Financial Fraud: What to Watch for and How to Help Prevent It

Financial Fraud Prevention

Financial fraud isn’t just about missing numbers on a screen. It’s an empty dinner table, an unpaid bill, and a vacation that never happens. When someone steals your money, they’re not just taking currency — they’re taking stability, plans, and peace of mind. Interpol’s Global Financial Fraud and Threat Assessment estimates that financial scam losses in 2025 reached $442 billion.

While everyone is at risk, military families, especially, are frequently targeted by scammers who exploit deployments, relocations, and the trust service members place in official‑looking communications. And because service members are often focused on their mission, they don’t have the bandwidth to keep a constant guard against financial threats.

But here’s the good news — you can take steps to help protect yourself. By understanding common scams and how to recognize them, you can help reduce the risk of fraud and better protect your money.

Why Financial Scams Work

• Sophistication: Financial scammers are generally tech-savvy and opportunistic. In ever-evolving ways, they know how to mimic real authorities, weaponize AI, and embed harmful software in seemingly innocent messages.
• Psychology: Many people have an overconfidence bias, where they believe that being scammed is something that happens to “other people” who are naïve or reckless. However, even an experienced, shrewd individual can fall prey to a well-designed scheme.
• Decency: These types of criminals often prey on people’s humanity and goodwill. They know that tapping into emotions — by posing as someone vulnerable or urgently needing help — can disarm even the most cautious person.

So what can you do for protection? Perhaps the best tool to combat financial fraud is awareness. If you realized you were being actively scammed, would you give a stranger a single dollar, or even a moment of your time? Probably not.

Awareness works like a muscle — it needs regular exercise. That’s why every text, phone call, email and interaction should be considered with a healthy degree of skepticism.

Common Financial Scams

Fraudsters generally don’t want to work hard. If they can profit from a low-effort swindle, they will. Therefore, building knowledge of routine financial scams is the logical first step to protecting your hard-earned money. Here are four of the most common: 

Phishing Emails

Phishing emails are fake messages designed to trick people into giving away personal information by appearing to be from a trusted source. They work by creating a sense of urgency or fear, so the target clicks a link or opens an attachment without thinking.

Text Message Scams

Also known as smishing, text message scams are phony texts that try to trick you into clicking a link or sharing personal information by appearing to be from a financial institution, delivery service, or other trusted source. Like phishing emails, they rely on urgency or fear to make you respond before you realize the message is fraudulent.

Impostor Scams

While phishing emails and text-message scams are usually mass-sent to thousands of people, impostor scams are much more personalized. It’s usually a live interaction, like a phone call, where they pretend to be a government agent, a bank employee, or even a family member — to get money or personal information.

Investment Scams

Investment scams start with an email, text or phone call, and they promise big financial returns with little or no risk, but the opportunities they offer are fake. They work by creating excitement or the sense of exclusivity, so you hand over money before realizing the investment doesn’t actually exist.

Financial Scams and the Military

Among the wider military community — including active-duty, National Guard members,  retirees, veterans and their families — the Military Officers Association of America reported total fraud losses in 2024 at $580 million, a staggering figure that reflects how aggressively scammers target those connected to military service. Many of these schemes take the form of impostor scams, which are especially effective against individuals accustomed to routine, structured systems and chain-of-command interactions.

For veterans and retirees, the consequences reach beyond the dollars lost. Fraud can disrupt medical or housing plans, create instability during a stage of life that should feel secure, and erode the sense of trust and safety earned through years of service.

 

Practical Steps You Can Take to Protect Yourself

Now that you’re equipped with some fundamental knowledge about financial scams, let’s identify some actionable steps you can take to protect your money.

1. Turn on multi‑factor authentication (MFA). This adds a second layer of security so stolen passwords alone can’t access your accounts. Use an authenticator app or hardware key for stronger protection.
2. Keep your financial and email accounts locked down with strong, unique passwords. Using a password manager prevents reuse and makes it far harder for attackers to break into your accounts in the first place.
3. Limit what personal information you share online. The less data scammers can gather about you, the harder it is for them to tailor convincing attacks or impersonate trusted contacts.
4. Set up alerts on your bank and credit accounts. Real‑time notifications for logins, transfers, or new credit activity help you catch suspicious behavior early and shut it down before damage occurs.

Acting on these four simple steps can help strengthen your financial security and reduce vulnerability to fraud. However, mistakes happen. If you think you’ve been scammed, don’t panic. Call your bank or Financial Advisor and explain what happened. In some cases, timely action may improve the chances of recovering funds. 

Think you’ve been scammed? Take these steps immediately.

1. Stop all contact with the scammer immediately.
2. Save evidence like screenshots, emails and phone numbers.
3. Change passwords and secure all affected accounts.
4. Notify your bank or card issuer right away.
5. Report the scam to the platform involved, notify local police, and file a complaint with the Federal Trade Commission (FTC) at ReportFraud.ftc.gov.

Frequently Asked Questions

What are some financial scam red flags?

If a message uses urgent language — like “final notice”, “legal action”, and “one spot left” — or contains spelling mistakes, threats, odd links, or requests for personal information, it may be a scam.

Are any specific groups more frequently targeted?

As mentioned earlier, military personnel face elevated risk, but scammers cast a wide net, and other groups at higher risk include:

• Older adults (age 65+), usually have the most money to lose.
• Younger adults (aged 18-30), because their personal information is often more exposed through online activity and social media.
• Lower-income households, since financial stress can make high-reward promises more tempting.
• Job seekers — scammers exploit their desire for stability, knowing people are more willing to share personal information when they believe it could lead to employment.

What happens after I file a fraud report?

Your report is added to a national database that helps law‑enforcement agencies track scams and spot patterns. It doesn’t guarantee immediate resolution of your case, but if your details connect to a broader investigation, a detective or law-enforcement representative may reach out with additional information or questions.