The Prevalence of Scams and How to Avoid Them

The Prevalence of Scams and How to Avoid Them

In November 2023, Gallup reported that financial scams were one of the most common types of crimes affecting adults in the US in 2023. Of those surveyed, 15% said that at least one member of their household had fallen victim to a scam and 8% (roughly 21 million US adults) reported that they themselves were victims of scams. 

According to the Federal Trade Commission (FTC), American consumers suffered total losses of more than $10 billion due to fraud in 2023 — a 14% increase from 2023 and a new overall high. 

The most devastating scams of 2023:

Investment scams: Over$4.6 billion lost (a 21% increase from 2022)

Imposter scams: Nearly $2.7 billion lost

Types of Scams

The digital era has made it easier for scammers to reach and deceive people with faulty information. They may reach out via email, phone, text message, social media, or snail mail, but their goal is the same – to steal your money. 

Three of the most common types of scams are:

  • Investment scams, which contributed to the highest amount of losses in 2023, are when someone offers you investment opportunities that usually sound too good to be true. The opportunity may differ — real estate, cryptocurrency, precious metals, NFTs — but the result is the same: paying money with nothing to show for it. 
  • Imposter scams: When someone contacts you pretending to be someone else (law enforcement, government employee, neighbor, colleague) and asks you to send them money. This often happens on social media, through fake profiles. 
  • Phishing: When criminals post as legitimate people or companies and contact random people by email, phone, or text message, asking for personal or financial information.  

Within those three categories, scams can take many forms and guises. Here are 10 of the most common:

  • Charity scams: When criminals pose as a charity (often after a natural disaster or crisis) and ask for “donations.”
  • Debt collection scams: When criminals pose as debt collectors and ask you to provide financial information or make payments on a debt.
  • Logo misuse: Sometimes scammers use legitimate logos (like the FDIC or others) in their communications to make people trust them. 
  • Mail fraud: Good old-fashioned mail fraud is when criminals mail out letters filled with false promises, but asking for real money. 
  • Romance scams: Criminals may approach someone under pretenses of romantic interest, and then ask for money. This typically happens on dating sites and social media platforms. 
  • Mortgage/foreclosure scams: When criminals send messages pretending to be lenders, financial institutions, or government agencies and offer help with mortgage/foreclosure issues – for an upfront fee, of course. 
  • Advance fee scams: When scammers promise a loan, prize, grant, inheritance, etc. and request payment upfront.

Tech support scams:  When you get a message on your device that says you have a major technical problem that must be fixed — for x sum of money upfront or giving the unknown entity access to your computer. The message may say it’s from Microsoft, Google, or another trustworthy name — but the content certainly is not trustworthy. 

  • Shopping sprees: When you get an offer for a funded shopping spree from a well-known company or government agency, but you’re requested to pay a small fee or reveal bank information before you can get your prize. 
  • Home repair scams: Criminals may offer home repairs or cheap materials that are “available only today” or “for a limited time,” requesting upfront payment and then delivering nothing. 

Across these scam varieties, there was a notable trend of scammers choosing email as the preferred vehicle for fraud. In addition to record-high losses, 2023 saw another first: the use of email becoming the most popular communication method of choice for scammers. Last year was the first on record that showed a larger proportion of scams via email than by phone and text messages, the second and third most common methods, respectively. The change may indicate further developments in technology and techniques that enable scammers to succeed. 

The Best Defense Against Scams: Awareness

According to the Gallup survey, less-educated and lower-income adults are more vulnerable to scams. In fact, adults with no college education are about twice as likely to be victims of a scam than those with a college education. In the same vein, households that generate less than $50,000 income per year are about two times as likely to report being scammed than middle- and upper-income households. 

What can we learn from these figures? That knowledge truly is power. The more you educate yourself and are aware of potential scams, the better you will be able to protect yourself from them.

The guidelines for avoiding scams are similar, no matter what type of deception you’re facing:

  • Never reveal personal or financial information to someone you do not know.
  • Never invest with a company or person before doing your due diligence.
  • Words like “guarantee,” “no risk,” “secret method,” “proven,” “urgent,” and the like are red flags — no investment is guaranteed and there are no secrets for making quick cash. 
  • Always read email headings and addresses carefully — you may think you know the sender, but check again — do you recognize the domain? Is the spelling correct?
  • Never click on links or open emails you don’t recognize.
  • Use a well-regarded antivirus program and two-factor authentication when possible.

If you do find yourself the victim of a scam, contact the FTC or local authorities.  

In the end, when it comes to the best scam avoidance strategy, sometimes time-tested cliches hold all the wisdom we need; trust your gut, and if it seems too good to be true, then it is not. The likelihood of a loved one needing cash immediately under duress is exceedingly rare, law enforcement (or anyone else acting in good faith) does not accept payment in gift cards, and your favorite pop star is not secretly in love with you or in need of your financial assistance. Common sense and sober thinking will get you most of the way.