Top 3 Online Money Scams of 2021 & How to Steer Clear of Them

There are many ways in which technology has simplified human life. Whether you want to book a holiday in a foreign country or work on your retirement plan, you have the power to accomplish just about anything at the click of a button online.

While modern society has been leveraging technology in many forms, the COVID-19 pandemic has skyrocketed our dependence on it. Today, your smartphone and computer have likely become indispensable to your lifestyle, helping you order groceries, attend work meetings, and stay connected with your loved ones.

But the same technology that makes your life more comfortable could also become the bane of your existence. Increased use of online payment methods has resulted in a wide array of financial scams and internet crimes.

The Rise of Online Money Scams

In 2020, the FBI’s Internet Crime Complaint Center (IC3) received more than 800,000 suspected cyber crime complaints in the U.S. These incidents resulted in cumulative losses of more than $4.2 billion.

Similarly, the Federal Trade Commission (FTC) has received reports of more than 14,000 investment scams in the first quarter of 2021. These scams have resulted in losses exceeding $215 million.

So, what’s propelling the sudden spike in online money scams? To begin with, the pandemic has skyrocketed the adoption of e-commerce. Today, consumers are open to the idea of purchasing expensive gadgets and household items online, sharing their personal information, and even making advance payments.

Then there’s the growing popularity of cryptocurrencies. In an age of job losses and financial insecurities, people are more eager to amp up their investments. That often means they walk right into the trap of worthless cryptocurrencies and associated frauds.

Needless to say, becoming the victim of a money scam could be catastrophic. Apart from the immediate financial ramifications, it could impact your credit score. Also, it could take a serious toll on your personal life and mental health.

It’s possible to get money back from an online scam with the help of professional experts. But recovering from the emotional impact of such an incident is a long and stressful process.

That’s why it is crucial to watch out for the online money scams that are trending in 2021. In the following sections, we’ll delve deeper into a few of these scams and discuss ways to avoid them. Let’s get started.

Synthetic Identity Fraud

It’s one of the most sophisticated scams that has been baffling modern financial experts. Unlike traditional identity theft, hackers use bits of your personal information to create fictional personas.

For instance, a cybercriminal could combine your home address with a fake name to create a new bank account. Similarly, they could misuse your biometric information to pass security checks in a financial institution.

While you won’t become the direct victim of identity theft, such scams could affect your credit profile.

The best way of protecting yourself from synthetic identity fraud is to set strong passwords for your online accounts and electronic gadgets. Also, never use the same password for all your accounts. Keep an eye out for phishing attacks that attempt to steal your personal information.

Celebrities Endorsing Cryptocurrencies

Social media influencers and celebrities have the power to shape public opinions and trends. One of the newest online scams doing the rounds involves celebrities endorsing worthless cryptocurrencies. Renowned public figures, including reality TV stars, YouTubers, gamers, and content creators, have helped fuel such scams.

They often host altcoin giveaways on their social media profiles, encouraging their followers to invest. What most people don’t realize is that these celebrities get paid by the developers of a particular altcoin to create hype around it and increase its valuation. Also, they’re typically paid in the same currency they’re endorsing.

Much like any other pump and dump scheme, the celebrities then sell their altcoins at an elevated price (resulting from their recommendations). Soon after, the developers abandon the cryptocurrency, thus minimizing its price and making your investments worthless.

So, how can you avoid worthless cryptocurrency scams? The most effective way is to only invest in established cryptocurrencies. Also, perform adequate research and consult experts before investing in any new cryptocurrency.

Celebrity Impersonator Scams

Unless you’re living under a rock, you already know about the reports of Elon Musk impersonators duping people of nearly $2 million since October 2020. It’s just a tiny drop in the ocean of celebrity impersonator frauds floating around on the internet.

Typically, the scammers use a fake social media handle or email address that closely resembles the celebrity’s original profile name/email address. They lure you with tempting giveaways or investment proposals asking you to immediately transfer money to the celebrity and reap your reward.

That’s precisely what the impersonators of Elon Musk managed to accomplish.

If you come across any giveaways on social media or email that ask you to transfer money or cryptocurrency, stay away from it. Check the social media handle and find out whether it’s a verified profile.

In 2021, online money scams come in all shapes and forms, including your favorite public personalities. Exercise caution while making any new investment or sharing your bank account details with a third-party company.

Don’t forget to lock your devices and online accounts with uncrackable passwords. Monitor your credit report, and contact your bank or credit card company as soon as you notice any sketchy transactions.