The Fraud Risks Quietly Threatening Your Financial Security
Over the weekend, I attended a Leadership training session about Artificial Intelligence (AI). It was a fascinating conversation all the way around about what AI actually is (spoiler alert: computers are dumb – they need precise information – and AI is built on predictive analytics). Given enough information (i.e. a prompt entered into ChatGPT), AI predicts a response.
The human brain, though, interprets data. The optical nerve is responsible for something like 15% of what we see – our brains make up the remaining 85% – and perhaps, at least anecdotally, this explains why people miss or overlook misspellings in words. And that’s precisely what scammers, aka bad actors, are counting on.
I recently met up for coffee with a friend who shared that she came very close to falling for an email scam. Thankfully, she had the foresight to see the red flag in the email, which appeared to come from a legitimate company she regularly does business with. There were exactly two letters transposed in the domain name of the email (think “on” vs “no”).
Scammers count on the human brain to interpret the words and rearrange them into a word they know, which means many of us would be fooled by a small change like this. Even when you’re vigilant, your eyes are likely to read the name and interpret them in the correct order – unless you are looking for it.
These days, it feels like bad actors are even more committed to their craft and creating new ways to take what is not theirs and wreak havoc on other people’s lives. Examples of situations like the one my friend shared with me are sadly prevalent, but also a good reminder to remain vigilant and aware. Along those lines, we’d like to share a few tips and resources that could go a long way towards prevention.
Tax Scams
According to the IRS website, the most prevalent tax scams mislead you about tax refunds, credits and payments. Bad actors have been known to impersonate IRS employees and attempt to apply pressure in an effort to gain access to financial or employment information.
Impersonators typically try to convince you to “pay now or else,” including threatening to arrest or deport you, and will not let you question or appeal the amount of tax you owe.
It’s important to know that the IRS will not initiate contact with you by email or social media to request personal information, and the IRS does not leave urgent messages or demand payment via gift card or crypto currency.
The IRS publishes an annual Dirty Dozen list of the year’s most prevalent scams. You can access that list for 2025 and previous years here: Dirty Dozen | Internal Revenue Service
Source: Recognize tax scams and fraud | Internal Revenue Service
Refund and Recovery Scams
As if falling victim to a scam isn’t bad enough, recovery scams re-target their victims, promising help of recouping their money.
In this vile scam, scammers buy lists of names of people who have paid scammers – they call it a “sucker list” according to the Federal Trade Commission (FTC), and it includes information like name, address and phone number, the kind of scam and how much money was paid. Bad actors use this list to re-target previous victims, with the assumption that if you’ve been scammed before, you are likely to be a good target.
Avoiding these types of scams requires being hypervigilant. As a rule, if someone contacts you unexpectedly and asks for an upfront fee – no matter how they reach out – email, text, phone, social media, it’s likely a scam. Never pay upfront. Government agencies and legitimate organizations will never ask for money to help you get a refund, nor will they ask for your financial information.
The FTC shares updated consumer alerts on recent fraud scams online. Also on their website you can find detailed information on How to Avoid Scams and What to do If You’re Scammed.
Source: Refund and Recovery Scams | Consumer Advice
The Rise of Check Fraud
Are you still writing paper checks to pay your bills? In an online blog earlier this month, Schwab reported a rise in paper check scams, despite the increased use of digital payments.
In check fraud scams, bad actors gain access to goods and funds without a person’s knowledge, by using counterfeit checks or altering a real check. In a common variation of this scheme, bad actors steal checks from the mail and “wash” them – by applying chemicals to remove the original payee and amount, leaving the account data and signature.
There are a few practices to help prevent being involved in a scam:
- Use a pigment-based, nonerasable gel ink pen instead of a ballpoint pen to help deter check tampering.
- Drop checks in secure USPS collection boxes or inside the post office to reduce the risk of theft (compared with leaving them in unsecured mailboxes).
- Track sent checks and immediately report missing or altered payments
Source: How to Protect Yourself From Check Fraud | Charles Schwab
Towards the end of the class, the professor brought it full circle by sharing that machines can beat any chess grandmaster – but we still care about the chess champion. As humans, that is our advantage – judgement, common sense about how the world works, and interpretation of our experiences. And in a world where bad actors are counting on us to overlook small details, those human strengths—when paired with a moment of pause—can be our greatest defense.
