Beware of these sneaky bank scams

You know you shouldn't send money to a Nigerian prince online, but scammers have many other tricks up their sleeves, not all of which are so easy to spot.

Last year alone, consumers lost $10 billion to fraud, according to the Federal Trade Commission. You can avoid falling into their ranks by knowing what scammers do and taking a few simple precautions to keep your information safe. Read on to learn how to spot common banking scams and protect your money.

10 common bank scams

You can always stay one step ahead of scammers by knowing the scams they prefer.

Check cashing fraud

You receive a check with a request to cash it and return some of the money to the sender. The check may be cashed, but by the time your bank realizes it's fake, you've already transferred real money from your bank account to the scammer. If a potential “employer,” mystery shopping company, or other source asks you to transfer money from a check you received, tear up the check and ignore the request.

Check laundering fraud

Criminals can steal envelopes containing checks from the mail, wash the check with chemicals, and change the payee or dollar amount. To protect yourself from this scam, use checks with security features, never leave check fields blank, don't leave mail in your mailbox, and write checks with black gel ink — it's harder to wash off.

phishing scam

A phishing scam involves receiving a text message or email from a seemingly genuine source – your bank or utility company, for example – asking you to update your information. Sharing your information can allow criminals to take over your account. Never click on a link in an unsolicited message. Call your bank's official customer service line to confirm the request.

Automatic withdrawal scam

You will receive a surprise message or phone call informing you of your win. To receive the money, all you have to do is provide your bank account and routing number. Once the scammer has this information, they can set up a recurring automatic debit that will cost you much more than the disappointment of no prize.

You've probably heard it before, but it's worth repeating: If something sounds too good to be true, it probably is.

Advance fee fraud

This scam asks you to pay a fee up front and promises money or services in return. In some cases, these scams are easy to spot – think of the classic “Nigerian prince” scheme – but others are more sophisticated.

For example, if you're struggling with debt, you might be tempted by a company that offers to help you get back on your feet for a fee. Don't let scammers take advantage of your predicament. There are many legitimate ways to get out of credit card debt, including contacting reputable, nonprofit debt counseling services.

Fake banking websites and apps

Scammers can easily create a fake website or app that looks like that of a real bank to trick you into giving up personal information or sending money. Before you click on any links, double-check that the URL is actually that of your bank or credit union. The FDIC's BankFind makes it easy to check. If you install a mobile banking app on your phone or tablet, make sure you download it directly from the Apple Store or Google Play Store.

Fraud with government counterfeiters

A government agency like the IRS and Social Security Administration will usually only contact you by mail. If you receive a call or text message from someone claiming to be a government official, do not respond or give them any information – even if the message initially appears genuine. Scammers can easily spoof legitimate phone numbers.

Job fraud

Legitimate job postings don't ask for your banking information or require you to pay for products and services to get started. Before you apply for a job, look up the company name with the Better Business Bureau to make sure you're not falling into a trap.

Charity fraud

Scammers want to take advantage of your generosity, especially during disasters like earthquakes or hurricanes. Rather than responding to an unsolicited request for donations, do your own research to find a reputable local organization and make sure your money is actually going to the cause.

If you're not sure how to donate to a cause you care about, contact a nationally recognized organization like the Red Cross or Feeding America.

Detect theft

Identity theft can take many forms, from fraudsters using your debit card information to go on a shopping spree to scammers using your Social Security number to open a bank account in your name. The best way to protect yourself from identity theft is to regularly check your credit report and bank statements and contact the bank immediately if you see anything suspicious. You can also sign up for an identity theft protection service for even more peace of mind.

How to avoid bank account fraud

Although bank fraud can be insidious, you can protect yourself from it by taking a few simple steps.

  • Know the warning signs. Be wary of unsolicited messages, requests that create a false sense of urgency, and offers that seem too good to be true. If something seems suspicious, it probably is.
  • Do not share your personal information. Keep your private information private, from your account numbers to your login credentials. This includes shredding any documents containing confidential information before disposing of them.
  • Create strong passwords. Use a combination of letters, numbers and special characters to create unique passwords. Avoid identifying information like your house number or date of birth. And don't use the same password for multiple websites or apps. A password manager can help you keep track of your logins across platforms.
  • Enable multi-factor authentication. A fraudster may be able to crack your password, but copying your fingerprint or face is much harder. Multi-factor authentication requires these biometric details to access your bank account.
  • Avoid public Wi-Fi networks. Do not do your online or mobile banking over an unprotected Wi-Fi network – stick to your secure home network.
  • Monitor your bank statements and credit reports. Regularly review your account transaction history and consult your credit report throughout the year to identify suspicious activity.
  • Access your ChexSystems reports. If you are concerned that someone may have opened a bank account in your name, obtain a copy of your ChexSystems Disclosure Report and Consumer Rating Report to check for negative entries in your name.
  • Use an identity theft protection service. You have to pay for the best identity theft protection and monitoring services, but it can be well worth it if you can sleep better at night.

What to do if you have become a victim of bank fraud?

If you believe you have been the victim of bank fraud, follow these tips to limit the damage.

  • Contact your bank. Contact your bank or credit union immediately to minimize your losses. In most cases, a prompt report will help you reduce your potential liability. But don't stop at one account. Take a complete inventory of your other financial products, including your credit cards, to make sure those accounts aren't also at risk.
  • File a complaint. Contact the FTC to file a complaint and receive a recovery plan.
  • File a report with the police. While there isn't much local police can do if a fraudster thousands of miles away has your account number, a police report can prove that a scam occurred and you tried to stop it. For example, if someone is using your personal or financial information to launder money, a report can help prove that you weren't involved.
  • Change your passwords. Update the passwords for all your financial accounts and consider changing them for other services such as email and social media.
  • Set up fraud and security alerts. In addition to monitoring your credit report more closely, you should also set up fraud alerts with all three credit bureaus (Equifax, Experian and TransUnion) as an additional security measure. It is also wise to set up a security alert with ChexSystems, which will automatically notify you of any attempts to open new accounts in your name.

Keep scammers out of your bank accounts

As long as you have money, there is a criminal who would love to find a way to steal it. Fortunately, there are many ways to thwart their attempts. By taking a few precautions and practicing a healthy skepticism, you can keep your hard-earned money safe and protected from scammers.