6 Scam Red Flags — and How Much It Costs When We Fall for Them

At this point, everyone knows someone who has been the victim of a financial scam. Whether it’s your mom, your co-worker or yourself, fraudsters are getting increasingly sophisticated with the scams they’re pulling.

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A recent GOBankingRates survey revealed the top red flags that tip people off about potential scams. We talked to financial experts about why people still fall for them, and the potential costs of falling victim to these schemes.

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Unknown Sender (33.76% of Respondents)

The most common red flag identified by survey respondents was communication from an unknown sender. Erika Kullberg, attorney and personal finance expert with Erika.com, agreed. “One of the biggest financial red flags is unsolicited communication,” she said. “Doesn’t matter whether it’s a phone call, email or text message, but anything at all that urges immediate action or tries to push you into making a rash move should raise eyebrows.”

Why people still fall for it: Despite this being a clear warning sign, scammers are pretty sophisticated these days with making their “companies” sound legitimate.

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Misspelled Words/Bad Grammar (14.24% of Respondents)

Poor grammar and spelling errors are often telltale signs of a scam, especially if the emails appear to be coming from legitimate organizations.

Why people still fall for it: As scammers get better at what they do, they improve their language skills — or, even more likely in 2024, use AI tools to write convincing messages.

Strange Email Address/Phone Number (11.55% of Respondents)

If you get an email from an odd email address or a call from a phone number that you don’t know — and isn’t searchable on the internet — there’s a pretty good chance it’s a scam.

Why people still fall for it: Scammers like to use email addresses or phone numbers that very closely resemble those of legitimate companies, making it easy to overlook small differences.

Requests for Specific Information or Specific Amounts of Money (8.67% of Respondents)

In a bid to appear more legitimate, fraudsters often ask for specific personal information or exact amounts of money.

Why people still fall for it: The specificity of these requests can make them seem more credible, especially if the scammer has some information about the victim.

Mentions of Packages/Purchases You Don’t Recognize (8.17% of Respondents)

Scammers sometimes try to trick people by mentioning unfamiliar packages or purchases, hoping to catch you off guard.

Why people still fall for it: We’re busy, so it can be easy to forgot about a late-night online purchase. Scammers, in fact, are counting on you questioning your memory when it comes to such things.

Sense of Urgency (5.48% of Respondents)

While only a small percentage of survey respondents identified this as a primary red flag, experts think it’s important. Marc Guberti, a CPFC and expert with Annuity.org, warned: “Time-sensitive offers are another indicator of potential scams. A tight deadline doesn’t give people as much time to think and weigh their options before buying a product or making an investment.”

Why people still fall for it: The pressure of a deadline can cloud judgment and lead people to make rash decisions.

Additional Scams To Look Out For

Experts highlighted several other red flags not specifically mentioned in the survey results.

Too-good-to-be-true offers: “If it sounds too good to be true, it probably is. “Some scammers promise that an investment comes with no risk and can generate substantial amount of upside in a short amount of time,” shared Guberti.
Lack of online presence: Guberti advised, “It’s also a bad sign if the scammer pretends to offer a service but doesn’t have a website or online reviews.”
Pressure tactics: Adam Ferrari of Phoenix Capital Group warned, “If they are pressuring you or throwing a lot of confusing jargon at you, then it is also a scam.”
Requests for unusual payment methods: Andrew Latham, a certified financial planner with SuperMoney.com, pointed out that “strange payment methods like gift cards or crypto” are often red flags.
Impersonation of authority figures: Dave Burroughs, partner at StoneTurn and former FBI special agent, shared that it is likely a scam if you receive communication from “individuals on the phone representing themselves as law enforcement, part of a government agency such as the Social Security Administration or IRS warning that you or a loved one have a situation which needs to be resolved immediately.”

The Cost of Falling For Scams

To put it frankly, the financial and emotional toll of falling for scams can be devastating. “In 2023 alone, falling for scams cost Americans over $10 billion, and the emotional toll can be just as devastating as the financial loss,” Latham said.

Joanna Clark Simpson, head of consumer research at PissedConsumer.com, got into specifics about numbers: “Cash App users alone reported a staggering $8.6 million in claimed losses.” And that’s just one app.

Protecting Yourself From Scams

To avoid falling victim to these costly scams, our experts recommend these steps.

Taking your time: Don’t rush into decisions, especially when pressured. Take a minute, consult a family member or friend and figure out what your next move is. You have time.
Verify identities: Always confirm the identity of individuals or organizations requesting information or money. You can do this by reaching out directly to the individuals or organizations via reputable ways. For instance, if someone says they’re calling from a specific bank, go online and get the bank number and call the bank directly. Don’t take their word for it.
Use security features: Enable two-factor authentication and keep your apps updated. If this is confusing to you, have a friend or family member set it up.
Be skeptical: If an offer seems too good to be true, it probably is.
Do your research: Check online reviews and user experiences before engaging with financial services or apps.
Report suspicious activity: If you encounter a potential scam, report it to the appropriate authorities. This is how we stop scams.