Banks offer scam advice in time for the holidays

Although scammers work year-round, they become most active during the holiday shopping season, and in a twist this holiday season, the FBI warned that criminals are now using artificial intelligence to facilitate financial fraud. In response, banks have stepped up their efforts to educate consumers about scam risks.

The warning from the FBI indicated that criminals are using AI-generated text, images, audio and videos to impersonate real people, create more believable stories and social media profiles, generate fraudulent documents and take other measures aimed to deceive both consumers and businesses.

Educating customers can help them avoid these and other threats. Many banks and credit unions provide their customers and members with guides to avoiding scams, quizzes to help identify the differences between real texts and fake ones and memorable tips that can help their customers avoid losing money to fraud.

Here's how to identify and avoid scams, according to banks and consumer advocates.

Common types of scams

In its customer guide to avoiding scams, Bank of America outlines four types of scams: imposter scams, investment scams, tech support scams and online sales.

Among the 2.6 million fraud reports the Federal Trade Commission received in 2023, imposter scams are the most common. A typical imposter scam starts with a text message that says a package is in transit, was delivered or failed to get delivered. Whatever the ruse, the scammer tries to convince the victim to transfer money or provide the scammer with remote access to one of their accounts. U.S. consumers lost $2.7 billion to this type of scam in 2023.

The most costly type of fraud for consumers is investment scams. These cost Americans $4.6 billion in 2023. Investment scams often start with the scammer reaching out via social media to offer a unique investment opportunity, convincing the victim that the investment is growing and using these returns to steal more money.

Tech support scams, sometimes considered a type of imposter scam, are also common. They involve a scammer sending a pop-up notification or calling the victim by phone to scare the person into believing their device has a virus that the scammer can help remove, as long as the victim provides the scammer with remote access to their computer. The scammer can use this access to steal information, install malware or hold the device ransom by demanding payment.

Second to imposter scams in terms of frequency are online shopping scams. These typically involve a scammer creating a fake website or posting a supposedly great deal on social media. One red flag for these scams is a request to pay with uncommon methods such as cash, gift cards or wire transfers. Others include pressure to act quickly and a lack of seller or product reviews from independent sources.

Bank of America also advises, "If something sounds too good to be true, it probably is."

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More red flags

Many banks including Bank of America promote a campaign from the American Bankers Association designed to educate people about avoiding scams. The website, BanksNeverAskThat.com, includes a quiz people can take to see whether they can identify the often nuanced differences between a text, email or call from a bank and a text, email, or call from a scammer impersonating the bank. The ABA site highlights five red flags of phishing:

1. They ask you to open a link you weren't expecting.
2. They use urgent or fear-inducing language.
3. They send an attachment.
4. They request personal info like PINs, passwords, or Social Security numbers.
5. They pressure you to log into, or send money with, payment apps.
   

In contrast, banks and credit unions often avoid providing links in emails and text messages, opting instead to instruct the user to use their online banking app, visit a branch or call the bank to learn more about the update provided.
This communication strategy helps customers better anticipate the contact methods they can expect from the bank, which in turn undercuts scammers by making it more suspicious when official-looking emails or texts include a link, evoke fear or request a direct reply to the message.

Practical tips

Wells Fargo provides customers with five steps to avoiding bank imposter scams. First is not to rely on caller ID. Even as telephone network operators make it harder for scammers to spoof phone numbers, the technology is still being implemented and improved. In the meantime, an incoming call that appears to be from the bank might not necessarily be legitimate.

Wells Fargo's second tip is to not share private account information. The bank's employees "will never ask for your PIN password, or one-time access codes," the bank said.

Similarly, bank employees "will never ask you to send money to anyone — including yourself — to 'reverse a transfer,' 'receive a fund,' or anything similar." The bank advises that, if it needs to correct your account, it already has the account information needed to do so.

Fourth, Wells Fargo advises customers to ignore transaction requests they do not initiate. If a customer receives a one-time access code to authorize a transaction they did not initiate, the customer should not use the code or share it with anyone, not even with someone who claims to be from the bank.

Fifth, "When in doubt, hang up and contact us directly," the bank advises. Whereas a scammer can spoof caller ID, it is much more difficult to intercept an outgoing call. Therefore, if the customer gets a suspicious call, text or email, they should hang up or ignore the message and instead contact the bank directly.

Some payment methods are safer than others

Many banks, credit unions and credit card companies advise against shopping online with debit cards if an alternative such as a credit card is available. This is primarily because debit cards do not offer the same consumer protections credit cards do.

Experts without a financial interest in credit cards also advise against using debit cards for online purchases. For example, AARP reiterated advice last month that people should use credit cards when shopping online to take advantage of consumer protections that debit cards lack, particularly against fraudulent purchases.

This guidance from AARP comes in part as a response to a trend in which fewer consumers surveyed agree with the statement "the safest way to make purchases online is with a credit card," according to a survey the interest group conducted. In 2022, 73% of respondents told AARP they agreed with the statement. In 2024, that percentage was down to 65%.

Multiple factors might affect this decline, including increasing awareness of online shopping fraud and scams, but respondents might also view digital wallets such as Apple Pay or PayPal as safer options.