Spot the red flags before scammers take your money
Being tech-savvy won’t make you scam-proof — the FTC says millennials lose money to fraud at twice the rate of older shoppers. Two warning signs stand out: anyone asking for prepaid cards, and any deal built around a giant check.
Billshark is sorry to have to tell you this, but just because you’re tech-savvy doesn’t mean you’re immune to scams. In fact, according to the Federal Trade Commission’s (FTC) Consumer Sentinel Network, millennials are twice as likely as people ages 40 and older to report losing money while shopping online, which has added up to nearly $450 million in just the last two years.
The top five frauds to which millennials report losing money are online shopping frauds, business imposters, government imposters, fake check scams, and romance scams, the FTC reports. They are also more likely than their older counterparts to report fraud losses on scams that promise to fix debt-related problems, or that promise money through jobs, investments, or business opportunities.
1 Why Millennials Are at Risk
A recent study by the Better Business Bureau (BBB) backs up these findings, and the firm listed five reasons why millennials are getting scammed so often:
they think they’re invincible, that they’re too educated and intelligent to become a victim, or that scammers only target older people;
they spend more time online, including checking financial data even when using public Wi-Fi;
they’re part of the sharing culture that puts every aspect of their lives online, making it easy for scammers to pick up personal information to use in scams;
they’re more prone to work-at-home scams (which make up about 70 percent of work-at-home offers online); and,
they tend to be generous, making them prone to crowdfunding scams.
Two huge red flags that indicate you’re about to lose all your money involve prepaid cards and large checks that you need to send on somewhere else.
2 Red Flag #1: The Prepaid Card
There are so many twists on this perennial “favorite” that it’s hard to keep up.
The rule of thumb: If you’re talking with anyone who tells you to go and buy prepaid cards and either send them or scratch off the numbers and read them over the phone, hang up. It’s a scam. Period.
No legitimate entity will ever tell you that you need to send payment via prepaid cards. Not the IRS, not AT&T, not the sheriff’s department, not a bank, not Microsoft or Apple, not anyone.
If a very official-sounding person calls to tell you you missed jury duty and must pay a $1,000 fine with prepaid gift cards to avoid jail, hang up.
If someone at Amazon tells you you need to pay a fee with a prepaid card to activate your new Alexa device, hang up. (Even if you called them, you got a phony number.)
If an angry “IRS” official is demanding immediate payment on taxes you owe or you’ll be arrested, hang up. (The IRS will contact you through snail mail, if indeed you are behind in your taxes.)
We repeat, no reputable business or government representative will demand that you pay with a prepaid card.
3 Red Flag #2: The Check in the Mail
The numerous twists on this common rip-off often involve work-at-home scams.
A company will send you a $3,000 check and tell you to deposit it in your bank account and wire the money back to them “to help evaluate money transfer businesses.”
A firm will send you a $1,500 check and tell you to deposit it and transfer the funds to another corporate vendor, who will ship you the supplies you need to get started in your new “job.”
An offer for a “mystery shopping” gig will send you a $2,000 check and tell you to deposit it, report back on the bank’s customer service, then return $1,700 to them and keep the $300 balance for yourself.
No matter how you receive a large check (snail mail, FedEx, hand delivered) or what kind it is (personal check, cashier’s check, money order), do not deposit it in your account.
Banks must make funds from deposited checks available within days, but uncovering a fake check can take them weeks. If a check you deposit bounces—even after it seemed to clear—you’re responsible for repaying the bank. Money orders and cashier’s checks can be counterfeited, too.
Listen to the U.S. Postal Service: “No legitimate transaction includes overpayment or requires a refund.”
It’s important that you understand that if you deposit one of these phony checks, you’re on the hook for the money. This is not something you can dispute; you will have to repay the bank.
4 How to Protect Yourself
If your intuition tells you something isn’t right, pay attention. Even if you’ve initiated a call with a business, check to see that you’ve dialed a legitimate number. If you found them on the Internet, double-check to make sure you have the real company, and not a look-alike website.
And by all means, never send money to strangers via a prepaid card or deposit checks from companies you don’t know if you’re required to wire money back to them.
Remember the old adage: If it seems too good to be true, it’s probably a scam.
One thing that’s not too good to be true is Billshark’s guarantee: If we can’t find you savings on the bills you send us to review, you don’t pay a penny. So contact us today and see how much we can save you.
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Frequently Asked Questions
Is it ever safe to pay someone with a prepaid card?
If anyone tells you to buy prepaid cards and then mail them or scratch off the numbers and read them over the phone, hang up — it’s a scam. No legitimate entity will ever demand payment by prepaid card. Not the IRS, AT&T, the sheriff’s department, a bank, Microsoft, Apple, or anyone else. A reputable business or government representative simply will not ask you to pay this way.
Why are millennials more likely to fall for these scams?
According to the BBB, millennials get scammed often for five reasons: they think they’re too smart to be victims, they spend more time online including on public Wi-Fi, they share many details of their lives online, they’re more prone to work-at-home scams, and they tend to be generous, making them targets for crowdfunding scams. The FTC reports they lose money to fraud at twice the rate of people 40 and older.
What should I do if I receive a large check I’m told to deposit and wire back?
Do not deposit it. No matter how it arrives — snail mail, FedEx, or hand delivered — or what type it is (personal check, cashier’s check, or money order), a large check tied to wiring money back is a scam, often a work-at-home pitch. Common versions ask you to deposit a check and wire money to “evaluate money transfer businesses” or for a mystery shopping gig.
Who is responsible if a deposited check turns out to be fake?
You are. The FTC explains that banks must make deposited funds available within days, but uncovering a fake check can take weeks. If a check you deposit bounces — even after it seemed to clear — you’re responsible for repaying the bank. Money orders and cashier’s checks can be counterfeited too. This is not something you can dispute; you will have to repay the bank.
How can I protect myself from prepaid card and fake check scams?
Trust your intuition — if something feels off, pay attention. Even if you started the call, confirm you dialed a legitimate number, and if you found the company online, make sure it isn’t a look-alike website. Never send money to strangers via prepaid card, and never deposit checks from unknown companies that require you to wire money back. Remember: if it seems too good to be true, it’s probably a scam.
