April 2025
Barbara O’Neill, Ph.D., CFP®, AFC®
Distinguished Professor and Extension Financial Management Specialist Emeritus
Rutgers Cooperative Extension
Recently released Federal Trade Commission (FTC) data show that consumers reported losing more than $12.5 billion to fraud in 2024. This represents a 25% increase over 2023. The highest percentage of reported losses came from investment scams and the second highest category was imposter scams.
The FTC also noted that consumers reported losing more money to scams that involved payments via bank transfers and cryptocurrency than all other payment methods combined. This is an indication that the tactics that scammers use have evolved. Crypto investment scams are often referred to as "pig butchering" by scammers, a reference to fattening the pig (building victims' trust) before slaughter (stealing money).
What to do? Consider the following six expert recommendations to reduce your risk of becoming a victim of identity theft and/or fraud:
Recognize Red Flags of Fraud- Pressure to act quickly and to "not tell anyone" about a proposed investment or other questionable transaction are all signs of a scam. So are statements indicating that an investment is a "sure bet" with "guaranteed returns." When in doubt, research a proposed financial transaction before investing in anything or sending money to "help" someone in distress.
Turn on Two-Factor Authentication (2FA)- 2FA can done in three ways: 1. Something you have (e.g., an ATM card), 2. something you know (e.g., a PIN number or a code that is sent via e-mail or text messaging), and 3. something you are (e.g., finger prints and facial or voice recognition). 2FA is typically set up using the "settings" and "privacy and security" links on a cell phone and online financial accounts.
Freeze Your Credit- A credit freeze prevents a business from viewing an individual's credit report for the purpose of extending credit. Credit freezes make it difficult for fraudsters to open new credit lines in a victim's name. Credit freezes must be placed individually with each of the credit reporting agencies (Equifax, Experian, and TransUnion) and remain in effect until removed.
Beware of Reciprocity Tactics- This is where people are given something (e.g., a small trinket or a free meal) with the expectation (and often sales pressure) that they provide something in return. Sometimes reciprocity tactics are associated with scams that separate victims from their hard-earned savings.
Delay and Question- Personal decision rules provide an automatic response in questionable situations. Develop "refusal scripts" that can be used whenever needed. Consider this example from the FINRA Investor Education Foundation: "I never make investing decisions without consulting _____. I'll contact you if I am interested." Another option is to simply say "I'm not interested," especially to cold callers.
Stay Vigilant- With so many data breaches having already taken place, assume that your personal data is "out there." Identity theft victims or those who have had information compromised are at risk of future fraud. Regularly review credit reports and "mix up" login credentials for online accounts so they do not have the same username and password. Free credit reports are available weekly from the website www.annualcreditreport.com. Also file your income taxes early to beat a fraudulent tax return filer.
For additional information about reducing your risk for identity theft and fraud, take the Rutgers Cooperative Extension Identity Theft Risk Assessment Quiz (36k PDF).