Beware of These 4 Scary Scams

For scammers out on the prowl, it’s all trick and no treat. This Halloween, we’re warning you of four types of scams that could gravely poison your finances. Keep reading so you don’t fall for the hocus pocus!

Mortgage Scam: Loan Flipping

Be Cautious of Multiple Mortgage Refinancing at Low Rates

You’re in a dark place. You’ve encountered financial hardship, but now you’ve been offered the chance for refinancing at a lower rate, but don’t take the bait! These loan flippers encourage repeated refinancing and “flip” your current loan, so you borrow more money and cash out equity. The scammer also swindles you into paying exorbitant fees and closing costs. Next thing you know, your equity’s gone, and the scammer vanished with your cash.

What to watch out for:

  • Upfront and alarmingly high fees
  • Offers for multiple refinancing; avoid doing one transaction right after the other
  • Fake “lenders” who have actively sought you out; always check with your credit union lender who can help and verify your options

Student Loan Scam: Too-Good-To-Be-True Help

Beware of Deceptive Student Loan Debt Companies

Haunted by sky-high debt? You’re an ideal target for student loan companies offering loan consolidation or immediate forgiveness, or better interest rates and terms. Scammers have collected $95 million in illegal fees for these false promises! In response to widespread and misleading loan forgiveness, the Federal Trade Commission even launched the Operation Game of Loans to crack down on these relief scams.

Signs for when you should RUN:

  • An advanced, upfront fee required before the service
  • Bogus processing or administration fees for consolidation
  • Promises of debt elimination with act-now urgency
  • Any time you’re asked to provide personal information like your FSA ID password

IRS Scam: Ghost Tax Return Preparers

Fraudulent Return Services from the Paranormal

It’s nearly the April deadline. Stressed about filing your taxes, you unwittingly resort to an unscrupulous “professional” who doesn’t sign the return or include their preparer tax ID number. You’re told to sign and return it to the IRS yourself as the preparer disappears, leaving you responsible.

Be suspicious when the preparer:

  • Inflates your return (preparers are paid based on a percentage of your refund — or charge fees depending on that percentage, according to the IRS)
  • Requires cash payment and doesn’t provide a receipt
  • Invents income or outlandish deductions
  • Offers to give you your money upfront by depositing the refund into their own bank account

Identity Theft Scam: Security and Data Breaches

Cybercriminals on the Hunt to Capture Your Identity

Here’s a scary statistic: In 2018, there were 1,244 breaches and over 445 million records exposed. Hacking was the most common form of data breach, according to the Identity Theft Resource Center. Attackers break into systems for names, credit card numbers, birth dates, contact info, passports and other private information. A data breach further opens up the opportunity for scammers to steal your info through fraudulent breach settlement emails, phone calls and websites.

When you’re a victim of a data breach nightmare:

  • Confirm that you’ve been affected by directly contacting the company or ensuring an email’s validity (watch out for suspicious emails with links)
  • Determine all the information that was compromised
  • Contact the appropriate institutions, such as a credit reporting bureau, your credit union and Social Security office if your number was stolen
  • Change logins, passwords and security Q&A’s
  • Get credit report monitoring or identity protection services

Fraudsters and scammers lurk everywhere for unsuspecting and vulnerable victims, but you can protect yourself by looking out for questionable loan refinance offers, outrageous student loan claims with high upfront fees, and eerie tax preparers and behaviors. Lastly, create a complex passphrase over a password, use a credit card for less liability and act immediately after receiving a data breach notification.

See Secure U’s Scam and Fraud Curriculum

Grow Your Knowledge

The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.