Banking and Financial Scams

Financial scams target your bank accounts, credit cards, and payment apps. This chapter covers how to protect your finances from sophisticated attacks.

The Financial Fraud Landscape

• Financial services/SaaS/Webmail: 23.3% of phishing attacks
• Banking segment: 11.9% of attacks in Q3 2024
• $4.4 billion lost to payment app fraud in 2024
• $870 million lost via Zelle since 2017
• $2 billion lost through bank transfers in 2024
• Zelle/Venmo/Cash App payments are immediate and irreversible

Common Banking Scams

1. Fake Fraud Alerts

Example:

"Bank Alert: Suspicious $500 charge detected. Call 888-555-0123 immediately to verify."

Red flags:

• Phone numbers in messages (banks use known numbers)
• Pressure to call immediately
• Requests to verify by making payments
• Links to click for account access

What real banks do:

• Call from known numbers on your card
• Never ask for full account numbers or PINs
• Don't send login links via text/email
• Give you time to verify through official channels

2. Account Verification Scams

The tactic: Fake emails/texts claiming your account needs verification or will be closed.

Red flags:

• Threats of account closure
• Links to "verify" account
• Urgent 24-48 hour deadlines
• Requests for passwords or PINs

Protection:

• Log into your account directly (type URL)
• Call bank using number on your card
• Banks send mail for important changes
• Never verify via email/text links

3. "Verify Yourself" Zelle Scams

How it works:

1. Scammer initiates Zelle payment TO you
2. You receive verification request
3. Scammer calls pretending to be bank
4. Claims you need to "verify" by sending money back
5. You send money = you just paid the scammer

Average loss: Can be thousands of dollars

Protection:

• Never "verify" by sending money
• Zelle verification doesn't work this way
• Hang up and call bank directly
• Banks never call asking you to send money

Payment App Specific Scams

Zelle

Vulnerabilities:

• Instant, irreversible transfers
• Tied directly to bank accounts
• Limited fraud protection
• No buyer/seller protection

Common scams:

• Fake fraud department calls
• Overpayment scams
• Marketplace payment fraud

Protection:

• Only use with known, trusted people
• Verify recipient before sending
• No buyer protection - not for purchases
• Can't reverse transactions

Venmo / Cash App

Vulnerabilities:

• Public transaction feeds
• Friend impersonation
• Payment reversals (chargebacks)

Common scams:

• "Accidental" payments asking for refunds
• Fake buyer protection schemes
• Friend account compromises
• Public username phishing

Protection:

• Make transactions private
• Verify friend requests
• Don't send to strangers
• No goods/services protection

PayPal

Common scams:

• Fake invoice scams
• Shipping confirmation phishing
• Account limitation emails
• Friends & Family payment fraud

Protection:

• Use Goods & Services for purchases
• Verify emails are from @paypal.com
• Check account through official app
• Report suspicious invoices

What Banks NEVER Do

Banks will NEVER:

• Call asking for your PIN, password, or full account number
• Send login links via email or text
• Ask you to transfer money to "verify" your identity
• Request you install software or apps
• Threaten immediate account closure
• Ask you to move money to a "safe account"
• Contact you via social media DMs

What Banks Actually Do

Banks WILL:

• Call from known numbers (on your card)
• Send secure messages through their app/website
• Send important notices via mail
• Give you time to respond
• Allow you to verify through official channels
• Have in-branch options for problems

Cryptocurrency Wallet Safety

Risks:

• Irreversible transactions
• No FDIC insurance
• No chargebacks
• Easy to send to wrong address

Protection:

• Store seed phrases offline
• Never share seed phrases or private keys
• Use hardware wallets for large amounts
• Verify addresses character-by-character
• Test with small amounts first
• Enable all security features

Verification Procedures

Before Banking Actions:

1. Pause - Never act on urgent requests
2. Verify sender - Check email/phone legitimacy
3. Independent check - Log in directly, not via links
4. Call official number - From card or bank website
5. In-person option - Visit branch if unsure

For Payment Apps:

1. Know recipient - Only send to trusted contacts
2. Verify requests - Call friend if asking for money
3. Double-check amount - Can't undo most payments
4. Screenshot details - For your records
5. Use protection - PayPal Goods & Services for purchases

Security Best Practices

Account Protection:

• Strong unique passwords for each financial account
• Two-factor authentication (preferably app-based)
• Transaction alerts for all activity
• Regular monitoring - Check statements weekly
• Freeze credit when not actively using
• Password manager to generate/store passwords

Safe Banking:

• Type bank URLs manually or use official apps
• Never use public WiFi for banking
• Keep software/apps updated
• Use secure, private networks
• Log out after each session
• Set up account alerts

Payment App Safety:

• Only link one bank account/card
• Enable all security features
• Make transactions private
• Verify recipients carefully
• Don't use for business transactions
• Keep minimal balance

If You've Been Scammed

Immediate Actions:

1. Call your bank - Use number on card immediately
2. Freeze account - Prevent further transactions
3. Dispute charges - File fraud claim
4. Change passwords - All financial accounts
5. Enable 2FA - If not already active

Within 24 Hours:

6. File police report - For identity theft
7. Report to FTC - IdentityTheft.gov
8. Report to FBI - IC3.gov for large losses
9. Credit freeze - With three bureaus
10. Monitor credit - Watch for new accounts

For Payment Apps:

11. Report to app - Within their systems
12. Contact recipient bank - If you have info
13. File complaint - With CFPB
14. Document everything - Screenshots, conversations

Recovery Reality:

• Bank transfers: Very low recovery rate
• Credit cards: Better protection, can dispute
• Zelle/Venmo: Difficult to reverse
• Cryptocurrency: Nearly impossible to recover

Key Takeaways

• $4.4 billion lost to payment app fraud in 2024
• Banks never ask for PINs or passwords
• Payment apps = cash - instant and irreversible
• Always verify through official channels
• Type URLs manually - never click links
• Enable 2FA on all financial accounts
• Monitor statements regularly
• Transaction alerts catch fraud early
• Credit cards offer better fraud protection than debit
• When in doubt, call bank using known number

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Next chapter: Package delivery scams - how to spot fake delivery notifications and avoid shipping fraud.