The Most Common Financial Scams That Even Smart People Fall For

April 1st is right around the corner and with so much of our spending now done online or with credit cards, financial scams are on the rise. Don’t be fooled into thinking it could never happen to you. Being aware of popular scams, reasons we fall for them and how we can avoid them in the future is the foundation of protecting yourself from financial fraud.

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Types of Popular Scams

Knowing some prevalent scams can help you recognize if you are the target of fraud. Scammers use tactics like phishing, fraudulent documents, larceny and more to retrieve your personal financial information or trick you into sending money. Below are some of the most common financial scams.

  • Fake Checks: You may receive a letter saying you won the foreign lottery. There’s a cashier’s check enclosed to cover the taxes and fees and all you have to do is wire the money to the sender. However, after a few weeks you will learn the check is forged. You are responsible for all deposits made into your account and the bank is required to give you credit for checks deposited, so you will lose money for any checks you wrote against that deposit. 
  • Phishing: Scammers use emails or phone calls posing as legitimate organizations in order to trick people into revealing things like passwords, Social Security numbers or other personal information. Don’t click on any hyperlinks you receive in email messages unless you can verify the source and don’t give information over the phone without verification.
  • Nigerian Letter Scam: Also called a 419 scam, this trick involves a letter from a Nigerian prince offering the recipient the opportunity to share in a percentage of millions of dollars that the prince is attempting to transfer out of Nigeria. The sender asks for a deposit or your bank account number. While this may sound like an obvious scam, it has been around for decades and continues to lose people money. 
  • Grandparent Scam: Scammers target elderly people by posing as a child or grandchild and asking for monetary help. The fraudster cites unfortunate events such as an accident or arrest while traveling that requires money to be wired immediately. If you receive this call, attempt to get in touch directly with this person or verify through other relatives before sending any money.
  • Phony Charity: Emails or phone calls urging you to donate to a good cause might tug at the heartstrings, but be careful that these aren’t scammers posing as charities. Confirm the legitimacy of all charities with Charity Navigator or the Better Business Bureau before making donations.
  • Mortgage Relief: In the wake of the real estate market’s collapse, scammers posing as lawyers began to offer homeowners “a way out” by granting them a loan in exchange for a fee. Victims will pay the fee and never receive the promised loan.
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Reasons We Fall into Financial Scams

There are a number of reasons intelligent people everywhere still find themselves as victims of fraudulent financial schemes. We are more apt to make irrational decisions or let our guard down when we’re in financial trouble or someone we care about needs immediate help. Promises of financial gain can also drive us to make risky investments. Additionally, scammers are constantly fine-tuning their schemes as well as exploiting people’s weaknesses. By keeping your guard up when it comes to your finances and protecting your personal information, you’re less likely to fall victim to a scam.

How to Avoid Scams

In order to better protect yourself from financial scammers, you must keep your personal information private and stay aware of what scams might look like. 

  • Protect Personal Information Online: Use strong passwords, don’t put your birthdate on social media sites and provide personal information on a need-to-know basis.
  • Transfer Securely: Use only secured outlets for transferring money or wiring money to people you don’t know.
  • Destroy Compromising Documents: Shred bank statements, receipts and any piece mail with personal information on it.
  • Read Monthly Statements: Rather than assuming everything is correct, take a second glance at your monthly bank statements in order to make sure you’re the only person making purchases on your card.
  • Invest Wisely: There’s really no sure thing in investments and high returns are never guaranteed, so if you’re promised a completely safe investment, double-check the credibility.
  • Shop Safely: Mobile devices often lack the security of a computer, so try to avoid making mobile purchases or saving your credit card information on mobile websites.
  • De-Clutter Your Wallet: Minimize the amount of things you carry around with personal information on them.
  • Say No: You have the right to politely decline to provide someone with personal information no matter how legitimate their organization or their offer appears. Promise to get back to them once you can verify the validity of their claims.

Discover Card wants to ensure that people are aware of fraud and are taking the right precautions to protect their finances.


Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.