Protecting Yourself Against Financial Scams

Personal Finance 4 The People is pleased to team with others who are able to share their expertise in various areas. We hope to combine our efforts to bring a greater financial effort in order to help you reach YOUR Financial Independence. Today's guest post comes to us from Karon Powell. 

Even the most experienced and knowledgeable person out there can become the victim of a financial scams.  What is a financial scam?  It is usually defined as deceiving someone for financial gain or in other words, any fraudulent scheme that causes you to lose money.  These types of scams range from investor fraud to home-improvement contractor fraud.  

One type of financial scam is identity theft.  This happens when someone else uses your personal information such as your social security number or bank account information to get credit cards, buy a home or raid your bank account.  A simple way to protect yourself from identity theft is to check your credit report regularly.  Once a year you are entitled to a free copy of your credit report.  You have probably seen commercials and advertisements for free credit reports but a credible source is located on the Federal Trade Commission’s website, just click the included link. Once you receive the report review it and follow the instructions to dispute anything that may be incorrect. Another simple way method to protect your identity is to shred any piece of paper that contains identifying information.

A second type of financial scam is investor fraud.  There are numerous types of scams involving fake investment firms offering unbelievable returns on an investment of your hard-earned money.  If something appears too good to be true it most likely is too good to be true.  It can be really hard to pass up what appears to be a windfall, especially when the person or persons offering the “tip” are church members or people you trust.  Before giving someone your money do some research and do not give away any of your identifying information.  Most businesses must register with the Secretary of State in their area.   The Secretary of State’s website is a good place to start when investigating whether a business is legitimate.  In order to find out if there have been complaints filed against a business check with the Secretary of State for your area or the Better Business Bureau.

Most fraudsters count on the fact that you will not want to do the work involved with checking their credentials or that you are in the middle of an emergency and will not bother to do background research.  Fraudsters can target ethnic groups, religious groups and even a particular age group.  Educate yourself about the types of consumer fraud and do not be afraid to ask for credentials.  Follow-up on any information you are given such as registration numbers.  If the information is incorrect or out of date do not give your money away.  Keep in mind that it is your money at stake.  You worked hard for it so if you are going to spend it make sure that it is spent wisely.