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Consumers lost more than $12.5 billion to fraud in 2024, a 25% increase over reported losses in 2023, according to the latest Federal Trade Commission data. Bank scams, from overpayment ruses to phishing schemes, are part o this problem. Scammers often use savvy tactics to commit fraud that make it hard to cancel or reverse the transaction.
For this reason, one of the best ways to protect your hard-earned cash is to be aware of what’s out there. Learn what the most common online banking scams are and how to spot and avoid them.
Key Points
• Online bank scams are increasingly sophisticated, with consumers losing over $12.5 billion to fraud in 2024.
• Overpayment scams involve fraudulent checks where sellers are tricked into refunding excess amounts.
• Employment scams exploit the victim’s eagerness to work, leading to financial losses when the fake payment bounces.
• Unsolicited check fraud can trap recipients into unwanted contracts through fine print on the checks.
• Phishing scams mimic communications from trusted entities to steal personal information.
How to Recognize the Red Flags of a Scam
While today’s scammers are increasingly sophisticated, there are some red flags that can give them away. Be on alert for these clues that you may be dealing with a scammer.
• You need to act urgently.
• You’re threatened with law enforcement or a government agency action.
• You’re told to purchase gift cards and provide codes as a form of payment.
• You need to mobile deposit a check and then transfer cash from your account to the person or company that wrote the check.
Recommended: How to Verify a Check
Common Scams Involving Fake Payments and Checks
Knowing what online banking scams are currently circulating can help you avoid enduring losses. Consider these examples of popular ways scammers are operating using fake payments.
Overpayment Scams
If you sell products online, you could inadvertently be hoodwinked by this popular scam. Here, the fraudster will pose as a buyer and send you a check or money order for more than the purchase price. Then, they’ll ask you to refund the difference either through an online payment or wire transfer. But the original payment type was fraudulent, meaning you lose the refunded money. If you already sent the item you “sold” them, you’ll lose that too. But it doesn’t end there: You’ll likely also be on the hook for a returned item fee from the bank.
Unsolicited Check Fraud
This banking scam involves a check you get in the mail. It might be described as a “rebate check,” a refund on an overpayment, or prize money for a contest you’ve won, even though you don’t remember entering one. You deposit it into the bank — why not?
Here’s why: There may be some (very) fine print on the front or back of the check stating that by cashing the check you are entering into a legally binding contract — one you likely don’t want to enter. It might be a membership with monthly fees, a loan, or other long-term commitment that ends up costing you far more than the “free” check you deposited.
Fake Employment Offers
A job scammer posts an enticing ad on a job board. The job they’re offering sounds too tempting to pass up. It might be a work-from-home set-up, the chance to be a mystery shopper, or a job that pays a full-time salary for part-time work. Before the employer can onboard you, however, you’ll need to pay a fee or supply your bank account information and other personal details so they can pay you. It’s all a front to get you to part with your money.
Recommended: Different Types of Bank Account Fraud to Look Out For
Common Scams Involving Impersonation and Deception
Also be aware of scams that aim to trick you into parting with money by using fake identities and other ruses.
Phishing, Smishing, and Vishing Scams
Phishing scams are particularly tricky because they come dressed as emails or texts from trusted companies you already know. The message may even mention suspicious activity on your bank account.
Typically, you need to click on a link in the email or text, and then complete an action like confirming personal information. When you click through, it usually looks like the website from your bank or the company in question. So you tap in the required information (which may be a password, account numbers, or some other type of personal information). The scammers now have your sensitive data and your account security is at risk.
In addition to bank phishing scams in general, there are smishing and vishing. These are specific kinds of phishing: Smishing using fake text messages to trick consumers into revealing financial details, and vishing using deceptive voicemails or phone calls to commit a scam.
Bank and Government Imposter Scams
A fraudster will contact you by phone, email, or text posing as a representative from a government or law enforcement agency (like the IRS, Medicare, or the FBI). They may ask you to provide personal information needed to issue a payment (like for a tax refund) or tell you that you owe money and need to make a payment immediately. The imposter could even threaten to put you in jail if you don’t reveal your personal information or send payment. It’s worth noting that scam texts during tax season, claiming to be from the IRS, are quite prevalent.
Charity Scams
Sadly, many scammers play on people’s compassion, kindness, and generosity to line their own pockets. A charity scammer might contact you by phone, email, or ringing your doorbell. They claim to represent a real (or real-sounding organization) and tell you in detail about an urgent need or crisis. They often flash legit-looking IDs.
You want to help, so you give them cash, a check, or, perhaps, your credit card or bank account information for a recurring donation. Unfortunately, they aren’t connected to any type of nonprofit organization and you’ve given funds or sensitive financial information to a scammer.
Recommended: Wire Transfer Scams
Common Scams Targeting Your Account Access
There are also scams that attempt to deceive you into revealing your confidential information so the scammer can steal your money or commit identity theft.
Unauthorized Withdrawal Scams
Also known as automatic debit scams, these involve unauthorized withdrawals from your bank account — typically checking accounts. Scammers get access to your bank account numbers through fraudulent telemarketer calls or by stealing them from unsecured websites when you sign up for a free trial.
Once a scammer has access to your account information, they set up an automatic withdrawal. When your bank receives the draft, they transfer money from your checking account to pay the scammer. Unless you pay close attention to your daily bank transactions, you may not notice the scam until much later.
Tech Support and Remote Access Scams
In tech support and remote access scams, an individual may contact you from “your computer support team,” “your online bank,” or other phony identity. They claim that there’s an urgent problem with your computer or your online banking account and then con you into either revealing your sensitive information or else paying them (perhaps by a wire transfer) for “saving” you by fixing your technology or account.
What to Do Immediately If You Think You’ve Been Scammed
If you believe a scammer made an unauthorized transfer from your checking or savings account, contact your bank as soon as possible. Let them know it was an unauthorized debit or withdrawal and request that they freeze and reverse the transaction and give you your money back. It isn’t guaranteed that this will work; if the transfer has been completed, it can be hard or even impossible to get the funds back.
If you gave a scammer your username and password, you’ll want to create a new, strong password. If you use the same password anywhere else, change it there, too.
If you gave a scammer your Social Security number, you can go to IdentityTheft.gov to see what steps to take, including how to monitor your credit.
Will My Bank Refund Scammed Money?
As noted above, banks may not always refund scammed money. If someone stole your cash by making an unauthorized payment, your bank, credit union, or payment app may have to reimburse you. (Say the scammer emptied out your checking account; you might be able to get that money paid back.) That could make recovering from a scam somewhat easier.
But if you are deceived into sending money to someone (maybe to pay them for “fixing” your computer or to refund them for an alleged overpayment), financial institutions are not generally required to reimburse victims. However, it can still be wise to report identity theft or fraud so authorities can take action and possibly spare others.
Understanding Authorized vs Unauthorized Transactions
The example above illustrates the difference between unauthorized and authorized transactions. When money is siphoned away without your permission, it is considered unauthorized and refundable.
If, however, you willingly provide payment or access to your accounts because you have been duped by a savvy scammer, then it is considered an authorized transaction. In this case, you may not be reimbursed.
How Regulation E Offers Protection
Regulation E, which is a federal regulation, protects consumers from fraudulent and incorrect electronic fund transfers (EFTs) to or from their bank accounts. More specifically, it provides a process for disputing unauthorized or erroneous electronic transactions (perhaps an unapproved debit card withdrawal). It also limits a consumer’s liability for a lost or stolen debit card.
The Takeaway
Scammers cheated consumers of $12.5 billion in the most recent year studied. That figure reflects how skillful scammers can be and how believable their ruses are. Fortunately, by knowing the red flags and all the latest scams for stealing your hard-earned cash, you can protect yourself and your bank account.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
How can I tell if a website is a scam?
When trying to determine if a website is a scam, check for “https” or a lock symbol at the start of the url, which indicates it’s secure. Also look for misspellings in the URL, like “g00gle.com” vs. “google.com.” Also look for websites that end with an unexpected extension, such as “citi.net” vs. “citi.com.”
What is the difference between fraud and a scam?
While the terms “fraud” and “scam” are often used interchangeably. Fraud is a broad term that describes any deliberate deception, such as online bank fraud, that is implemented to achieve financial or personal gain. A scam is a subset of this, and involves a fraudster using manipulative schemes for financial gain.
Will a bank ask for my password or 2FA code?
Simply put, a bank will very, very rarely ask for your password, a multifactor authentication code, PIN, or other financial credentials. Being asked for that is a red flag that you may be dealing with a scammer.
How can I report a scam?
To report a scam, you should let any financial institution involved know ASAP, as well as let the local authorities, FTC (Federal Trade Commission), and FBI’s Internet Crime Complaint Center know. Doing so can help you as you seek restitution and also help others by potentially catching the scammer.
Besides my bank, who else should I report the scam to?
In addition to letting your bank know that you have encountered a scam, you can also report it to local authorities (the police, your state attorney general) as well as federal authorities such as the FTC and the FBI’s Internet Crime Complaint Center.
Photo credit: iStock/eggeeggjiew
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