Artificial intelligence tools and sophisticated technology are making it harder for consumers to spot scams.
Fraud cost U.S. consumers more than $7 billion during the first three quarters of 2023, according to the Federal Trade Commission. Those figures are up 5% compared to the same period in 2022.
“Fraud is at a crisis level in this country,” said Kathy Stokes, director of fraud prevention programs at AARP.
Perpetrators of these types of crimes may be organized gangs or transnational criminal enterprises with employees who have scripts they follow to lure victims. “They have the money, they have the time and they’ve got the playbook to get you into that heightened emotional state,” Stokes said. “It’s us against them.”
The most crucial step to avoid being scammed is knowing what could happen and discussing it with family and friends. When people are aware of a specific scam, they are 80% less likely to engage with it, and if they do engage, are 40% less likely to lose money or sensitive information, according to the FINRA Investor Education Foundation.
Here are five of the top financial scams you should look out for in 2024, and ways to avoid becoming a victim.
1. Grandparent scams
Playing on people’s emotions by targeting personal relationships and posing as someone they care about is a starting point for many fraud schemes.
The grandparent scam is becoming a more damaging version of imposter scams with advanced technology. Thieves can capture a voice recording and then generate an imitation version of your voices that can be used to impersonate you.
Fraudsters may call and pretend that they are a family member in immediate jeopardy — for example, that they have been arrested or are dangerously ill — and urgently needs money. Fraudsters frequently try to isolate their victims by concocting some reason the victim cannot consult with friends, family or law enforcement, such as saying the case is under a “gag order.″
2. Romance scams
Romance scams have been a common way to use new, but fake, relationships to steal people’s money and they are growing in popularity. These scams often start with private messages on social media or dating apps, after thieves review the information posted on these accounts.
Once the new “love interest” gains your trust, they may claim that someone close to them is sick, hurt or in jail. They may claim to be in the military or need help with an important delivery. After telling the lie, they’ll ask for money or a purchase made on their behalf.