5 Financial Scams Consumers Should Watch Out For

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

According to the Federal Trade Commission, nearly 590,000 consumer complaints have been submitted since the pandemic started, with consumers reportedly being bilked out of nearly $545 million. The government agency said COVID-related scams peaked during spring 2020 as fears of the virus first began to spread in the U.S.

With all this in mind, it’s an especially important time for consumers to be on the lookout for scams. Here are a few of the bigger ones to be aware of.

1. Payday loans

Despite the rollout of stimulus checks, many Americans are still in dire financial straits. At the same time, the regulation of payday loans was rolled back earlier last year by the Consumer Financial Protection Bureau, which has made it easier for payday lenders to prey on the most financially vulnerable. 

In light of the rollback, consumers need to know that while payday loans may seem appealing by providing quick access to funds, they also come with exorbitant interest rates that can make it very difficult to pay back, while also potentially causing severe damage to the consumer’s credit rating (which can make it harder to get approved for more credit in the future and hinder job prospects).

2. Robocalls

Phone scammers have taken robocalls up a notch during the pandemic. In response, agencies like the World Health Organization and Federal Communications Commission have issued warnings about robocall and text message scams targeting both consumers and small businesses during the pandemic.

These scam calls can involve everything from information about the virus, to selling home testing kits, to offering government assistance. One call claims to be from the U.S. Department of Health, warning of an outbreak "in your area."

Consumers should never share personal or financial information over the phone with suspicious, unverified callers and additionally not open any text links from unknown numbers.

3. Stimulus scams

When the first round of stimulus checks went out in April and May of last year, government agencies warned of a variety of scams, typically in the form of fake government emails or phone calls, which tried to phish for information by posing as the IRS or claiming payment was required in order to receive funds.

With talks of a fourth round of stimulus checks (possibly on a recurring basis), more stimulus scam calls will surely follow. It’s important to remember the IRS—the agency tasked with sending out checks—will never contact you by phone, email, text, or social media. Consumers should only use the IRS website to submit information to the agency.

4. Online shopping scams

When shopping online, it’s always important to only buy from verified sellers on established websites. If ordering off a website like Amazon, Etsy, or eBay, check the seller’s reviews to make sure they are legitimate. If ordering off a store’s website, make sure the company has an established reputation and check out the return policy.

Consumers should also be aware of package delivery scams, where a scammer will send a fake tracking link for your package. These links may prompt you to enter personal information or call a number because of a problem with your delivery. In doing so, they can install dangerous malware on your device.

5. Peer-to-peer payment scams

As a result of the pandemic, consumer adoption of peer-to-peer mobile payment apps like PayPal’s Venmo, Square’s Cash App, and Zelle is growing.

These platforms are all easy to use and provide consumers with a quick and safe way to send and receive money from people they know and trust. However, their user-friendliness also makes them popular with scammers soliciting transfers, in which getting your money back can be extremely difficult.

Be cautious of anybody you don’t know requesting money via one of these mobile apps. This includes seemingly well-meaning people asking for charitable donations, such as anybody running a COVID-19 relief fund. If you’re sending money to an organization or individual, make sure to verify their information and confirm that they are trustworthy.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.