How to Identify Bank Scams and Keep Your Money Safe

Bank scams are fraudulent activities cyber scammers employ to steal money and data from their victims. These scams negatively impact individuals, organizations, and institutions' financial lives.

With bad actors getting smarter and savvier by the day, bank scams have become a huge problem in the world of online scams. In fact, in 2022, the USA experienced bank transfer and payment fraud amounting to a staggering $1.59 billion.

Bank frauds directly impact how financial institutions, government agencies, businesses, and consumers handle money operations.

At Bitdefender, we aim to be one step ahead of fraudsters and online scammers, so helping you deal with bank scams has become one of our top priorities. That's why we've compiled this all-in-one guide to spotting, avoiding, and combatting bank scams. Let's dive into it.

How Do Bank Scams Work?

Banking scams represent one of the most malicious and sophisticated forms of financial fraud, combining multiple scam types to get access to money immediately.

From phishing and fishing attempts to hacked or fake account scams or deepfakes tricking you into revealing data on your financial accounts, bank scams have evolved into a wide spectrum of fraudulent attempts.

Understanding Bank Account Scams

Banking scams target individuals and organizations to exploit their trust and gain access to their financial resources. Scammers often operate through collaborative networks involving operators from various countries, including underdeveloped regions and distressed individuals, or simply malicious-intended users.

Common bank scam tactics usually involve multiple steps before scammers can access your personal or account information.

Step 1: Scammers begin by initiating contact

They initiate contact through official-looking emails, text messages, or phone calls. These look like they come from reputable sources, such as your bank, a government agency, or familiar companies.

Using psychological manipulation through tactics like scarcity, urgency, or instilling a sense of authority, scammers create a sense of fear upon which you should act fast.

Phrases like:

● "Immediate action required, click this link to verify"

● "Your account has been compromised, reply to this email ASAP"

● "Verify your online or mobile banking app immediately to avoid access being removed"

Are all common tactics to prompt quick responses without thorough verification.

Step 2: Scammers gather personal or account information

Scammers need personal information to carry out their bank account fraud. They will use various channels to gather data:

● Phishing emails and websites – they'll ask you to input details like a bank account number, passwords, or Social Security numbers.

● Smishing – scammers will send you urgent texts with links directing victims to fake websites.

● Phone calls (vishing) – they will directly ask for sensitive information, like personal details or an account authorization code, under the pretext of resolving an urgent issue.

● Spoofing – sometimes, scammers may spoof legitimate phone numbers and impersonate a bank representative, a government official, or even a family member, to manipulate you into revealing sensitive data.

● Malware infections – sometimes, scammers will infect your device with malware that once installed, will monitor your activities and capture sensitive information.

● Keyloggers – they can track every keystroke you make, including passwords and login credentials.

Step 3: They get access to the funds

Finally, they will transfer funds, make purchases, or withdraw money directly from your account. Many times, a bank scam continues with them changing account settings to lock you out, so that they maintain control.

What do Bank Scammers Aim to Collect?

● Account numbers and passwords to gain direct access to your bank accounts.

● Social Security Numbers to carry out identity theft and create new fraudulent accounts.

● Personal identification details, including names, addresses, dates of birth, etc., to bypass security questions and authenticate their fraudulent actions.

● Financial information like credit card numbers, PINs, and transaction histories.

How To Avoid Banking Scams

● Use Scamio, Bitdefender's free AI-powered fraud detector, to identify online scams before they occur.

● Always verify the authenticity of any unexpected communication from financial institutions.

● If someone seemingly reputable prompts you to take immediate action, stop and assess. Ignore bank warning messages and call your branch yourself to clarify.

● Use updated security software to protect against malware and keyloggers.

● Employ multi-factor authentication (MFA) to add another layer of security to your accounts.

● Keep a close eye on your bank statements and report any suspicious activity immediately.

12 Types of Bank Scams You Should Be Aware Of

Cybercriminals employ various tactics to trick you into divulging your bank account details and passwords or even to authorize fraudulent transactions. Here's an overview of some common types of bank scams:

Advance-fee scams

Advance-fee scams, such as the infamous "Nigerian Prince" scam, promise access to a large sum of money, loans, or profitable investments but require you to pay an upfront fee to 'process' your claim or application. After paying, the funds or loan promised never materialize, so you essentially lose money investing in the initial fee.

Always be skeptical of any offer requiring upfront payments. Verify the credibility of the giver through sources like the Better Business Bureau. This upfront fee is often requested to be paid directly into their bank account, leaving you with no recourse after the scam is revealed.

Check overpayment scams

The check overpayment scam is becoming very popular among cyber hackers. They will provide counterfeit checks, often for amounts higher than what is owed, and then request that you act immediately and refund the difference. Once the check bounces, you are left out of pocket for the refunded amount.

Tax season scams

Scammers thrive during tax season, as the often impersonate IRS officials or tax authorities to gain personal and financial information under the pretext of resolving tax issues or providing tax refunds.

You may receive a call claiming to be from the IRS, asking for your Social Security number to resolve an urgent tax matter. In fact, FTC data reveals that consumers lost $76 million to government impersonation scams in 2023, a 90% increase from $40 million in 2022.

However, keep in mind that the IRS never initiates contact via email, text, or social media to request personal information. If you find that someone impersonating IRS contacted you, notify them immediately.

Online sales scams

Scammers pose as legitimate sellers offering products that either do not exist or are of inferior quality. They often prefer untraceable payment methods to make it difficult to get your money back.

One popular example is purchasing an expensive item from an unfamiliar website that requires wire transfer payments or for you to use odd payment methods.

Our advice? Always research sellers and check multiple reviews before making a purchase, especially on less-known websites. Stick to using well-known payment platforms like PayPal or payment gateway providers like Klarna (for buy-now-pay-later) or Stripe, which offer buyer protection.

Social media scams

Cybercriminals often use social media platforms to impersonate friends, family, or trusted businesses to deceive users into sharing personal information or sending money, which can lead to bank account compromise and financial loss. These scams exploit the trust built on social media.

Package delivery scams

Scammers send fake notifications claiming package deliveries are delayed, prompting you to provide personal information or payment details to 'resolve' the issue. Falling victim to these scams can lead to unauthorized access to your bank accounts.

Such scams can materialize through an email claiming your package is being held and requires a fee to be released or a malicious link that, once clicked, infects your device.

Always track packages directly through the official carrier website and avoid clicking on unsolicited links. Install email filters to flag suspicious emails, and consider installing Bitdefender Total Security–the leading anti-malware solution against advanced attacks in independent tests.

Donating money scams

Scammers pose as representatives of fake charities, especially during crises or natural disasters, to solicit you to donate money that never reaches legitimate causes. The request donations are usually made through specific payment methods that are difficult to trace, such as wire transfers or prepaid cards.

Research charities through platforms like Charity Navigator before donating, and never hand over your device for donation transactions.

Investment Scams

Scammers impersonate investment professionals, promising high investment returns to extract personal and financial information or upfront fees.

This online scam looks like you received an invitation to invest in a 'cannot-miss' opportunity via email. They promise high returns with minimal risk using deals that seem too good to be true. Always research investment managers online before sending any payments over.

Tech Support Scams

The most common tech support scam involves remote scammers who pose as tech support and request remote access to your computer or mobile device. Never grant device access or download any app without confirming the identity of the person requesting access.

Compromise Scams

Scammers exploit hacked or fake accounts to deceive you. They may impersonate friends, family members, or even reputable organizations to gain your trust. Once trust is established, they request money, gift cards, or sensitive information, often under the pretext of an urgent situation.

If you receive a message from what appears to be your friend’s social media account stating they’ve lost their wallet while traveling and need an immediate wire transfer to cover emergency expenses, think twice before you send money.

Natural Disaster Scams

Natural disaster scams arise after events like hurricanes, earthquakes, or floods. Scammers pose as contractors or relief workers offering urgent repair and clean-up services. They typically demand upfront payments, often through wire transfers or prepaid cards, but they disappear without completing the work once the money is handed over.

To protect yourself, research and hire reputable contractors online and through peer recommendations, and be wary of unsolicited offers for assistance.

Utility company scams

These involve fraudsters posing as representatives from utility companies (such as electricity, water, gas, or internet services). They aim to steal money by threatening you with service disruption. These scams often take place over the phone or email.

1. Scammers contact you, claiming an immediate payment is required to avoid service termination. They may say you owe money from a past bill or there's an issue with your account.
2. They insist on immediately paying the owed money through untraceable methods like prepaid debit cards, wire transfers, or cryptocurrency.

How to Protect Your Bank Accounts

While online scammers are getting savvy, banks, financial institutions, and security service providers are getting savvier. Here are some of the best ways to protect your bank account:

Use secure passwords and two-factor authentication

Use strong and unique passwords for online banking and enable two-factor authentication to add an extra layer of security. Here's our best advice for setting strong passwords:

● Aim for at least 12-16 characters.

● Incorporate a mix of uppercase and lowercase letters, numbers, and special characters.

● Don't reuse passwords across multiple accounts. Each online banking account should have its own unique password.

● Steer clear of easily guessable information such as birthdays, common words, or sequential numbers.

Monitor your account activity

Check your account activity regularly for suspicious transactions. Set up alerts for large or unusual transactions and geolocation monitoring to block potential transactions from foreign countries.

What to look for:

● Any transaction you do not recall authorizing.

● Repeat charges that indicate processing errors or fraud.

● Small test charges (scammers sometimes make small test charges to check if your account is active before larger fraudulent transactions)

Beware of possible scam notices

Be cautious of emails or texts that ask for personal or financial information. Never click on unfamiliar links or provide personal information, and avoid using public Wi-Fi or unsecured networks to access online banking.

● Look for unfamiliar or suspicious senders. Scammers might use addresses that look very similar to legitimate ones but with slight modifications (e.g., [email protected] instead of [email protected]).

● They use generic salutations like “Dear Customer” instead of personalizing the message with your name.

● They use urgent or threatening language, with phrases like “Your account will be suspended if you do not respond/ transfer money immediately” as red flags.

● Spelling mistakes, grammatical errors, and awkward phrasing are common indicators of scams.

Send money safely

Always use secure payment methods like wire transfer or online banking. How? Verify the recipient’s information before sending money, and check that you're using your bank’s official wire transfer service.

● Select recognized payment services like PayPal, Venmo, Zelle, or TransferWise for electronic transactions.

Report fraud to your bank

If you suspect or identify fraudulent activity on your bank account, act quickly to minimize the damage. Doing so can help you recover your funds.

● Most banks have a 24/7 hotline for reporting fraud. If your account information has been compromised, request that your bank freeze it to prevent further unauthorized transactions. If your bank fails to offer you proper help, report them to the Consumer Financial Protection Bureau.

Protect yourself against identity theft

According to the Federal Trade Commission (FTC), in 2023, 19.2% of all reports filed were identity theft reports. Consider investing in identity theft protection to catch suspicious activity such as bank frauds happening on your behalf. Monitor your credit report for unusual activity.

To report identity theft, head to IdentityTheft.gov (Federal Trade Commission) and contact one of the major credit bureaus (Equifax, Experian, TransUnion) to place a bank account fraud alert. Also, notify your bank and local law enforcement.

FAQs

How can I avoid bank account scams?

Be cautious of requests for personal or financial information. Verify the identity of the person or company requesting information. Don’t ignore bank warning messages and use a legitimate tech support company to help with computer or mobile device issues. Never send money through instant money transfers or wire transfers without verifying the recipient’s information. Most importantly, never share your account verification code with anyone.

How to spot a bank scammer?

Spot a bank scammer by looking for red flags like unsolicited contact asking for personal info, poor grammar, and urgent language. Scammers use unfamiliar email addresses and push you to act quickly.

Do banks refund scammed money?

Each bank has its own policies and procedures for handling fraud claims, but sometimes, they may refund scammed money if you report it promptly.

How do you know if a call from the bank is real?

A real call from the bank will never ask for your full password or PIN. Verify the caller's identity by calling back using the official bank number. If the recipient is trying to grab your attention with an alarming phone call, they're most likely a fake business or a scammer looking to deceive you.

Can someone open a bank account in your name without you knowing?

Yes, someone can open a bank account in your name without you knowing, especially if they gained access to your personal information. This is a form of identity theft that’s currently on the rise, so it’s crucial to monitor your financial accounts and credit reports regularly to catch any suspicious activity early. One way to do so is via ChexSystems.com.