Clark Howard

Most Common Financial Scams and How To Avoid Them

Swindlers and scam artists have been busy over the past 12 months trying to separate as many people from their money as they can.

A recent report from the Federal Trade Commission (FTC) shows that criminals defrauded Americans out of $8.8 billion last year, which is $2.6 billion more than in 2021. The report breaks down the top scams into two main categories:

The FTC data come from the agency's Consumer Sentinel, an investigative cyber tool that gives local law enforcement agencies access to millions of reports on things like identity theft, unwanted calls, fraud, scams and more.

In this article, we'll list the top scams that U.S. consumers were victimized by in 2022. We've also included some preventative measures you can take to reduce your risk of exposure, courtesy of money expert Clark Howard and Team Clark.

Top Fraud Scams

1. Imposter Scams

Imposter scams were the most reported crime last year, the FTC says, with losses of $2.6 billion.

These scams typically include crooks impersonating other people or businesses. This year, the FTC saw a huge increase in losses to scam artists impersonating legitimate businesses. To make the scam more believable, the crooks will often employ a technique called “spoofing,” in which a phone number that appears to be a legitimate entity shows up on your caller ID.

Clark has a simple rule for avoiding imposter scams, which aim to trick you out of your money.

“Consider following my rule,” he says. “It’s a simple rule: If I don’t recognize the number as being from someone I know, I do not answer the call.”

2. Online Shopping

Looking to buy some items online? Buyer beware! Some websites are not what they seem. If you have a habit of typing in the website you want to visit, make sure you spell it correctly. One false letter could have you on a fake website that looks eerily similar to the real one.

If you're considering purchasing something from a website you've never heard of or visited before, you need to vet it first.

A great way to tell whether a website is legitimate or not is to read reviews from multiple sources. Trustpilot is a review site that lets you see what real customers have to say about websites, products and services.

The site also features a business transparency page that can tell you more about the online vendor you plan to patronize. Want to learn more? Team Clark's review of Trustpilot has everything you need to know.

3. Prizes, Sweepstakes and Lotteries

An unfortunate reality is that many people who participate in contests, from Jamaican lotteries to sweepstakes of some kind, often fall victim to scams.

How can you tell if a lottery or prize is a scam? Here are some red flags:

  • They rush you to take immediate action. A legit company won't pressure you to part with your money.
  • A caller will say you've won a prize for something you haven't even applied for or filled out. Don't fall for it.
  • If an offer seems too good to be true, it likely is!

4. Investments

When it came to dollar amounts, people reported losing the most to investment scams, which accounted for $3.8 billion in losses, which is double what was reported the previous year.

Seniors are particularly vulnerable to investment scams, which prey upon people's hopes for comfortable living during retirement.

Such scams, which the report defines as investment opportunities in day trading, gold, art, rare coins and other things, caused people to suffer a median loss of $5,000, according to the agency’s figures.

Clark wants you to stay away from financial advisors that promise get-rich-quick-schemes or phenomenal returns with minimal investment. He also wants you to be skeptical of anyone promising "fully guaranteed" returns for your money, including annuities, which he is generally not a fan of.

Clark says the safest way to invest and plan for your retirement is to do so slowly and over a long period.

5. Business and Job Opportunities

Right behind the losses incurred by investment scams were those lost to business and job opportunities, according to the report.

The report defined fraudulent business and job opportunities as multi-level marketing schemes, fake job listings, employment services and more.

To sift through bogus job postings, remember to only use reputable job websites. At, we frequently list positions from the remote jobs site FlexJobs, which vets all of its employment postings.

If you’re doing research on your own, it’s vitally important that you look up the company name and reviews before you apply for a job. Go to Google and type in the company’s name and the word “scam” to see what comes up.

Top Identity Theft Scams

The FTC reported over 1.1 million cases of identity theft. Let’s go over some common types of ID theft and how you can stay safe.

1. Credit Card Fraud

When it comes to identity theft, credit card fraud was the most prevalent type, according to the FTC. More than 440,000 people who applied for a new credit card reported that their credit card information was misused in the process.

No matter how frequently you purchase things with your credit card, Clark wants you to get in the habit of checking your credit report regularly. Every year, you can get one free credit report from each of the three major credit bureaus — Equifax, Experian and TransUnion.

This guide can help you access your free credit report.

2. Other ID Theft

Consumers also reported additional forms of ID theft, including those related to utilities, phones, government documents, banking and more.

To stay safe from such snares, Clark’s #1 recommendation is to freeze your credit.

“A credit freeze allows you to seal your credit reports, so only you can temporarily ‘thaw’ your credit when legitimate applications for credit and services need to be processed,” he says. “The added layer of security means that thieves can’t establish new credit in your name even if they are able to obtain your personal information.”

3. Bank Fraud

Few things are as crushing to your financial confidence as finding out that your bank account has some discrepancies that can’t be accounted for.

One of the quickest ways to resolve any issues you find on your bank statement is to dispute fraudulent charges as soon as you notice them.

“Contact your bank immediately and tell them there are fraudulent charges on your account. A normal thing that people do every day is report these fraudulent transactions,” Clark says.

Read our guide on how to fight fraudulent bank charges.

4. Loan or Lease Fraud

Clark has long warned about student loan scams and similar ruses that take advantage of people in debt.

One way scammers may try to ensnare you is by asking for upfront fees, which you should never pay!

Student loan debt relief shouldn’t have a price tag, but if it does, you should never pay before a company has even started to help you. If a company asks for upfront payment to help you get out of debt, run!

5. Employment or Tax-Related Fraud

Tax fraud accounted for 78,588 reports, while employment-related scams accounted for 26,390, a 10% increase over the previous year, according to the FTC.

Tax fraud always sees an uptick around tax season. The Internal Revenue Service (IRS) recently warned taxpayers about a scam in which criminals instruct people to file bogus tax returns electronically to get a big refund "sometimes as much as five figures – due to the large amount of withholding," the agency says.

Along with pretending to be IRS agents (which is a form of “imposter” scam mentioned earlier), scammers are pulling out all the stops to rob you of your tax refund and more.

Read about the five tax scams you need to watch out for this tax season.

Final Thoughts

Clark wants you to stay safe from the many scammers trying to defraud you. One way of doing that is to never shop with a debit card because it simply doesn't have the same consumer protections that a credit card has.

He also wants you to steer clear of answering suspicious phone calls or clicking on sketchy links in your email or text messages.

The post Most Common Financial Scams and How To Avoid Them appeared first on Clark Howard.

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