‘Fraud is at a crisis level,’ says expert: 5 financial scams to watch out for in 2024 (2024)

Artificial intelligence tools and sophisticated technology are making it harder for consumers to spot scams.

Fraud cost U.S. consumers more than $7 billion during the first three quarters of 2023, according to the Federal Trade Commission. Those figures are up 5% compared to the same period in 2022.

"Fraud is at a crisis level in this country," said Kathy Stokes, director of fraud prevention programs at AARP.

Perpetrators of these types of crimes may be organized gangs or transnational criminal enterprises with employees who have scripts they follow to lure victims."They have the money, they have the time and they've got the playbook to get you into that heightened emotional state," Stokes said. "It's us against them."

More from Personal Finance:
Bipartisan tax deal could boost child tax credit for 2023
How to make New Year's money resolutions stick
How this 77-year-old widow lost $661,000 in a common tech scam

The most crucial step to avoid being scammed is knowing what could happen and discussing it with family and friends. When people are aware of a specific scam, they are 80% less likely to engage with it, and if they do engage, are 40% less likely to lose money or sensitive information, according to the FINRA Investor Education Foundation.

Here are five of the top financial scams you should look out for in 2024, and ways to avoid becoming a victim.

Playing on people's emotions by targeting personal relationships and posing as someone they care about is a starting point for many fraud schemes.

The grandparent scam is becoming a more damaging version of imposter scams with advanced technology. Thieves can capture a voice recording and then generate an imitation version of your voices that can be used to impersonate you.

Fraudsters may call and pretend that they are a family member in immediate jeopardy — for example, that they have been arrested or are dangerously ill — and urgently needs money. Fraudsters frequently try to isolate their victims by concocting some reason the victim cannot consult with friends, family or law enforcement, such as saying the case is under a "gag order."

"Elder fraud and elder abuse are reprehensible crimes," U.S. Attorney General Merrick B. Garland said in a statement to CNBC. "I urge all Americans, particularly older Americans, to be on the lookout for potential scams, to pause before turning over personal information, and to report fraud and abuse when it occurs."

Some scammers may have a third conspirator pose as a courier and go to a grandparent's home to pick up the money.

Romance scams have been a common way to use new, but fake, relationships to steal people's money and they are growing in popularity. These scams often start with private messages on social media or dating apps, after thieves review the information posted on these accounts.

Once the new "love interest" gains your trust, they may claim that someone close to them is sick, hurt or in jail. They may claim to be in the military or need help with an important delivery. After telling the lie, they'll ask for money or a purchase made on their behalf.

Scammers will often ask for payment in ways that are harder to trace and reverse, such as gift cards and peer-to-peer services such as Venmo and Zelle, said Ted Rossman, a senior industry analyst at Bankrate. "Be very suspicious if someone that you don't know asks you for one of these payments."

Another frequent lie from an online "love interest" is an offer to help invest in cryptocurrency. While many victims of romance scams send money with a gift card, the most significant dollar losses — more than one-third of losses to romance scams in 2022 — were in cryptocurrency, according to the FTC.

Investment-related scams are the most costly type of financial fraud with total losses of more than $3.8 billion in 2022, according to the FTC. The median loss was $5,000.

Scammers use cryptocurrencies because they don't have the same legal protections as credit or debit cards, and payments usually can't be reversed. With investment scams, crypto is central in two ways: It can be both the investment and the payments that can't be reversed.

Besides claiming to be a love interest who needs you to send them money, crypto scams may start with an "investment manager" calling you out of the blue with a tip that seems too good to be true or a scammer claiming to be a celebrity who can quadruple your money.

Business and job-related scams are another top category of financial fraud, and with companies laying off workers, these schemes are likely to continue in 2024.

Some scammers use enticing, hard-to-detect tactics to lure victims through interviews with a company that may seem legitimate. Then this fake employer sends you a fake email to collect personal information, or says they're using a third party, which is also fake, to do a background check. Once they have your personal identity information, it's an easy step to get into your bank account.

Other job scams may promise guaranteed or easy income if you purchase a program they offer, or you'll see job opportunities that involve receiving or sending money to another account.

In this scam targeting individuals, swindlers pose as a "helpful" third party and offer to help create an online account at IRS.gov to pay taxes. Bad actors can use the taxpayer information in such accounts to file a sham taxreturn where the scammer gets the refund. The information can also be used for other financial fraud or identity theft, such as to get a loan or open a line of credit.

"Any of the process that you'd go through to set up an account or check on a refund or just to look at payments that you've made, all of that would start at IRS.gov," said IRS spokesperson Eric Smith. "If someone contacts you saying, 'We'll help you set up an IRS account and send us all of your information,' that's bogus."

If you do get caught in a scam, report it to local law enforcement, the FBI, the state attorney general where the fraud took place, AARP and the FTC.

• Tesla versus BYD: Analysts prefer one of them — giving it up to over 70% upside
• Goldman says small caps to beat large caps this year. 10 cheap smaller stocks to buy
• 'One of the best valuations for AI': Buy the dip in this Big Tech stock, strategist says