4 Financial Scams That Are Currently Making Headlines

4 Common Financial Threats That Are Skyrocketing 

The FTC reported that US consumers suffered over $7 billion in losses during the first three quarters of 2023, marking a 5% increase from 2022. In response to this escalating issue, Visa released its Spring 2024 edition of the Biannual Threats Report, detailing financial threats observed between June and December 2023.

Michael Jabbara, Senior Vice President and Global Head of Fraud Services at Visa, highlights the four most prevalent financial scams impacting individuals and provides strategies for protection:

1. Pig Butchering Scams

Today, social media platforms are taking proactive measures to prevent pig butchering scams, commonly known as romance scams. In these schemes, fraudsters employ social engineering tactics to initiate fake romantic relationships with targets online. Over time, they build trust with the victim and eventually persuade them to invest in a fraudulent platform or make remote payments. In response, various platforms are implementing safeguards to detect and mitigate such scams, protecting users from financial exploitation. "They're called pig butchering scams because they are carried out over a long period," Jabbara told TPG.

2. Inheritance Scams

This type of scam involves fraudsters sending emails to targets, claiming that they are the beneficiaries of a substantial inheritance from a long-lost relative. According to a survey conducted by Visa, 15% of respondents reported being targeted in an inheritance scam. Typically, these scammers create a sense of urgency, pressuring victims to make hasty decisions, ultimately leading to the separation of the victims from their money. "Most of us have a level of confidence that tricks us into thinking it can't happen to us. But these threat actors use their keen understanding of human psychology and our biases to emotionally manipulate their victims. A sense of overconfidence could get you into trouble," Jabbara warned. 

3. Humanitarian Relief Scams

Exploiting tragic events such as border conflicts, global crises, and natural disasters, scammers resort to ruthless tactics to defraud individuals. They capitalize on these incidents by establishing fake charities and fundraisers, deceiving people into donating money for purported relief efforts. Typically, scammers employ two techniques to acquire funds unethically. They solicit donations via social media platforms, leveraging the immediacy and reach of these channels. Alternatively, they employ email phishing tactics, posing as legitimate entities like financial institutions or charitable organizations, to extract sensitive information from unsuspecting individuals.

4. Triangulation fraud

Triangulation fraud, a lesser-known but significant threat, poses challenges of detection among the general populace. According to Jabbara, scammers employ a deceptive tactic by establishing online storefronts offering seemingly irresistible deals. "When you take advantage of the 'deal' and place an order, you usually do receive the goods you ordered, but there is fraudulent activity behind the scenes," he cautioned. Sharing credit card information amplifies the risk, as scammers exploit stolen credentials to make legitimate purchases while concealing their illicit activities. "What is happening here is that when you submit your order, the fraudster buys an actual couch with stolen credentials they harvested from previous purchases just like yours. Now, they can use your stolen card to defraud the next victim, and so on," Jabbara explained.