Fraud Prevention Tips: How to Protect Yourself and Your Family from Financial Scams

Fraud Prevention Tips: How to Protect Yourself and Your Family from Financial Scams

Key Points – Fraud Prevention Tips: How to Protect Yourself and Your Family from Financial Scams

• Who Are the Typical Targets of Fraud?
• Identifying Recognizable Patterns of Fraud
• Eight Financial Scams to Know
• Everyday Habits That May Help Prevent Fraud
• 7-Minute Read

Financial fraud is not a fringe risk anymore. According to Experian and the U.S. Federal Trade Commission, total financial losses associated with fraud rose from $12.78 billion to $15.86 billion from 2024 to 2025.₁ The people behind these schemes are organized, patient, and increasingly convincing. They target everyone, but tend to concentrate on people who have spent decades building wealth.

The good news is that fraud typically follows recognizable patterns, and criminals usually take the path of least resistance. A handful of consistent habits, plus the ability to recognize a scam while it is happening, may greatly help reduce the risk.₂ This guide covers eight scams to watch out for, everyday practices that may help to prevent fraud, how to protect aging family members, and exactly what to do if you suspect something is wrong.

Fraud Prevention Tips: 8 Financial Scams to Know

Many schemes aimed at individual investors are a variation on one of these eight patterns. It’s important to know how each one works because scams depend on the victim not recognizing the script.

1. Romance Scams

A romance scam starts on a dating site, social platform, or even a game with chat features. The person is attentive, moves fast emotionally, and usually claims to be far away for work or military deployment. They push the conversation off the monitored platform onto text or personal email. Then, just before you would finally meet, an emergency appears: an accident, a medical bill, a business payment stuck overseas. The request for money always comes with a promise of quick repayment, and the repayment never comes.

Red Flags

• You have never met in person, and something always prevents meeting or video calls.
• Professions of love very early, paired with lots of personal questions.
• Any request to send money, cover an emergency, or receive and forward funds on their behalf.

2. Sweepstakes and Lottery Scams

You are told you won a prize in a contest you do not remember entering. To collect, you just need to pay a small fee for taxes, shipping, or customs, or hand over bank details so they can deposit your winnings. Legitimate sweepstakes never ask winners to pay to collect, and they never need your account credentials to send you money.

3. Government Impersonators and IRS Scam Calls

A caller claims to be from the IRS, Social Security Administration, Medicare, or law enforcement and demands immediate payment to avoid arrest, benefit suspension, or a frozen account. The pressure and the threats are the tell. The IRS communicates primarily by mail and never demands immediate payment over the phone or threatens arrest. The SSA will not suspend your Social Security number. Caller ID proves nothing, since scammers routinely spoof government numbers. If you are worried a call might be real, hang up and call the agency at a number you find on its official website.

4. Tech Support and Refund Scams

A pop-up warns that your computer is infected and gives a number to call, or someone phones claiming to be from Microsoft, Apple, or your antivirus provider. The goal is remote access to your device or payment for repairs you do not need.

A common variation is the refund scam, which occurs when a caller claims you were overcharged for a subscription, gains access to your bank account to “return” the money, then claims to have deposited too much and pressures you to send the difference back by wire, gift card, or crypto. Legitimate companies do not put phone numbers in virus pop-ups and do not call you unsolicited to fix your computer.

5. Real Estate Wire Fraud

During a home closing, scammers send spoofed emails posing as the title company, escrow agent, or attorney with updated wiring instructions. The email looks right because the criminals have often compromised a real mailbox in the transaction. Wire transfers are nearly impossible to reverse, which is why this scam is so damaging. Always verify wiring instructions by phone, using a number you already know to be correct, before sending closing funds. Treat any last-minute change to instructions as a fraud attempt until proven otherwise.

6. Business Email Compromise

Business email compromise is the corporate cousin of wire fraud. A criminal spoofs or hijacks a familiar email address, then sends a plausible request: a vendor invoice with a new mailing address, a manager asking for gift cards, a payroll change. The differences between the fake address and the real one can be a single letter. Verify any request that moves money or changes payment details with a phone call to a known number and be especially suspicious when the request carries artificial urgency.

7. Investment Scams

Investment fraud sometimes opens with a promise of high returns with little or no risk. Increasingly it arrives through a slow-built relationship, sometimes months long, in which the scammer earns trust before ever mentioning money. Fake account dashboards show your money growing right up until you try to withdraw it.

Before investing with anyone who contacted you first, verify their registration with your state securities regulator or FINRA, get every detail in writing, and talk to your advisor.

8. Check Fraud

Check fraud has surged because it is low-tech and effective. Criminals steal checks from mailboxes and collection boxes, chemically wash the ink, and rewrite the amount and payee. Every check also carries your name, address, and account number, which can be resold and reused for identity theft.

To help prevent check fraud: use electronic payments whenever possible, request direct deposit for large incoming amounts, mail checks inside the post office rather than a collection box, write checks with indelible black ink, review check images in your online account to confirm they cleared as written, and shred cashed checks. If you still write many checks, ask your bank about its positive pay or check verification services.

Fraud Prevention Tips: Everyday Habits That May Help

Individual scams change; the underlying defenses do not. These practices close the openings nearly every scheme depends on.

Verify Before Money Moves

• Treat every emailed or texted payment instruction as unverified until you confirm it by phone at a number you already know.
• Be automatically suspicious of any payment request involving gift cards, prepaid debit cards, wire transfers to new recipients, or cryptocurrency.
• Expect your advisor and your financial institutions to call and confirm requests to move money or change account information. That friction protects you.

That last point is one of many expectations you should have of your advisor. At Modern Wealth Management, it’s important to our team for our clients to be able to enjoy today with confidence for tomorrow. Fraud prevention is a big part of that, as is your confidence in your investments, estate, taxes, and insurance. Get your Modern Confidence Score today to help us understand how confident you are in your finances.

Now, let’s review a few more everyday habits that may help prevent fraud.

Lock Down Your Credentials

• Use a unique, long password for every financial institution, ideally through a password manager.
• Turn on two-factor authentication everywhere it is offered and never share one-time passcodes with anyone, no matter who they claim to be.
• Never include personal details like your birth date or Social Security number in a user ID.

Outsmart Phishing

• Do not click links or open attachments in unexpected messages. Type the institution’s address into your browser instead.
• Check the sender’s actual email domain, and hover over links to see where they really lead.
• Report suspicious messages that appear to come from a financial institution directly to that institution, then delete them.

Keep Your Technology and Habits Current

• Keep your operating system, browser, and antivirus software up to date on every device.
• Avoid public computers and public Wi-Fi for anything financial; a personal hotspot is safer.
• Set up account alerts, review statements regularly, and log out completely after online banking sessions.

Protecting Aging Parents and Family Members

Scammers deliberately target older adults, who often combine accumulated savings with a reluctance to worry their families. Adult children are usually the first line of defense, and a few structural steps matter more than any amount of warning.

Talk About Specific Scams, Not Fraud in General

The grandparent scam, where a caller poses as a grandchild in urgent legal or medical trouble, works because it hits before skepticism can engage. Agree on a family code word for genuine emergencies.

Add a Trusted Contact to Their Financial Accounts

Many custodians and brokerages let account holders name a trusted contact the institution can reach if something looks wrong. It grants no access to money, only a channel for warnings. It is an important measure to help reduce certain risks.

Watch for the Warning Signs

Unusual secrecy about a new friend or opportunity, unexplained wires or gift card purchases, sudden reluctance to discuss finances, or distress they will not explain all warrant a gentle conversation.

Get Their Advisor Involved

An advisor who knows your parents’ normal patterns should be able to spot requests that are out of character.

What to Do If You Suspect Fraud

Speed matters more than certainty. If something feels wrong, act on the feeling.

• Stop all contact with the suspected scammer immediately, and do not send anything further, even to “recover” earlier losses.
• Call your advisor and your financial institutions right away so they can watch for suspicious activity, freeze what needs freezing, and attempt to recall recent transfers.
• Report it to the FBI’s Internet Crime Complaint Center at IC3.gov and to the FTC at ReportFraud.ftc.gov. These reports drive investigations and takedowns.
• Change your passwords for any account that may have been exposed, starting with email, since email access lets criminals reset everything else.
• Do not be embarrassed. These operations are professional and they succeed against smart, careful people every day. Silence is the scammer’s best friend. The sooner you speak up, the more can be recovered.

Frequently Asked Questions on Fraud Prevention Tips

Q: What Are the Most Common Financial Scams Right Now?

Government impersonation calls, tech support pop-ups, romance scams, investment schemes promising guaranteed returns, and check fraud are the most frequently reported. Business email compromise causes some of the largest individual losses.

Q: What Should I Do If I Already Sent Money to a Scammer?

Contact your bank or custodian immediately and ask them to attempt a recall or stop payment, then file reports at IC3.gov and ReportFraud.ftc.gov. Recovery is most likely in the first hours after a transfer, which is why speed beats embarrassment every time.

Q: How Can I Tell If a Call from the IRS or Social Security Is Real?

Assume it is not. The IRS initiates contact by mail, and neither agency threatens arrest, demands immediate payment, or asks for gift cards or wire transfers. Hang up and call the agency directly using the number on its official website.

Q: How Do I Protect My Elderly Parents from Scams?

Talk through specific scam scripts together, set up a family code word for emergencies, ask their financial institutions to add a trusted contact to their accounts, and make sure their advisor knows to flag out-of-character requests.

Q: Does Working with a Financial Advisor Reduce Fraud Risk?

It may potentially add a meaningful layer of protection. A fiduciary advisor who knows your normal financial patterns should recognize out-of-character requests, verify money movement by voice, and act as a sounding board before you commit to any opportunity that arrived out of the blue.

A Second Set of Eyes on Everything

Fraud prevention can include avoiding significant financial decisions when you are alone or under pressure. Having a fiduciary adviser can also provide another resource when evaluating important financial decisions. If you have questions about the security of your accounts, or you want a second opinion on something that does not feel right, our team is here to help. Get your Modern Confidence Score today, and our team will be in touch with you about next steps to help you build financial confidence.

GET YOUR MODERN CONFIDENCE SCORE

Resources Mentioned in This Article

[1] https://www.experian.com/blogs/ask-experian/identity-theft-statistics/

[2] https://www.schwab.com/schwabsafe/security-knowledge-center