5 Financial Scams to Avoid in 2024

Let me tell you a story.

Last week I got a sudden call out of the blue from one of my cousins living in another city. With a shaky voice, he told me that he had been an accident and urgently needed some cash for treatment.  

Of course, I immediately sent him the money - thank God for technology - and I’m sure you would have done the same for family! 

But wait, the story isn’t over yet. 

The next day I called him again to confirm if he was feeling better. He was surprised at my question - there was never an accident and it was not him who called me! 

I immediately knew I had fallen victim to financial fraud. But, how was this possible? It was unmistakably his voice on the call! Then I learned this was one of the latest financial frauds - called voice cloning - using AI tools. 

So… I just made up the story, but I got your attention! The fact is millions of Americans are falling prey to financial fraud, and in 2023 they lost more than $10 billion to this fraud–a new record–according to the Federal Trade Commission (FTC). This marks a 14% increase over reported losses in 2022.

If you think you’re immune from this phenomenon, unfortunately you’re not! It’s important to be aware of these frauds so you can protect your hard earned money. 

The silver lining is that financial knowledge is power - staying ahead of the curve lowers the chance of falling victim to these scams by 80%. 

So, beware of these 5 newest financial scams that you might encounter in 2024.

Scam #1: AI-based voice cloning scams

If you are thinking the latest technologies like AI will only make your life easier, you are in for a great shock. 

Like in the story above, AI tools can be used in all sorts of nefarious ways to dupe people. Scammers can collect voice samples of your friends and family from social media platforms and use those samples to clone their voices. 

So, the funny reels that you made with your sister can be used to extract your voice samples and the same can be cloned to make fake calls. Last year, the FTC issued a consumer alert on how scammers are using voice cloning to extract money from unsuspecting people.

There is even a Hollywood movie inspired by this scam. 

And it's not just common people who are falling victim to this ‘sci-fi’ scam. Earlier this year, a robocall impersonating President Biden urged voters not to vote in the presidential primary. 

Tip: Pay attention to the number calling you. You’re most likely to get these calls from unknown numbers, which are routed through computers, instead of the actual number of the person. 

So, next time your ‘cousin’ or ‘friend’ calls and asks for some urgent cash, hang on and verify before pressing the ‘send’ button. 

Scam #2: Deepfakes

Imagine in a social media video Elon Musk urging people to invest in one of the hottest new crypto coins in the market that is apparently backed by the man himself. 

While the real Elon Musk will almost never do that, scamsters can easily generate a fake Elon Musk video mimicking his look and voice. Once victims fall prey to this elaborate scheme, they invest money, which then vanishes into thin air. 

Investors have lost millions of dollars to deepfake scams in which images and videos of celebrities were artificially created to mislead them. 

While small investors most commonly fall for these scams, recently a large multinational company lost over $25 million in a deepfake scam. Perpetrators used AI apps to create deepfake representations of some key people like the CFO of the company, who instructed an executive to make a series of funds transfers. 

Of course, the funds were directed to accounts held by organized criminals. But you don’t have to be the CFO of a company or a celebrity to have your identity stolen.

Tip: That’s why it’s important to regularly monitor your digital presence to make sure no one is using your likeness without permission.  Verify the source of any unexpected or unusual communication, especially if it involves sensitive information or financial transactions. Use two-factor authentication for an added layer of security to make it harder for scammers to gain access to your information.

Scam #3: Romance & Sextortion Scams 

When you love someone

You'll do anything

You'll do all the crazy things

That you can't explain

So sang Bryan Adams. We all have been there and done that… for love! 

But one of the most foolish things one can do in love is trust blindly and then end up emptying one’s bank accounts to digital fraud. 

Online dating is gaining popularity, but what if your match turns out to be a scammer from another country? When we are in love, the world looks different. 

With butterflies in our stomachs, we tend to ignore the red flags in the back of our minds.  

In a typical romance scam, your match is first going to build trust and a strong connection before introducing you to a highly lucrative investment option that ‘recently fetched them a huge profit.' 

Emotionally blackmailed, many end up investing–sometimes even with borrowed money–and eventually losing everything invested. According to the Federal Trade Commission (FTC), consumers lost a whopping $1.14 billion to romance scams in 2023.  

If that wasn’t bad enough, another disturbing scam called sextortion is growing in prominence. Sextortion is a term used to describe a crime in which an offender coerces a minor to create and send sexually explicit images or video. After receiving the sexually explicit content from the child, the offender threatens to release that compromising material unless the victim produces additional explicit material or financial payment.

In 2023 alone, the National Center for Missing and Exploited Children received 26,718 reports of financial sextortion. Teens are increasingly being targeted, and it’s even resulting in suicide. 

Tip: never send sexually explicit images to anyone, even if you know them. It can only hurt you. 

Scam #4: Pig Butchering 

It’s an old technique to fatten up pigs with extra feed weeks before they are butchered. The same happens in the pig butchering scam. 

But here, you are not the butcher - you are the pig - sorry! 

A pig butchering scam generally begins with an innocent “hey, how are you?” on social media platforms like Facebook and Instagram or a dating app like Hinge, Buble, or Tinder. Like with romance scams, pig butchering scammers begin by building a strong rapport with potential victims through days of innocuous conversation. 

The ultimate goal is to make the victims feel comfortable enough to loosen their purses with promises to ‘get rich fast’ via crypto tokens, stock, or a business idea, for example. Invariably, the promises are pretty high: you are going to earn big in weeks or even in days. 

To fatten the pigs, initially, the scammers might show high paper profits on your investments or even send you a small amount of money as an initial return. Once the victims are committed, the scammers then take off with the cash and cut off all communication. 

You lose everything even before realizing what just happened. Here is the story of how a Mississippi man Barry May lost half a million dollars to a pig butchering scam on the Internet. 

Tip: Be cautious if someone you recently met online is overly eager to build a close relationship, whether romantic or friendly, very quickly. If it feels too good to be true, it is! Trust your instincts.

Scam #5: Package scams

Have you recently received a text message from USPS or FedEx stating that your package is undeliverable and that you need to pay a delivery fee or residual the delivery? 

Well, chances are that it was a scam. 

Consumers are shopping online now more than ever. Unfortunately, it’s also a breeding ground for different digital frauds, and package scams are the newest varieties. 

In a typical parcel scam, potential victims receive a text message or email impersonating top courier companies like UPS and FedEx. Depending on the motive of the scammers, these texts typically read something like: 

“Hi, we failed to deliver your package with the tracking ID #GJNBSH654XX due to an unpaid delivery fee. To pay this now, visit: https://bit.ly/3FchyyH”

Once you click the link, scammers are likely to steal any sensitive personal identifiable information (PII) you enter, such as credit card or social security numbers. They then install malware to get access to your phone, or simply disappear with the fee you pay. 

Of course, the package never arrives because there was never any package in the first place. 

Tip: Always use the official tracking information provided by the retailer or shipping service to monitor the status of your package. They won’t be randomly texting you.

Listen, earning money is difficult enough, especially when the job market is more competitive and technology is disrupting the workforce. (Side note: check out our 5 resume hacks to get noticed by more recruiters.) But the last thing you want is to lose it all to an online scam. 

Protecting yourself from these five scams is just the tip of the iceberg. There’s so much more to protecting your assets, which we discuss at length at uThrive!  We are on a mission to financially educate young Americans. We have developed a no-nonsense personal finance course designed to imbibe the money skills you need in today's economy. Check out the course today.