How to spot financial scams

Most financial scams share the same signs: an upfront fee, a demand to pay by gift card, crypto, wire or a payment app, pressure to act right now, and someone pretending to be your bank, a government agency or a well-known company. If you think you have been scammed, contact your bank or card issuer immediately using the number on your card, then report it to the FTC at reportfraud.ftc.gov. Speed matters.

The red flags that apply to almost every scam

• You have to pay first. A fee before you get a loan, a refund, a prize, debt relief or help with student loans.
• Unusual payment methods. Gift cards, cryptocurrency, wire transfers, cash by courier, or a payment app sent to a person. Real companies and government agencies do not demand these.
• Urgency. "Your account will be closed today", "a warrant is being issued", "this offer ends in an hour".
• Secrecy. Being told not to tell your bank, family or anyone else.
• Someone contacts you out of the blue. A call, text, email or social media message you did not expect.
• Requests for codes or passwords. One-time passcodes, PINs, online banking logins or remote access to your computer or phone.
• Too good to be true. Guaranteed approval, guaranteed returns, or debts wiped out for a small fee.

Any one of these is a reason to stop. Two or more together almost always mean a scam.

Common financial scams and how they work

Bank impostor and "safe account" scams

You get a text or call that seems to come from your bank's fraud department, often with the real bank's name showing on caller ID. They say there is suspicious activity and you need to act. They may ask for the code just texted to you, or tell you to move your money to a "safe account" or send it to yourself through a payment app.

The truth: your bank will never ask you to move money to protect it, and will never ask for a one-time code it sent you. Hang up and call the number on your card.

Government impostors

Someone claims to be from the IRS, Social Security, the FTC, the police or a court, and says you owe money or are in trouble. They demand payment by gift card, crypto or wire. Government agencies do not do this. They do not threaten immediate arrest over the phone.

Fake debt collectors

A caller says you owe a debt, sometimes a real old one, and threatens arrest or a lawsuit unless you pay today. Real debt collectors must give you a written validation notice and cannot threaten arrest. Ask for the notice in writing, do not pay by phone on the spot, and check the debt with the original creditor. Our guides on debt collector rights and debt validation letters explain how.

Advance-fee loan scams

You are "approved" for a loan, even with bad credit, but must first pay for "insurance", "processing" or "the first payment". Once you pay, the lender vanishes. Legit lenders may charge fees, but they generally take them out of the loan or include them in your loan costs. They do not ask you to pay by gift card or wire before you get the money.

Credit repair scams

A company promises to remove accurate negative information from your credit report, or to give you a "new credit identity", for a fee paid upfront. Under federal law, credit repair companies generally cannot charge you until they have done the work, and nobody can legally remove accurate, current information. You can dispute real errors yourself for free. See how to dispute a credit report error and get your free reports at annualcreditreport.com.

Debt relief scams

Ads promise to cut your debt in half or stop collectors for a fee. Some ask you to stop paying your creditors and send money to them instead, then disappear. Companies selling debt relief by phone generally cannot charge fees until they have actually settled or changed a debt. Talk to a nonprofit credit counselor first. Check the debt relief category before signing up with anyone.

Student loan relief scams

Callers or ads promise loan forgiveness, lower payments or "new government programs" for a fee, sometimes asking for your Federal Student Aid login. You never have to pay for help with federal student loans. Applying for repayment plans and forgiveness is free through your servicer or at studentaid.gov. Never share your FSA ID. See student loan servicer problems.

Payment app and online purchase scams

Fake sellers, fake buyers who "overpay", fake rentals and fake "accidental" payments that you are asked to send back. Payment apps are often like sending cash, and money sent to a scammer can be hard to get back. Read payment app scams and refunds.

Investment and crypto scams

Someone you met online or through a text "wrong number" introduces you to an investment platform that shows big gains. When you try to withdraw, you are told to pay taxes or fees first. The platform is fake. Check any investment firm on FINRA BrokerCheck before sending money.

What to do if you have been scammed

Do these as fast as you can. The first few hours often make the biggest difference.

1. Contact your bank or card issuer now. Use the number on your card or statement. Tell them it is fraud, ask them to stop or reverse the payment if they can, and ask about blocking your card or account. For card payments, ask about a dispute. See disputing a card charge.
2. Contact the payment service you used. If you paid by gift card, call the gift card company and ask whether the funds can be frozen. Contact the payment app, wire service or crypto exchange too.
3. Secure your accounts. Change passwords and turn on two-factor authentication. If you gave someone remote access to a device, disconnect it from the internet and get it checked.
4. Protect your identity if needed. If you shared your Social Security number or ID, place a credit freeze with all three credit bureaus and report it at identitytheft.gov. See identity theft and credit freezes.
5. Report it to the FTC. At reportfraud.ftc.gov. Reports help investigators find patterns.
6. Report internet crime to the FBI. If the scam happened online, file at ic3.gov.
7. Tell your state attorney general and, if useful, local police. A police report can help with bank disputes and identity theft.
8. Keep every record. Screenshots of messages, phone numbers, websites, receipts and transaction IDs.

Will you get your money back?

It depends on how you paid. Credit card payments usually have the strongest protections. Unauthorized debit card and bank transfers have legal protections too, especially if you report quickly. Money you sent yourself by wire, gift card, crypto or some payment apps, even because you were tricked, is often much harder to recover. Banks and apps have their own policies, and some do reimburse certain impostor scams, so always ask. Rules vary, and a consumer attorney or legal aid office can help if a lot of money is involved.

How to protect yourself before it happens

• never act on a call, text or email you did not expect: contact the company yourself
• never share one-time codes, PINs or passwords with anyone
• check that a company is licensed before you pay it. Our guide on how to check if a company is legit shows how
• look up a company's complaint record before signing up, and read others' experiences
• set up account alerts so you see payments right away
• talk to someone you trust before sending money under pressure

Questions and answers