Avoiding financial scams in the digital age

The digital age brings a lot of benefits to everyday life, but it also comes with risks like more advanced financial scams. It’s safe to say fraud is climbing, with consumers losing more than $10 billion in 2023 – an all-time high reported by the Federal Trade Commission.¹ To protect yourself and your finances from fraudsters, it’s important to be able to spot a scam before it’s too late. Here are some common ones you might run into.

Pig-butchering scam

Consumers lost more money to investment scams than any other category in 2023.¹ One of these is known as the pig-butchering scam. The name comes from the practice of farmers fattening hogs before slaughter, much like fraudsters lure people into handing over their money for fake investments. Every instance looks a little different, but the scammer will usually do something like this: 

1. Send you a “wrong number” text or online message. Scammers need a seemingly natural way to start conversation with you. They’ll often message you, then “realize” they have the wrong person but continue to chat with you. If they’re reaching out on social media or a similar website, they’ll likely be using a fake profile – maybe one that makes them look like they live a lavish lifestyle.
2. Gain your trust. They usually won’t get straight to the scam because they know it would look suspicious. Instead, they might talk to you about something that matters to you – friends, family, work – so you feel more comfortable with them.
3. Talk about investing. Once they feel they’ve developed a good rapport with you, they’ll try to get you to invest in something. They might claim to be a successful investor themselves and tell you about a “brokerage” that will make you a lot of money.
4. Get you to transfer money. This might be through an app (MetaTrader is a common one) the scammer claims is secure when it’s not. They’ll lead you to believe you’re transferring money to some sort of account that you would own, when really, your money is going directly to the scammer’s account.
5. Cut you off. Once they’ve made enough money, the fraudster may stop talking to you suddenly.

While the pig-butchering scam might sound easy to spot, people lose money to it every day – sometimes hundreds of thousands or even millions of dollars. Remember, this is a full-time job for fraudsters, so they keep getting better at it. But you can protect your information by staying educated on scams and following best practices for avoiding them.

Tip: When in doubt, step back. If you’re approached with a potential scam and you aren’t sure what to do, it will never hurt to wait and investigate. Plus, it’s a red flag if someone is rushing you to act.

Generative AI financial scams

Generative artificial intelligence (AI) is a tool that can create text, images, videos and more using data from all over the internet. It can write articles, piece together videos and even create websites. 
Posing as another person or company certainly isn’t a new tactic for stealing money, but generative AI makes it a lot easier for scammers to pull off. Look out for:

Deepfakes

Scammers know trust goes a long way. They’ll use generative AI to resemble someone you know in an image, video or audio clip to convince you to hand over money or personal information. Deepfakes could come in many forms, like: 

• Phone scams. You might get a phone call from someone posing as your family member by impersonating their voice, telling you they urgently need money for something like bail or kidnapping ransom. Just because it sounds like your family member doesn’t mean it’s them.
• Fraudulent social media ads. Maybe an influencer or public figure you follow is directing you to a suspicious website or asking for donations. It could be a scammer using AI to look or sound like that person you trust.
• Impersonation of your employer. Let’s say your “CEO” asks you to wire money to an account. They might even have a video call with you to put your concerns at ease. Even if you’re looking right at them, it could be a deepfake. 

Tip: If you suspect someone is posing as another person, go directly to the source. For example, if your “family member” calls you from an unknown number, call their actual number to see what’s going on.

Email scams

With the amount of information at scammers’ fingertips using generative AI, they can create fake login pages, invoices and more with similar branding to organizations you know and trust. This makes it easy to send out phishing emails, where you’re tricked into providing personal information or clicking on harmful links. Common examples of phishing emails are: 

• Account deactivation warnings. Scammers might pose as a subscription service, for example, and tell you to confirm your payment details or password to prevent your account from being deactivated.
• Fake invoices. You might receive an email from a company you’ve done business with and even an invoice that looks like the real thing when it’s not.
• Compromised credit card alerts. A fraudster could send you an email posing as a retailer you recently bought something from, telling you your credit card information has been compromised. They’ll ask you to confirm your credit card details to protect your account.  

Ransomware attacks

Like other financial scams, ransomware attacks are on the rise. Ransomware is a type of malware that holds a victim’s data or device hostage until they pay a ransom. Cyber attackers typically target organizations like businesses, hospitals or school systems, but even individuals could be victims of it. The attacker might threaten to destroy data or do other alarming things if they don’t receive their ransom, forcing many people to weigh the pros and cons and ultimately pay up. Whether you’re acting as an individual, employee or business owner, you should:

• Be cautious of emails that require you to act.
• Back up your data so it’s available to you outside of your device.
• Change passwords to sensitive accounts regularly.
• Only download applications from trusted sources.
• Stick with secure Wi-Fi networks, not public ones.
• Keep an eye out for all the scams mentioned in this article.
• Contact local authorities if you’re targeted with ransomware.

Education is the key to prevention

Because financial scams in the digital age only get more sophisticated over time, it’s important to stay in the know. Check out our other financial security articles and do a quick online search if you’re ever unsure about something. Above all else, remember to trust your instincts and give yourself the time to investigate anything that seems suspicious to you.