Is this a scam? Red flags to watch out for

Is this a scam? Red flags to watch out for


Financial scams are on the rise. According to the Federal Trade Commission, more than $8.8 billion was lost to scams in 2022, which is a more than 30% increase from the previous year.1

It’s not just older people who are targets; recent data shows that members of Gen Z are more likely than Baby Boomers to be victims to scams.2

Following are nine of the most common scams to watch out for, as well as things you can do — or things you can avoid doing — to help protect yourself from financial scams.

9 common scams to watch out for

Scams can come in many different forms, but there are a handful that, according to the Consumer Financial Protection Bureau and Cybersecurity & Infrastructure Security Agency, are most common.3

Charity scams

A charity scam is one where the scammer pretends to be involved in a charity — it could be a real charity but is often a fake one. They may claim to be raising money for anything from childhood cancer to natural disaster relief. But when you donate, rather than your money going to a good cause, it goes directly to the scam artist.

If you’re being contacted about making a charitable donation, start by verifying the legitimacy of the organization. You can use a charity database to help determine whether the charity is real. Examples include CharityWatch, Charity Navigator, and BBB Wise Giving Alliance.

Once you’ve verified that the charity is legitimate, donate through the organization’s official website rather than by sending your money to an individual.

Debt collection and relief scams

Unfortunately, scammers often target people in financially vulnerable situations, including those in debt. Debt collection scammers may contact you to pose as debt collectors trying to collect a debt. It could be a debt you’ve already paid or even one that isn’t yours at all.

There are also common debt settlement and relief scams where bad actors promise to help you settle or renegotiate your debt. These scammers pose as legitimate debt collection or debt relief companies, but they actually charge you an upfront fee and pocket your money. Not only can they leave you further in debt, but they can also damage your credit.

Phishing scams

A phishing attack usually comes in the form of an email or text message designed to get you to click on a link and either infect your computer with a virus or get you to share personal information, such as your Social Security number, bank account login, credit card numbers, and more. For example, someone might send an email impersonating your bank to solicit your login information, which they then use to hack your bank account.

Romance scams

A romance scam, also known as a sweetheart scam, is one where the scammer tricks you into falling in love with them and pretends to fall in love with you. But the ultimate goal is to get close enough to you to steal from you.

A romance scammer might use social media or dating apps to connect with potential victims and then ask for money. A well-known example of a romance scam is the Tinder Swindler, where a con artist used dating apps to meet women and then convince them to transfer him money to the tune of millions of dollars.

Imposter scams

When someone uses an imposter scam, they pretend to be someone you know and trust to get money from you. For example, a common imposter scam is a grandparent scam, where someone targets senior citizens and pretends to be their grandchildren in trouble and asks for money. Thinking they’re helping a loved one, the victim then transfers money.

In addition to impersonating a loved one, an imposter scammer could also pretend to be someone from law enforcement, the government, a charitable organization, etc.

Money transfer scams

Scammers often try to get their targets to transfer money to them. There are many ways a scammer might go about this, including pretending to be a friend or family member or pretending to have a product for sale, but when you transfer the payment, there’s no product at all.

For example, there were many scams on Facebook Marketplace and other online sites during the Taylor Swift Eras Tour. Because the resale cost of tickets was so high, scammers were often able to run off with thousands of dollars from a single victim.

To avoid falling for a money transfer scam, avoid transferring money to anyone you don’t know personally. If you’re buying items second-hand, wait until you have the item in hand or use a credible resale site.

Employment scams

There are several ways a scammer might use a fake job posting to take advantage of a victim. First, a criminal might use an employment scam to enlist innocent bystanders to inadvertently participate in criminal activity.

Other employment scams might include someone listing a job post for a well-paid at-home job. It seems too good to be true, but then you’re asked to send money upfront for training or other purposes, only to learn there’s no job at all.

To avoid falling for this type of scam, make sure to thoroughly vet any employment opportunities, especially those that seem too good to be true or those that ask you to send money upfront.

Mortgage closing scams

A mortgage closing scam usually targets someone who is in the process of buying a home and is nearing their closing date. The scammer contacts the home buyer and tries to get them to send their down payment and closing costs to them. It’s only later that the home buyer learns it was a scam and they’ve lost that money. Unfortunately, the scam may even prevent them from being able to close on their home.

If you ever receive a phone call or email that you fear may be a mortgage closing scam, contact your real estate agent or attorney. As your primary point of contact, they can tell you what’s legitimate and what’s not.

Prize scams

You might be targeted for a prize scam if you’re contacted by someone telling you that you’ve won a prize through a sweepstakes or lottery. You’re asked to provide upfront payment for taxes or fees, but there’s no prize once you send the money.

To avoid losing money to this type of scam, be cautious if you're contacted about winning a sweepstakes or lottery you didn’t sign up for. Additionally, never hand over an upfront payment for a prize.

How to avoid becoming a scam victim

Falling for a scam is a significant fear for some people, while other people give it little thought. Regardless of which camp you’re in, there are minor steps you can take and things you can do to help avoid becoming the victim of a scam:

  • Be wary of communications from people you don’t know. Scams often involve unsolicited communications, usually from a phone number or email address you don’t know. Con artists usually contact you first, and it should be a red flag to hear from someone asking for money when you haven’t contacted them first.
  • Always verify before you send money. When you’re sending money to someone you believe to be a friend or family member, double-check the information before hitting send. And if you’re donating money or making an online purchase, do it only through official channels to make sure your money is going exactly where you think it is.
  • Never share personal information online. Your bank, the federal government, and any other official organization will typically not email you to ask for very personal information. If you receive an email asking to share your Social Security number or bank account number, contact the organization that’s supposedly contacting you to verify.
  • If something seems too good to be true, it probably is. Whether it’s a great job offer or a sweepstakes you won without even entering, be wary of any opportunity that seems to appear out of thin air.
  • Don’t succumb to pressure. When a scammer is trying to get money from you, whether it’s from an imposter scam, an employment scam, a prize scam, or anything else, they will often apply pressure to send money as quickly as possible. If the person you’re communicating with isn’t comfortable with you taking time to vet the opportunity, it should be a red flag for you.



1 U.S. Federal Trade Commission, “New FTC Data Show Consumers Reported Losing Nearly $8.8 Billion to Scams in 2022,” February 2023.

2 Vox, “Gen Z falls for online scams more than their boomer grandparents do,” September 2023.

3 Cybersecurity & Infrastructure Security Agency, “Secure Our World.”


Erin Gobler


Erin Gobler is a money coach who helps people pay off debt and reach their big financial goals without giving up spending on the things they love. She is a freelance writer for Empower.

Author is not a client of Empower Advisory Group, LLC, and is compensated as a freelance writer.

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