Preventing Financial Fraud: Tips for Identifying Social Engineering Scams

In 2023, consumers lost more than $10 billion to fraud, with $1.8 billion attributed to bank transfer or payment fraud, according to the Federal Trade Commission (FTC). Imposter scams were the leading type of fraud, with scammers contacting victims via social media resulting in $1.4 billion in reported losses.

These eye-catching numbers highlight the importance for consumers to educate themselves on scam prevention. One of the most prevalent and sophisticated methods used by fraudsters currently is social engineering, often enhanced with artificial intelligence (AI) and deep fakes.

Here are tips on how social engineering scams work and ways to protect yourself and your finances.

How Social Engineering Scams Work

With social engineering scams, fraudsters try to psychologically manipulate individuals into divulging confidential information, often under the guise of it being a “legitimate” request. Among common tactics:

• Spoofing: Fraudsters spoof phone numbers and email addresses to appear as legitimate businesses, such as your bank. Oftentimes, scammers will say there is an “issue” with your account and they need some information to resolve it.
• Deep Fakes: With the continued growth of AI, scammers are taking their tactics to the next level by creating realistic videos and voice recordings that mimic your loved ones. Using photos, videos and other information taken from publicly available websites like your social media profiles, they can create realistic deep fakes to trick you into thinking a friend or family member is contacting you.
• Romance Scams: Fraudsters have also been known to create fake identities to form a “loving” relationship with their victims online via social media or dating apps before getting to their payoff. With a romantic or personal connection established, victims are more likely to ignore potential red flags and comply with the fraudster’s requests.

• Urgency and Pressure: Like many scams, fraudsters work to create a sense of urgency to prompt immediate action without giving you time to think.
• Isolation: Fraudsters do not want you to confer with others about the actions they are urging you to take, as others are likely to offer a clearer perspective and warn you it could be a scam. One of the tactics fraudsters use is impersonating a bank employee and telling you other bank employees may be involved in perpetrating a fraud against you. Under the guise of keeping your account safe, the fraudster instructs you to speak only with them about your situation.

• Untraceable Payments: Fraudsters often request payments in ways that are more difficult to trace and recover like cash, gift cards or cryptocurrency. If you’re asked for payment through these methods to resolve an “issue” with your account, it is a red flag you’re being scammed.

Strategies to Protect Yourself

It’s crucial to be vigilant and take proactive steps to safeguard your personal and financial information, including:

• Set Profiles to Private and Watch What You Share: Check the visibility of your social media profiles and consider limiting it to friends and connections only – reviewing your connections and removing any suspicious ones is also a good idea. Be mindful of what you post online, and avoid sharing personal information, addresses, vacation details and other sensitive data that scammers can exploit.

• Have a Healthy Dose of Skepticism: Exercise caution when answering calls from unfamiliar numbers. If you receive a suspicious call or text from someone claiming to be a friend or family member, try to contact them directly using a known number.

• Know Your Bank’s Communication Styles: Familiarize yourself with how your bank communicates with you. If you receive a suspicious message, do not respond or click any links. Instead, contact your bank directly using the phone number on their official website or on your debit/credit cards.

• Take a Deep Breath: Scammers rely on creating a sense of urgency to get you to act without thinking clearly. Take a moment to breathe and think before responding to any urgent requests for money or personal information. Consider consulting with trusted family members or friends before taking any action.
• Monitor Your Financial Accounts Regularly: Use online and mobile banking to monitor your accounts for any suspicious activity and report any unauthorized transactions to your bank immediately. Enabling features like two-factor authentication can add a layer of security for online accounts.

What to Do if You’ve Been a Victim

If you’ve been the victim of a scam, acting quickly can help minimize the damage. Steps to take include:

• Contacting your bank to freeze your accounts, get new account numbers and debit/credit cards, and taking a close look at your statements to identify any fraudulent charges.
• Filing a report with the police, Federal Trade Commission (reportfraud.ftc.gov) and Federal Bureau of Investigation’s Internet Crime Complaint Center (IC3.gov).
• Placing a fraud alert on your credit report with Equifax, Experian and TransUnion.
• Updating your online account usernames and passwords, and having any compromised devices professionally cleaned.

Social engineering scams are evolving rapidly, thanks in part to fraudsters leveraging technologies like AI and deep fakes to deceive unsuspecting victims. By staying informed and remaining vigilant, you can reduce your risk of falling victim to these scams.