2021’s Most Common Financial Scams

From Birch Gold Group

Among the many contenders for the most frequent scams in 2021, Business Insider has selected the five most frequent offenders. Last year, there were more than 800,000 scams with some form of online presence, resulting in losses of more than $4.2 billion. Scammers haven’t taken it any easier this year, and the diversity of the scams shows that caution and common sense should be part of everyone’s daily routine.

Partial identity fraud

While identity thefts have been around for ages, a new take on these has made it to the top of the list. Financial planner Justin Nabity calls these “synthetic identity fraud”, although “partial identity fraud” might be more accurate. In short, Nabity says that hackers obtain just part of your personal information and spoof the rest. That’s enough to pass many institutions’ security checks and to perform illicit transactions.

How much information do scammers need? Not very much… Since having your address alone can be all that’s necessary to trick a bank or broker, it’s even more vital to keep your information private. Nabity recommends turning to the basics by making strong passwords for online accounts.

Pump and dump scams

Second on the list is a variant on stock scams, this time including cryptocurrencies.

With 2021 being a breakout year for crypto, financial planner RJ Weiss says that this has been a particularly prominent scam. Celebrities or famous individuals are paid to promote cryptocurrencies with little to no value. Most often this takes the form of a give-away in the specific crypto they’re touting. After attracting enough buyers to drive the price up, they sell their holdings and walk away, leaving latecomers holding now-worthless crypto.

This is a popular form of scam because, unlike with the penny-stock pump-and-dump scams we’re familiar with, cryptocurrencies don’t have a plethora of federal agencies like the SEC or FINRA policing them. And where the law is weak, fraudsters can grow strong.

A little research into a cryptocurrency’s team and standing should be enough to avoid falling for this kind of scam.

Short-squeeze stock scams

With GameStop’s stock exploding and the physical silver market getting its own grassroots movement, there have been plenty of short squeeze theories online as to what the next upswing will be. While not always a scam by definition, SEC-registered investment advisor Asher Rogovy notes that misinformation can nonetheless attract investors into making rash decisions.

Sometimes, the short squeeze attempt will be organized by a group which intends to sell a company’s stock once it has inflated its price to sufficient levels through propaganda. Remember: any investment that isn’t based on the asset’s fundamental value has an extremely high risk of going to zero.

If in doubt, consider the source of the information. Don’t let peer pressure push you into making a financial decision you’ll regret.

Celebrity charity scams

CPA Zach Reece says that celebrity impersonations with claims of holding charity events have risen to even greater prominence. This is a pretty straight-forward scam: someone who happens to look like famous person reaches out (usually through social media) targeting you based on your interests. They’re putting together a charity fundraiser to benefit a cause you’re interested in. Could you help them get the event off the ground by pledging a few dollars as a supporter?

There is little reason to trust a celebrity more than one would any other stranger. This stands especially true if the stranger in question is asking you to send money to them (or someone they’re affiliated with).

We don’t want to dissuade you from charitable donations, but please do a little research first. Make sure you’re corresponding with an official account on social media. Don’t succumb to high-pressure tactics. Most of all, be willing to say, “No.”

Stimulus check scams

We discussed stimulus check scams in-depth in an earlier article. As we’ve noted, scammers are quick to take advantage of a hectic situation and have devised numerous ways to use the allure of government grants to get citizens to part with their cash and personal information. “Stimulus checks” aren’t necessarily the only bait that criminals like to dangle; you may hear pitches for Covid relief, tax rebates, advance child tax credit payments (whether or not you have children), free government grants you never applied for and so on.

The unifying theme here, and pretty much with all financial scams and money cons, is the same: You can get something for nothing, right now. Some may think that sounds like an opportunity.

Wiser heads will recognize the opening lines of a classic scammer’s pitch, and respond accordingly.

Knowing what to look out for is key to defending against most scams. To help you detect and avoid financial scams, Birch Gold Group has pulled together an extensive resource guide that is now available on our website. The Birch Gold Group Scam Protection Resource Guide helps you identify warning signs and provides you with tips on how to avoid fraud.

2021, cyber fraud, Featured, scam watch