items online. They may "accidentally" send more than the agreed amount in a check and ask you to wire the difference back.

If you receive a check for more than the agreed amount simply send the check back and don't send the merchandise. If they made a legitimate mistake they can just write a new check for the right amount.

Imposter Scams

Just like email scammers take your name to scam people who trust you, someone may pose as someone you know and trust in order to scam you. They may claim to be in some sort of trouble that requires money urgently. They will often urge you to keep their request a secret, claiming to be embarrassed by the circumstances.

One way to guard against this scam is to call the family member they are claiming to be by a number you know them to use. You can also ask other family members if the story is true or ask the caller something only the real person would know.

Mystery Shopper Scams

Many online scammers mimic real opportunities for work but turn out to be false. Mystery shopper opportunities actually exist but online scammers often offer this deal in exchange for an application fee. In some cases, the scammers will couple this with the fake check scam.

They will send you a check in order to test the customer service of a local banking service and you are instructed to wire some of the money back when it's done. However, the check will often bounce and you are responsible for covering the cost.

Bogus Apartment Rentals

A good rule of thumb when you are apartment searching is to never send any money before meeting the owner or seeing the place. Scammers will often try to make an excellent offer on a fake apartment listing and say they are out of the country but plan to get you the keys as soon as you send money for a security deposit and the first month's rent. They may also create a sense of urgency by saying they have other offers.

Scammers may even hack into real apartment listings and change the contact information that is listed. The best way to guard against this is to be sure that you have seen the apartment in person before sending money. That means the listing is real and you are dealing with people who have access to the apartment.

Miracle Cures

An age old scam dating back to the 19th century, the miracle cure scam meant a traveling salesmen would travel from town to town peddling powders, potions and snake oils that were supposedly capable of curing any ailment. Today, this type of fraud has found a new home on the internet. Similar to the weight loss scam, scammers will offer miracle medicines. At best, these are expensive sugar pills that end up being a total waste of your money. At worst, you are sold a harmful substance that causes you to lose your money and health.

Maintain a healthy skepticism whenever you hear about a "scientific breakthrough" that has a limited availability and requires you to pay in advance. Nothing cures everything and your chance of success with these products is non-existent.

Debt Relief Scams

Legitimate debt relief programs exist but there are plenty of bad programs out there that simply solve the problem in a way that is detrimental to your credit or take your money without doing anything at all.

Many lenders and banks offer ways to consolidate your debt but some companies will advertise debt settlement services and then require you to file for bankruptcy. Be wary of any company that takes control of your bank accounts directly and move money without your knowledge or consent. Legitimate companies should outline your debt relief plan in detail with you.

Pay-in-Advance Credit Offers

If a lender or credit card company says that you pre-qualify for a loan or credit card without you ever having to go through an application process, they are probably a scam. They will probably require that you send in a pricey application fee before receiving funds.

There are lenders who have online applications that will offer pre-approval, but that is after you have filled out an application. Keep in mind, legitimate lenders will always want to know the financial history of the person they are lending to.

Investment Schemes

In investment, a low-risk-high-reward opportunity is very rare, but there are advertisements for such opportunities all over the internet. Any investment opportunity that guarantees big rewards for little to no risk is probably false.

These scammers will often take your money and offer no returns. They'll shut down or disappear and quickly spend your investment. Any investment should be considered carefully and thoroughly. Be cautious of any investment that requires you to act quickly.

The "Nigerian" Email Scam

The Nigerian prince email scam is commonly referenced in pop culture as the quintessential internet scam. The classic version of this scam involves an email from a Nigerian prince that has extreme wealth and would like to move it out of the country. They will usually spin a story about how their money is tied up and if you will just pay the fees to have their money released, they will fill your bank account with their vast wealth. Variations include overseas business people, government officials, and spouses of wealthy people that need help because of all kinds of different scenarios.

Related: Online Privacy & Internet Safety

Recap

Now you know internet scams aren't comprised of just one type of fraud.

Anyone can be vulnerable to this crime: people who do any shopping online, job seekers trying to make money online, those seeking a love connection, online business owners - internet fraud doesn't discriminate. Email scams and information theft are fixtures in today's cyber landscape.

That said, there's no need to panic. With the tips I've given you above and a little common sense, you now know how to avoid online scams. Happy - and safe - browsing!