We live in an increasingly digital age, where almost every aspect of our lives can be done online. From socializing to mobile banking, the convenience of digital interaction is something today’s teens have grown up with. But while exchanging money online may seem completely normal to them, it can also make them vulnerable to identity theft and fraud. Parents should help their teens understand the risks and steps to protect themselves.
TYPES OF FRAUD
Fraud is an intentional effort to deceive another individual for personal gain. Some types of fraud involve deception in an effort to sell over‐valued or ineffective products, while others use Social Engineering to manipulate victims. The most common types of fraud include:
Identity Theft
This type of fraud occurs when personal and financial information is used without the owner’s permission. Identity thieves may use personal information to apply for credit or employment, make purchases, acquire new bank or credit accounts, or apply for a driver’s license.
Communications Fraud
When thieves fraudulently use mass marketing, mailings, telephone solicitations and other forms of communications to try and extract money directly from a person, or to trick them into giving out personal information, account numbers, personal identification numbers and passwords.
Tax Fraud
Tax fraud involves scammers making claims that a person might be exempt from filing tax returns and/or offering to file their tax return in exchange for personal information.
Investment Fraud
Sometimes investors are deceived by people claiming to be financial advisors or claiming to have an investment that is guaranteed to make money.
Credit Fraud
Credit card fraud occurs when a thief uses a stolen credit card number to make purchases.
HOW DOES FRAUD OCCUR?
Scammers take advantage of a person’s willingness to trust others. Most scammers start by building a level of trust with the person, to where the person thinks the scammer is their friend. These professional thieves can access personal information in a variety of ways:
Steal a purse, wallet, or personal records from a workplace or mailbox, including information carelessly discarded in the trash or recycling bin.
Divert mail by completing a change of address form at the Post Office to have someone’s mail delivered to them. By doing this they raise the chance of obtaining bank statements, credit card information and other personal details that can be used for the thief’s benefit.
Skim credit and debit card information, including personal identification numbers (PIN), by attaching a device to card processors or ATM machines.
Phish for personal information by pretending to be a company or depository institution requesting sensitive information via email.
Hack computers or install spyware to monitor internet use, send pop‐up ads, and redirect a personal computer to other sites.
PROTECTING AGAINST FRAUD
The government has put agencies in place to help protect consumers against fraud, such as the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB), but ultimately the best way to protect yourself is to be alert to the risks and follow some common sense guidelines:
Evaluate a situation carefully before giving away money or personal information.
Don't give out personal information over the phone, through the mail or on the Internet unless you've initiated the contact and are sure you know with whom you are communicating.
Protect personal information.
Store your Social Security card in a secure location, rather than carrying it in a purse or wallet.
Memorize your debit card PIN number. Think of an unusual combination of numbers to use for your PIN and not a familiar combination such as your birthdate or street number.
Shred all personal documents before discarding them.
Never share personal or financial information on social network sites.
Take safety measures when using the internet.
Make sure a site is secure before making an online purchase or giving out any personal or financial information on a website. Look for the letters “https” and a lock icon next to the URL. These two indicators signify the site is secure.
Use a debit card or credit card when making online purchases, since they have fraud protection.
Change passwords regularly. Choose a combination of letters, numbers, and symbols not easily identified. Use different usernames and passwords for different sites.
Use two-factor authentication for logging onto websites, whenever possible.
Use privacy settings on social networking sites, blogs, and other sites to restrict who is able to view your information.
Practice electronic device safety.
Use anti‐virus and anti‐spyware software and update these security programs regularly.
Do not click on links found in pop‐up advertisements or in suspicious email. Only download software from trusted websites.
Watch for strange actions that might indicate a computer is infected with spyware. You might see a stream of pop‐up ads, unexpected toolbars or icons on the computer screen and random error messages.
There are many common sense, no‐cost measures a person can take to protect against identity theft and fraud. Teens need to know they have to take control and responsibility to protect themselves.
ADDITIONAL RESOURCES:
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The Center for Financial Empowerment is a 501c3 nonprofit organization whose mission is to empower disadvantaged youth through financial literacy education. Find out more about our work.
References:
Protecting Yourself From Fraud, Take Charge Today, June 2021