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According to surveys, nearly 801,000,000 people report experiencing fraud within a year. Although young people tend to believe that older people are more susceptible, the average loss across all age groups was highest among those aged 18 to 24, with those aged 35 to 44 most likely to fall victim to fraud. Fraudsters exploit psychology to manipulate people, and that's precisely why they're so successful. No one who falls for a scam realizes it's happening until it's too late.
It's safe to say that scams exist all the time. And even if you think you're immune, you're probably not. In fact, your confidence in not being scammed could make you the perfect victim, because the scammer won't be able to anticipate the deception. So how do you spot a scam? It's a difficult question to answer, even given the countless scams out there, but hey, we'll give it a try.
Signs of fraud
Let's start at the very beginning, with what law enforcement agencies say about fraud. They are the people most people turn to when something goes wrong, and most law enforcement agencies in most jurisdictions have prepared information about fraud for their citizens. This information must be constantly updated, because fraud is constantly evolving. For example, artificial intelligence-based fraud is now very popular, whereas five years ago, no one even heard of it.
Fake
Scammers typically call you or contact you online, possibly making threats. They may pretend to be government officials, celebrities, or even family members and friends. Artificial intelligence-based scams have become especially ruthless, as AI can imitate the voice of a family member. You might talk to someone and be convinced it's your mother, your son, or maybe your brother.
They may also try to convince you of their legitimacy by using fake phone numbers. You can find out who called you and search for that number on Google, where you'll see that it belongs to the police, the FBI, another government agency, or something else that looks legitimate. They may also call you from the number of a loved one. This is all done using VoIP technology and web services, which allow the customer to choose the number that will appear to be calling.
Some scammers try to scare you, while others seek to take advantage of the situation. They may time their calls to coincide with tax season and pretend to be from the IRS. They may offer you an investment that's only available now or tickets to an upcoming event. Whenever someone you don't know tries to trick you into giving them money over the phone, be cautious.
Request
At some point, the scammer will ask you for money. This can happen in several ways. They might try to trick you by offering an investment opportunity. They might threaten to scam you by claiming you owe money for fines or other serious issues, the failure to pay which could have dire consequences. Or, if they're scamming family and friends, they might pose as a loved one in serious trouble and in need of money.
Scams require urgency. They need you to act now, while they're still talking to you. If they keep pushing, you're less likely to stop and consider why it doesn't make sense or to seek a second opinion.
They may ask you to immediately transfer the money to an account. They may also ask you to hand over the money in person at a specific location, or even to someone they claim works for them. This could be cash, but they often ask for gift cards or cryptocurrency, which are virtually untraceable. They may ask you to create a new PayPal account or use a different online payment system.
You should exercise extreme caution when a government agency or law enforcement agency demands that you immediately hand over cash for any reason. The problem is that by the time someone asks you for money, there's a good chance you've already been scammed and won't be suspicious.
Fraud statistics
Once, 71% people told a Canadian firm they were confident in their ability to spot fraud. However, when they were tested, 96% were found to be victims of fraud. If you're confident you can spot and avoid fraud, you could very well become the perfect target for scammers. Your confidence is your blind spot.
In 2023, cybercrime cost Americans a total of $12.5 billion in losses. This is up from $8.8 billion in 2022. More than 880,000 incidents were reported. Nearly $5 billion of this total was attributed to investment scams, the most lucrative type of fraud. It's important to remember that many people are too embarrassed to report being a victim.
Fake ID fraud reaches massive proportions every year, and in 2023, the most frequently targeted company was Best Buy/Geek Squad, followed by Amazon.
Types of fraud
Since there are so many types of scams you could fall victim to, it's worth learning the specifics of each. Remember, most people are overconfident in their ability to avoid these scams. It doesn't matter how smart you are or how internet-savvy you are. These people fall for scams almost as often as those who don't possess these qualities. Psychology plays a cruel trick on you, and when everything is urgent and you're scared, you don't realize what's happening until it's too late.
Fraud using AI
The most insidious and perhaps most dangerous scams ever created are now linked to artificial intelligence. Thanks to deepfake and spoofing technology, you could receive a call from your spouse claiming to be in pain or even kidnapped and in need of help, and you'd never know it was real until it was too late. Artificial intelligence can clone your voice based on a three-second audio sample. Do you have your own voice on your answering machine? Have you ever recorded a video and posted it online? That's enough. Up to 70% people say they're not sure they can distinguish a cloned voice from a real one.
Perhaps the voice on the phone didn't convince you, or perhaps you need a FaceTime video call to see your loved one. Well, AI can do that too. You can no longer trust your eyes or ears when it comes to fraud. In 2024, a financial company employee involved in a video call with their CEO lost $25 million after it was revealed that the call was a scam using AI-powered deepfake technology.
In France, a woman fell victim to a fraud scheme: artificial intelligence was used to create photos of Brad Pitt, which created the illusion of a relationship with the actor for nearly two years. During this time, she lost $850,000 on fake photos of Pitt, which the fraudster claimed were used to finance a divorce.
These video calls may also involve law enforcement officers or other officials. These could be famous people you've seen on TV, or simply someone in uniform who appears official. If you can't see the person in person, don't trust what you see, especially if they're trying to extort money.
Moreover, you're not the only one at risk of fraud. Artificial intelligence can call your bank immediately after you finish your phone call and possibly cancel the transfer or send the money elsewhere.
Recognizing AI-powered fraud is very difficult, but there are signs if you pay attention and remain calm. With AI-generated videos and deepfake technology, there will be glitches in the image. Mouth movements may not match the voice. Strange artifacts may appear and disappear in the background. Even simple audio may contain strange clicks and noises.
Law enforcement recommends discussing such situations with your family and coming up with a code word that will allow everyone to tell each other whether it is really you.
Artificial intelligence is also being used to improve the efficiency and speed of all the old scams.
Phishing scams
Phishing is one of the oldest types of online fraud, typically involving receiving emails from seemingly trustworthy sources. This could be your internet service provider, a store you shop at, Google, Amazon, and so on. The emails will appear official and request information from you. If you click a link or fill out a form, you'll be providing information to the scammers.
Approximately 22% of all data breaches are the result of phishing attacks. In a controlled experiment, at least one employee was the victim of a phishing attack at 8 out of 10 organizations.
For the average person, these emails often present offers that seem too good to be true, such as free or inexpensive vacations.
Another type of letter is more threatening, typically posing as law enforcement or government officials, asking for confirmation of information because you're being accused of something or facing a fine. This triggers panic in people, who are likely to try to quickly hush up the matter if the letter offers a solution.
Investment fraud
As we've already mentioned, investment fraud is a lucrative industry. In 2023 alone, nearly $5 billion was lost to investment fraud. These include, for example, the infamous romance scams, where victims believe they're in a real relationship for a few months, only to discover that the person they thought they loved doesn't actually exist, and they lose thousands of dollars on investments they never made.
Pump and dump scams are perpetrated by people who own a company's stock and encourage you and others to buy without disclosing that they have already invested heavily. They drive the price up sharply and then sell all their shares, driving the value down for you and everyone else.
Other types of investment-related scams include crypto scams, where someone tries to convince you that you can make good money by investing in cryptocurrency.
Fraudulent schemes like "brokerage firms" are large-scale operations aimed at making large sums of money. They can create entire fictitious offices to deceive you, or develop complex and functional websites with working phone numbers and much more. All this is done to attract large investors, lure people in, and then disappear with the money.
A "community of interest" scam targets not only you but also a group of people, such as a church or community organization, who share similar interests and ideals. The scammer may join the group and ultimately offer an opportunity to supposedly help everyone.
Charity Fraud
These scams often emerge after major disasters or humanitarian crises. Social media is flooded with requests for donations to help the victims. Sometimes these donations come from well-known organizations, but sometimes not. Some donations may even come from crowdfunding platforms, where it's difficult to verify who organized the fundraiser or who the recipient is.
These scams can take many forms. You might receive a targeted email, see an ad on a frequently used social media platform, or be promoted by friends or family members who are unaware of the scam, thus lending it legitimacy.
There are countless scams worldwide, attacking from all sides. Keeping track of them all is incredibly difficult, especially with new ones constantly emerging. Whether you consider yourself invulnerable or not, the most important thing to remember is this: if someone asks you for money, you must be absolutely sure you know why. You must be absolutely certain who is asking you. If anything seems suspicious, whether it's a stranger, the IRS, the police, or your own grandmother, stop it and contact them later, on your own terms, when you're in control of the situation, not them.
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