How to Look Out for an Online Bank Scam


The internet has changed our lives in so many ways, especially how we bank. There is no question that online banking and mobile apps have made banking easier, but the downside of online convenience is the increase in the number of online scams.

According to the Federal Trade Commission (FTC), there were 1.4 million fraud reports filed in 2018 and fraud losses of $1.48 billion, an increase of 38% over 2017.  Most online scams come in the form of phishing attempts. Phishing is when a fraudster poses as someone else in an attempt to acquire personal information they can use for identity theft or fraudulent transactions. The most common phishing attacks are designed to get you to divulge a password or login credentials, financial information such as your bank account or credit card number, or personal information such as your social security number. Phishing attacks are made by phone, text, and email, but email phishing attacks tend to be the most insidious.

Common Online Scams

Most digital bank fraud starts with a phishing message, so you should know what to watch for when looking for spoof emails. Here are some of the most common types of online scams:

  • Credit card and bank account scam: This type of attack starts with an email, purportedly from your bank or credit card company, requesting that you update your account or perform some other action. The email includes a link that directs you to a phony site, which asks for your social security number and other information. Such scammers are skilled at creating email messages and websites that look authentic but are fake. Whenever you get a request to click a link in an email, don’t do it! Instead, go directly to the bank or credit card website using your browser to see if the request is legitimate.

  • Check or transaction overpayment scam: This is a popular form of fraud that targets online sellers from Craigslist, eBay, auctions, and so on. Typically, a fraudulent buyer will overpay for a transaction using a non-cash payment, such as a check. They then come back asking the seller to refund the difference, and by the time the seller realizes the original payment is fake, they have already been bilked.

  • Charity scam: You probably receive plenty of requests for money from different charities. Some may be legitimate, but many of them are phony, looking to gain access to your bank account or credit card for a direct funds transfer. For example, requests for donations to local law enforcement and the military are common, but they often are from scammers looking to take your money.

  • “Guaranteed loan” scam: This type of scam preys on those who have poor credit or trouble borrowing money, promising guaranteed loans at attractive rates. The scammer’s only goal is to get your personal information. Anytime someone comes to you offering money, even borrowed money, be extra cautious.

  • Blackmail scam: Another scam that is becoming more common is the blackmail scam. This usually comes in the form of a ransom email from someone saying they have stolen your passwords and will share personal photos or embarrassing information with everyone you know if you don’t send a payment, usually in the form of bitcoin. They may even present an old password as proof. These are usually baseless scare tactics and can be ignored, but they are a good reminder to change your passwords often and use complex password combinations—and to be careful about what photos you share online.

  • “You are a winner” scam: Another common scam involves an email congratulating you for winning a foreign lottery. You also may receive an offer for an unbelievable trip at little or no cost. Remember, if it’s too good to be true, then it’s likely a scam.

Related: Download the Financial Survival Guide and get on your way to financial  success.

Protecting Yourself Online

The best way to avoid online scams is to use common sense. You are the one responsible for controlling your identity, so be cautious about where you share personal information. If you receive a request for personal information, even if it looks legitimate, think carefully before responding. Here are some obvious telltales suggesting you are dealing with a scammer:

  • What types of information are they asking for? If the application is asking for personal information or sensitive data such as your social security number, then be wary. Consider trying to access the same service or offer through another channel, such as going directly to their website or through a web search.

  • How do they want you to pay? Credit cards are protected against most types of fraud, but if someone requests a wire transfer or cash to complete a transaction, that should give you pause. Cash, direct deposits, and wire transfers are highly susceptible to fraud, and once the money is gone, you can’t recover it.

  • Do they ask for payment up front? If the transaction requires advance payment, then consider the source. If it’s a legitimate online business, then prepayment is expected; otherwise, be careful.

There are other ways to protect yourself. Keep a close watch on bank and credit card statements and look for unauthorized transactions. Watch your credit score and make sure there aren’t unauthorized credit cards or other accounts opened in your name. You also can protect yourself by putting a freeze on your credit so no one can use your stolen identity.

Anyone can fall victim to an online scam, no matter how careful they are. Defend yourself by using common sense, and making sure you have someone like iQ Credit Union in your corner if you do become a victim of an online scam.

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