Every parent knows money doesn’t grow on trees. Earning a paycheck can be quite a lot of work, and unfortunately, some people decide to take dishonest shortcuts in an effort to make a quick buck. Yes, fraud can be quite common, which is why we felt it was so important to tell you all about fraud risk examples and how to avoid them.
Scams and fraud can happen nearly anywhere. From that fake email asking for donations to a random call implying that you owe the IRS, scammers are always trying creative new tactics to get their hands on your money. Unfortunately, families make great targets for them, as trust, fear, and a genuine desire to help loved ones in need can make people easier to scam.
As a parent, you might already be up to date on the latest scam tactics, but the same might not be true for your kids. Even if they know what a scam is, can they easily identify one? Well, not to worry. By the end of this article, both you and your child will easily be able to identify a scam at first sight, steer clear, and help keep your family safe from the potential risks.
Table of Contents
What Is Fraud?
Fraud takes place in many forms, which is why there are so many different fraud risks examples that you’ll want to get familiar with. Fraud and scams go hand in hand, but it’s important to note that not all fraud is a scam. There are many different types of fraud, but basically, you can explain it like this: fraud is lying about something to gain an advantage (like identity theft), whereas scams are a specific type of fraud designed to get money, personal information, or other valuables from a person.
The potential fraud risks vary depending on the type of fraud, but the basic tactics used are almost always the same. The fraud triangle is made up of three parts: motivation, opportunity, and rationalization. Fraudsters look for moments where they can make lots of money easily with little risk to themselves.
Unfortunately, this makes families a prime target for these deceptive third parties. Parents are often eager to help, even if they’re spread too thin to check the tiny details, making human error a great opportunity for these scammers. Children, on the other hand, might not understand the significant risk of something as simple as clicking a link in a web browser.
The financial losses from even simple fraud incidents can be quite problematic. Fortunately, by informing yourself and your family, you can help reduce the risk of fraud to a more acceptable level.
Common Fraud Risks Examples and Scams Families Should Know
Now that you have a general idea of what you’re up against, let’s start getting a bit more specific! Next up, we’re going to share seven common scams that both you and your kids should get familiar with. Once you know what to look out for, avoiding becoming a victim will be much easier.
Phishing Emails and Texts
Have you ever gotten a text or email that seemed legit, except that something was off about it? Urgent requests (such as “Act now or your account may be suspended”), misspelled words or names, and odd links are all red flags that a seemingly legitimate message might actually be a phishing attempt. But what is phishing?
Well, phishing is basically the act of sending a message that seems real in order to get the recipient to provide valuable information to the scammer. This could be a number of things, from your name or credit card to your social security number.
It can sometimes be hard to tell which messages are real and which ones are fake, especially for children. Fortunately, the solution is easy. If you get an unexpected message, never open the link. For kids, it’s best to tell a parent right away so they can check things out. For parents, go to the official website—or call the official number—of the supposed sender and handle business from there.
Imposter Scams
Imposter scams are another one of the common fraud risks examples. For this type of fraudulent activity, a scammer calls the victim up and demands money. They often pose as the police or the IRS to make the demands seem real. More recently, scam callers may even pose as a relative in trouble, using voice cloning technology to add to the realism.
Any calls that happen out of the blue, demand immediate payment, or try to pressure you are likely imposter scams. Calls from the “police” or the “IRS” are easy to disprove. Simply hang up, then call the official number if you think the problem is real. Remember, it’s extremely easy for scammers to change the Caller ID number, so you can’t rely on this alone to verify the caller.
That brings us to our next point, which is the importance of a family safe word. This is a word that only you and your family members will know. If you get a call from a family member but aren’t quite sure that the caller is who they say they are, you can easily use this safe word to verify.
We recommend using something completely random and non-relevant to increase the reliability of this tactic. After all, your safe word won’t be much good if a scammer can simply figure out the answer from a quick web search!
The takeaway: Parents and children alike should simply hang up the phone. For kids, make sure to tell your parents about these calls right away. For parents, call the official number and verify that the claims are accurate.
Charity Scams
Scammers sometimes will try to take advantage of people’s generosity, especially in times of crisis. Generally, they’re trying to make quick financial gains, although they can also get useful information for scams later on from information sharing.
If you get a call or text from one of these fake charities, there are a few things to look out for. Do they have an official website? Do they have clear contact information? Do they provide additional details when asked? If the answer to any of these is no, then you might be dealing with a charity scammer.
Make sure that your kids know to tell you right away if they get a message asking for donations, even if they think the charity is real. From there, you can check the legitimacy online, ensuring that the charity has clear donation policies and trusted ways to contact them. If so, then feel free to donate – it’s great to help those in need! If not, however, then you may want to consider reporting the so-called “charity” to the FTC.
Tech Support Scams
If your computer doesn’t have an ad-blocker, then you might find yourself facing an urgent-looking pop-up ad, claiming your computer is infected with a virus and providing a number for you to call. You might also just randomly get a call claiming the same thing. Either way, the message is a scam and carries many potential risks.
These scammers will try to pressure you, pushing the urgency of your supposed computer issues and demanding up-front payment to fix these imaginary problems. For kids and parents alike, the best action to take is the same. Just hang up!
In general, this type of scam is pretty easy to identify when compared to other fraud risks examples. Still, if you are worried about viruses or computer problems, contacting your ISP, computer manufacturer, or local computer store is your best bet.
Online Storefront Scams
This one is especially important to discuss with your kids, as it’s one they’ll likely run into and could easily fall for if they’re not informed. For this type of fraud, scammers will usually make online stores that offer popular items at heavily discounted prices. Once you pay for it, however, your money is gone, and the item never shows up.
These sites are fairly easy to identify, though, through their extremely low prices, a lack of reviews, and no visible return policy all posing red flags. Kids should always check with their parents before making a purchase, even if the deal looks great. Together, you can check if the site is legitimate and decide if the item is worth purchasing.
Fake Job Offer Scams
This is a type of scam that really only applies to parents, but it’s definitely one you’ll want to know as falling for it could mean ending up as a victim of identity theft. You see, employee fraud isn’t the only type of fraud going on at the office. In fact, there might not even be an office at all!
Creating a job listing online isn’t very hard, and scammers take full advantage of this. They post fake job offers, wait for people to apply, and then tell the victims that they’ve been selected for the job. The catch? They’ll have to pay for training, uniforms, or other “work-related” supplies first if they want to lock in their new position.
As you’ve probably guessed, the position never existed. The scammers will simply take your money and then likely never reach out to you again. Even worse, they may have gathered some personal information from you during the “interview” process, putting your identity in danger.
When in doubt, it’s best to just ignore these job offers.
Prize Scams
Last but not least, we have yet another one of the popular fraud schemes : the prize scam. Whether it’s that “free vacation” offer or a huge cash reward for a raffle you don’t remember entering, the conditions to “claim” are the same. You’ll have to pay to play.
Like jobs, you shouldn’t have to pay upfront to “lock in the offer”. Any messages asking you to pay a sum of money to claim your reward should instantly be written off as a scam. The idea of lots of money can be especially enticing to the little ones, so make sure they know that these “amazing offers” are never the real deal.
The best plan of action is easy. Just delete and ignore the message. Avoid writing a response (no matter how tempting it may seem), as all this does is confirm to the scammer that they’ve reached a potential victim.
How to Proactively Protect Your Family’s Info
Now that we’ve gone over all the different fraud risks examples, let’s dive into what you and your kids can do about it. Ultimately, educating yourself and taking preventative measures ahead of time can go a long way.
Teach Your Kids About Credit Reports
Your little ones might be a bit young to start worrying about their credit score, but nonetheless, credit scores and reports are good concepts for them to know! The credit report is especially important, as it shows all of your accounts, when they were opened, and financial records of how they’re doing.
Keeping a close eye on your credit report is a good habit to have, especially when it comes to fraud detection. If an account you don’t recognize is opened under your name, you can react in a timely manner, limiting the damage caused by the fraudsters. Individuals usually don’t get exception reports, but you might get credit monitoring reports instead. Still, it’s best to take a proactive approach yourself, rather than relying on fraud detection notifications.
Go Over Safe Online Banking Practices
Using unique passwords is one of the best practices that people often forget. Never use the same password for your bank as you do for other websites. This is important to teach your kids, as it’s easy to fall into the habit of using the same password for every website.
This poses a real risk though. If one of your accounts is compromised, scammers won’t need to use data analytics or artificial intelligence to break into your other accounts. They can simply use the same password! No good.
Using unique passwords won’t protect you entirely, but it’s a great start. For even more protection, set up two-factor authentication on all of your accounts, and make sure your kids learn how to do this as well. Like a password, it’s not perfect, but it can greatly reduce the likelihood of someone gaining access to your accounts.
Encourage Internet Safety
The internet can be a great place. It’s a seemingly never-ending source of knowledge, a vast wealth of opportunities, but also a scammer’s playground. Of course, this doesn’t mean that your kids need to be completely cut off from the internet, but it does mean that you’ll need to arm them with the best practices to help keep themselves safe on their personal use devices.
Simple, straightforward rules are best when it comes to preventing scams. Don’t click on unknown links, never share personal information, don’t accept friend requests from strangers, and report suspicious content. If you have to ask yourself, “Is this a scam?”, just assume that it is.
If You’ve Already Been Affected
Hopefully, you don’t have any personal experience with the fraud risks examples we’ve gone over so far. Still, anyone can fall victim to the various types of fraud out there. If you do, recovering your funds and securing your information becomes a top priority. Fortunately, you won’t have to do it alone, as there are many different resources you can reach out to.
On a local level, your local police department, State Attorney General’s office, and consumer protective services are great places to start beyond your bank. They will know the applicable law, be able to gather any additional information they might need, and help you start the process of recovery. Individuals and small businesses can make a lot of headway by starting the recovery process locally.
Support groups offer a source of support, where victims of fraud can come together, share experiences, learn, and help prevent the likelihood of fraud occurring in their communities. These groups are great if you’re feeling the burden is too much to bear. You’re not alone, and these groups are here to help you through it.
In terms of national resources, the FTC (Federal Trade Commission) is worth reaching out to. They provide resources to everyone, from individuals and business owners to entire financial institutions. They have a deep understanding of fraud risk and can help you recover from losses. Additionally, they also take reports for potentially fraudulent activities, so you can help protect others from becoming victims as well.
FAQs About Fraud Risks Examples
What are online fraud 3 types?
The three main types are phishing, identity theft, and account takeovers. Phishing is a tactic used to send legitimate-looking messages that gather personal information, while identity theft generally involves using your information to create new accounts or make purchases. Account takeovers, as the name implies, involve taking complete control of your account(s).
What are the risks of online scamming?
The main risks are financial loss and identity theft. However, depending on the type of scam, malware—software designed to compromise your computer—may also pose an issue.
How to spot internet fraud?
There are a number of tell-tale signs you should look out for, but the most common ones are messages from unknown email addresses/phone numbers, misspellings, poor grammar, and a sense of urgency.
Now that you’ve familiarized yourself with all of these fraud risks examples, it’s up to you and your family to keep yourselves safe. Effective fraud risk management involves everyone, so make sure that you go over all the fraud risk factors and best practices with your kids.
Scams are widespread, and people fall victim every day, but you don’t need to be one of them. By arming yourself and your loved ones with the right knowledge, you’ll be able to create a comprehensive approach that helps keep your family’s finances safe in the years to come.
