It’s easy to feel secure about the money you deposit with a bank you’ve come to trust. After all, most banks and credit unions offer certain levels of protection against fraudulent transactions.
Banks, however, won’t protect you against all types of fraud.
Here’s a look at the protections that banks and credit unions usually provide to their customers – and which situations where you’ll likely be on your own.
When a Bank Usually Protects You
For credit cards, banks usually provide zero liability on any unauthorized charges.
Debit cards also provide protection against fraudulent purchases, but there may be limitations depending on which financial institution issued your card. According to federal law, here is the maximum amount of fraudulent transactions you’ll be responsible for depending on when you notify your bank that your card is lost or stolen:
Immediately notify your bank before any unauthorized charges are made: Zero liability
Within two business days: Up to $50
After two business days but within 60 days: Up to $500
Fail to notify within 60 days: Unlimited
When a Bank Usually WON’T Protect You
Unfortunately, there are many types of scams that banks won’t reimburse you for if someone steals your money. Here are some of the more common scams:
You are scammed into moving money out of your account and into another person’s account.
A hacker uses lies to convince you to make a bank transfer into a cryptocurrency wallet.
You liquidate your retirement funds and send the money to someone else for any reason, even if you were conned into it.
You make a person-to-person transfer to another individual using an online payment app, and that transfer doesn’t come with any type of purchase protection.
How to Protect Yourself from Common Banking Scams
Here’s how to protect yourself from getting scammed:
Don’t communicate about your accounts unless you initiate the conversation. If someone calls about your bank account, hang up and call the financial institution directly using your normal means of contact.
Never share your information. Don’t share account details or personal information online or over the phone, especially if you were asked to share these details in a phone call you didn’t initiate or via email.
Tell someone. Scammers try to isolate you from family members and friends. If you’re unsure about a banking transaction you plan to make, or you wonder if you’re being victimized, tell someone you trust about the situation.
Ask your bank for help. Bank tellers are trained to spot the early signs of fraudulent transactions. If you’re making a bank transfer and feel unsure about the situation, explain it to a teller or bank representative and ask for their help.
Report the incident. Whether you unfortunately got scammed or you spotted the attempted scam before withdrawing any money, submit a report of the situation by visiting ReportFraud.ftc.gov.
Social media is an easy way for scammers and others to try encouraging people to pursue some really bad ideas, and that includes ways to magically increase your tax refund.
– IRS Commissioner Danny Werfel
Tax scammers continue to become more sophisticated, which means it’s more important than ever to pay attention to any person or message asking you to provide confidential information. Here are several of the more prevalent scams to be on the lookout for, according to the IRS.
Phishing and smishing. Taxpayers continue to be bombarded with email and text scams from fraudsters attempting to lure you into providing valuable personal and financial information that can lead to identify theft. Phishing involves fraudsters sending emails claiming to come from the IRS, while smishing uses text messaging and alarming language such as Your account has now been put on hold!
What you can do: Never respond to phishing and smishing messages, and never click on a link! Report all unsolicited emails, including the full email headers, claiming to be from the IRS to [email protected].
Online help to create an IRS account. A scammer may offer to help you set up an online account on www.irs.gov. While the IRS’s online account tool can provide convenient access to your tax information, it’s also a valuable source of information for identity thieves who use information from your account to submit fraudulent tax returns using your name in order to get a big refund.
What you can do: Schedule an appointment with someone you trust if you need help creating an online IRS account.
Fake charities asking for donations. Scammers masquerading as charitable organizations try to lure you into making a contribution after natural disasters and other publicized tragedies. Scammers also use fake charities to swipe personal and financial information from you, in addition to targeting certain groups such as senior citizens.
What you can do: Visit www.irs.gov, then search for Tax-Exempt Organization Search Tool. Use this tool to confirm that a charity to whom you want to donate is a legitimate organization registered with the IRS.
Fake tax advice and AI tools. Social media routinely circulates inaccurate and misleading tax information. These articles and videos share wildly inaccurate tax advice, including some that involve urging people to misuse common tax documents such as Form W-2 or Form1099. They will make is especially convincing by using AI as a buzz word.
What you can do: Don’t turn to the internet for tax advice. Remember, AI-generated ideas can also pull in inaccurate information as well!
It’s easy to fall victim to tax scams. So stay vigilant and if you see a scam, let everyone know. It’s with increased awareness that we can decrease the number of scam victims.
It’s never too early to start teaching your kids about money. By proactively explaining how money and banking work in the real world, you can help them begin their adult lives on solid financial footing. Here are some ideas.
Help kids to start earning money. Letting kids earn money is a good first step to learning positive financial habits. Teenagers can get a traditional job or line up babysitting work to earn some cash, whereas younger children can mow lawns, pick weeds, or do other age-appropriate household chores.
Open a bank account. Kids need a place to store any money they earn, as well as cash they receive for birthdays and holidays. Plenty of banks offer checking and savings accounts for children and teens, provided parents or a guardian are also on the account. This is also a great opportunity to teach how to balance a bank account every month.
Get a debit card for older kids. There are many teen checking and debit card options available today, including some free options. For example, Capital One offers a teen checking account option with no fees, no account minimums, and a debit card for kids.
Help teenagers build credit for the future. You can add teenagers to credit card accounts as an authorized user to help them build credit history over time. Just remember that the impact on a teen’s credit will only be positive if you pay bills on time and keep debt levels within a reasonable range.
Teach about investing. Kids with earned income can contribute money to their own IRA. There are also online apps for teenagers that can help them monitor their investments, such as the Greenlight app, which lets families manage money and research stocks and ETFs.
Teaching kids about money can give them a head start with being financially savvy. The lessons they learn can help them minimize debt, save more money, and potentially have enough money when they retire.
Cutting expenses is often easier said than done. It’s easy for somebody to say Just cut your expenses! Stop getting a to-go espresso everyday! Eliminating something from your monthly budget, though, may come down to figuring out the best way to change your spending habits. Here are several ideas that may help.
Build a list of named goals. Getting motivated to save can seem like a chore when you’re not saving for something specific. Consider writing down on paper two or three goals for something specific you want to save for, then open a savings account for each goal. For example, you could start a beach vacation fund, a college savings account, or a new golf clubs account.
Give your goals a visual element. Bring your goals to life by creating something that lets you track each one as you save. This could be a savings spreadsheet that breaks down your goal into manageable chunks of weekly savings, or it could be a poster board with sections to fill in as you save money and get closer to your goal. Also print several images of what you want to buy and hang them up around your living quarters.
Always pay yourself first. Set up automatic transfers to your savings accounts and pay yourself first. This ensures that your savings become a priority, and that you don’t accidentally spend the money on other bills and expenses.
Immerse yourself in education. Fill your mind with financial lessons you want to learn about. Read books, listen to podcasts, and read essays from financial experts to help you learn new habits surrounding saving and investing.
Make new friends. Motivational speaker Jim Rohn said most people become the average of the five people they spend the most time with. If you’re surrounded with people who are constantly struggling with money, it may be time to expand your social circle. Look for like-minded people by joining online groups centered on financial topics and attending money-related meetups in your area.
Going on vacation is a time to get away, relax and enjoy new experiences. But if you don’t pay close attention, extra costs can sneak up on you like tiny money-stealing gremlins. Here are several sneaky vacation costs to watch out for:
Covert airfare increases. Airline pricing algorithms are programmed to store your browsing history to see if you’ve been looking at flights. If you have, they will bump up the price. Before searching, clear your internet history and switch to private (or incognito) mode on your web browser. When you are finally ready to book the flight, do so using a different computer from a new location to be sure that you’re avoiding this artificial price increase.
Stealthy resort fees. The nightly base rate for a fancy resort will often compare favorably to a standard hotel in the same location. This is an intentional pricing tactic used by resorts to get their rooms on the initial search results page. Don’t be fooled! These same resorts will add a daily resort fee on the back end of your bill to cover the extra amenities they offer. The extra fee might be worth it to you, but it’s better to understand the full cost of the stay before making your reservation.
Useless rental car insurance. Rental car companies will try to sell you insurance to cover damages you may cause during the rental period. Often, the auto insurance you already have will extend to the rental car. In these cases, the extra insurance isn’t necessary. Before renting a car, check with your insurance company to see if a rental will be covered.
Bloated baggage fees. You probably already know that airlines may charge for checking a bag, but do you know they will charge extra if a bag is too heavy? Exact weight can vary by airline or location, so check the weight limits before you go and weigh any heavy bags using a bathroom scale.
Crafty parking costs. Downtown hotels in big cities charge as high as $100 per night for parking! Research alternative parking options near your hotel or compare the cost of using rideshare options before committing to the hotel rate.
Sly extra driver charges. Rental car companies will charge an extra daily fee to have a second driver listed on the rental. If possible, commit to one person to handle all the driving on your vacation.
Tricky foreign transaction fees. Traveling abroad and paying an extra fee for every purchase will add up in a hurry. Before you go, check your credit cards and bank accounts to see if they charge foreign transaction fees. If they do, shopping for another card or account that doesn’t charge fees might make sense.
Some vacation fees can’t be avoided, but many of them can if you know where to look. Implement a plan to navigate the fees in the planning stages of your trip to avoid dealing with them during your vacation.
With supply chain snarls still plaguing parts of the U.S. economy, many consumers are turning to gift cards as the holiday present of choice this year. In fact, according to the website Research and Markets, the United States gift card industry is expected to reach $188 billion in 2022.
Why is gift card fraud such a problem?
Because of the small dollar amounts involved, gift card fraudsters face a low probability of prosecution. It’s also easy to convert gift card value to cash or merchandise. In other words, this kind of fraud is relatively risk-free and easy to pull off.
In one common scam, a crook goes to a retail establishment, grabs a handful of gift cards from an out-of-the-way stand or kiosk, and records the card numbers using a magnetic strip reader. After returning the cards, the crook heads home and repeatedly checks balances on the merchant’s website until the numbers are activated.
The thief then spends or transfers the money on the card before the legitimate buyer or gift recipient has a chance to use it. Less sophisticated scammers may simply scratch off the card’s coating and replace it with a sticker, hoping the buyer won’t notice.
You can scam-proof your gift card experience by following these tips:
Don’t pick the front card. Crooks are impatient. They often return compromised cards to the most accessible place on the rack. Select your gift card from the middle of the rack.
Buy gift cards online. Purchase cards online, directly from the business that issued them. This reduces the potential tampering risk.
Inspect packaging. If you purchase gift cards in person at a store, examine the cards for signs of tampering. It’s safer to buy from stores that keep gift cards behind the counter or in well-sealed packaging.
Register the card. If a card issuer lets you register on their website, do it. You’ll be able to check your balance regularly and identify any abuse.
Don’t give out card information to callers claiming to be from government agencies, tech companies, utilities or other businesses. Only scammers ask you to pay fees, back taxes or bills for services with gift cards.
Don’t buy gift cards from online auction sites. They could be counterfeit or stolen, according to the Federal Trade Commission.
If you think you’ve been scammed, contact the store directly and report incidents to local law enforcement.
