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What You Need to Know to Protect Yourself From the Rising Bank Scams to Protect Your Finances

Banking Scams

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TL;DR

  • Rising banking scams, including bank impersonation, “Pay Yourself,” and “Check Washing,” are costing financial institutions millions.
  • Scammers are becoming more sophisticated, using tactics like deceptive text messages, phone calls, and spoofed contact information.
  • To protect yourself, use electronic payments, indelible ink for checks, review statements, and safeguard your mail, among other precautions.

In today’s digital age, the convenience of digital payments has brought with it an alarming surge in banking scams, leaving customers vulnerable to financial losses. A recent PYMNTS Intelligence and Hawk AI study revealed that a staggering 43% of banks across the country have fallen victim to fraud in ways they have never experienced before. This wave of sophisticated scams has not only cost financial institutions nearly half a million dollars on average this year but has also necessitated increased investments in modern-day machine learning and artificial intelligence (AI) to combat the rising tide of fraud.

Bank support impersonation scams: A growing threat

Leading the charge in the world of scams are bank support impersonation schemes, wreaking havoc on both banks and customers alike. These scams involve fraudsters posing as bank employees or representatives and employ various tactics to deceive unsuspecting victims. However, two other fraudulent schemes are starting to gain prominence in the realm of financial swindles: “Pay Yourself” and “Check Washing.”

 “Pay yourself” scam: Targeting Zelle customers

The “Pay Yourself” scam is causing considerable concern, particularly among Zelle customers. The scheme typically begins with a deceptive text message that appears to be a fraud alert from the victim’s bank—a tactic commonly used by bank impersonators. If the victim responds to the text and engages with the scammer, the next step involves a phone call from a number that appears legitimate, suggesting it is from the victim’s bank.

On the other end of the line, the scammer impersonates a bank employee and offers to help stop the alleged fraud. In reality, the fraudster’s aim is to manipulate the victim into sending money to their own bank account. These scammers employ a variety of communication channels, including phone calls, emails, text messages, and even social media messages. They often use spoofed phone numbers and email addresses to appear trustworthy, mirroring tactics commonly used by seasoned scammers.

One particularly sinister aspect of the “Pay Yourself” scam, as highlighted by Zelle, is the manipulation of security codes. When enrolling with Zelle, banks typically send customers a security code to verify their identity. The scammer, in this case, claims they need this passcode to authorize the victim’s payment to themselves. If the victim provides the code, they unwittingly grant the scammer access to their account. With the passcode, the fraudster can link their bank account to Zelle using the victim’s email or phone number, ultimately redirecting funds to their own account.

“Check washing” scam: A growing postal menace

Another rising threat is the “check washing” scam, which has seen an alarming increase, thanks to organized groups of thieves. These criminals target personal checks sent via USPS mailboxes or stolen from personal mailboxes, and in some cases, even resort to robbing mail carriers. The United States Postal Inspection Service (USPIS) reports that they have recovered over $1 billion in counterfeit checks and money orders in the past year alone.

Once these thieves acquire a victim’s check, they employ chemicals to “wash” the check, altering the amount or making themselves the payee. Subsequently, the modified check is deposited, allowing the criminals to siphon funds from the victim’s account. Victims may only realize they have fallen prey to “check washing” when recipients of their checks report not receiving payment.

Protecting yourself against scams

The American Banking Association (ABA) spokesperson, Sarah Grano, emphasizes the importance of proactive measures to protect against scams. Grano suggests:

Use electronic payments: Consider making payments using e-checks, ACH automatic payments, and other electronic or mobile payment methods.

Use indelible ink: Employ pens with indelible black ink when writing checks to make them more difficult to alter.

Follow up: Contact charities and businesses to ensure they receive your checks.

Online banking: Utilize online banking to review copies of your checks and confirm they were not altered.

Shred old checks: If your bank still returns paid checks, shred them instead of disposing of them in the trash.

Review statements: Regularly review your bank activity and statements for any discrepancies.

Avoid blank spaces: Avoid leaving blank spaces in the payee or amount lines of checks you write.

Additionally, the United States Postal Inspection Service recommends safeguarding your mail by:

Using USPS blue collection boxes: Drop off mail in these boxes before the last scheduled pick-up time or directly at your local Post Office.

Regular mail checks: Do not leave your mail in your mailbox overnight.

Mail hold service: When heading out of town, have the Post Office hold your mail or ask a trusted friend or neighbor to collect it.

If you become a victim of these scams, Grano advises immediate action, including contacting the United States Postal Inspection Service, your local police department, and your financial institution.

As the threat of sophisticated scams continues to evolve, vigilance, and proactive measures remain the keys to safeguarding your finances in an increasingly digital world. Banking institutions are also stepping up their efforts, harnessing the power of AI and machine learning to stay one step ahead of the fraudsters who seek to exploit unsuspecting customers.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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John Palmer

John Palmer is an enthusiastic crypto writer with an interest in Bitcoin, Blockchain, and technical analysis. With a focus on daily market analysis, his research helps traders and investors alike. His particular interest in digital wallets and blockchain aids his audience.

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