In a digital age where credit scores are the gateway to everything from home ownership to affordable insurance, scammers are finding sneakier ways to manipulate people and steal money—and sometimes, even destroy their credit. If you’re working hard to build or repair your credit, being scammed doesn’t just hurt your wallet. It can derail years of financial progress.
According to the Federal Trade Commission (FTC), over $12.5 billion in fraud losses were reported by consumers in the past year alone—a staggering 25% increase from the previous year. Whether you’re new to credit or using tools like a credit builder app to increase your score, understanding how fraud works is the first step toward protecting your identity, credit report, and future financial stability.
What Is a Financial Scam?
A financial scam is a deceptive tactic used by criminals to trick you into handing over money, personal information, or both. These scams can come in the form of emails, phone calls, text messages, social media interactions, and fake websites—all designed to look trustworthy while secretly stealing from you.
Falling victim to a scam can not only result in lost money but can also trigger identity theft, unauthorized credit card activity, or even fraudulent loans opened in your name—all of which severely damage your credit profile.
9 Common Scams That Can Jeopardize Your Credit and Finances
1. Romance Scams
Often starting on dating apps or social media, these scams involve fraudsters creating fake identities to emotionally manipulate victims. Over time, they build trust and ask for money due to a fabricated crisis—such as a medical emergency or being stranded abroad.
Impact on Credit: Victims may open new lines of credit, max out cards, or take out loans to “help” their online partner, often resulting in high debt or default.
2. Gift Card Payment Scams
Scammers impersonate legitimate organizations—such as tech companies or government agencies—and claim you owe money. They then ask for payment in gift cards, which are hard to trace and non-refundable.
Why it’s a red flag: Real companies and institutions will never request gift cards as a payment method. This scam thrives on urgency and fear.
Credit Tip: If you’ve been coerced into using a credit card to buy the gift cards, report it immediately to your issuer. You may be able to reverse the charge.
3. Impersonator (Imposter) Scams
These scams involve someone posing as a trusted individual—such as a family member, police officer, IRS agent, or even a bank employee. The scammer may claim there’s fraud on your account and ask for verification by collecting sensitive info like your login credentials or Social Security number.
Impact: If you provide your banking or credit login, the scammer can access your accounts, open new credit lines in your name, and destroy your financial reputation.
4. Grandparent Scams (Family Emergency)
This scam targets older adults by exploiting their love for family. The scammer pretends to be a relative in trouble (such as a grandchild), urgently needing money for bail, hospital bills, or travel.
AI Danger: New scams use AI-generated voices to mimic real family members. These realistic-sounding messages make it harder to detect the fraud.
Prevention Tip: Always verify with another family member before sending money.
5. Phishing Email Scams
These are fraudulent emails pretending to be from trustworthy companies like PayPal, Netflix, or your bank. They often include fake links to sites that look real but are designed to capture your login info.
Credit Threat: If scammers access your bank or credit accounts, they can drain funds, rack up charges, or apply for loans—all of which damage your credit standing.
Tech Tip: Use antivirus software and enable multi-factor authentication to reduce risk.
6. Lottery or Prize Scams
You're told you’ve won a sweepstake or lottery, but in order to claim the prize, you must pay a fee or taxes upfront. There is no real prize—just a fake check or empty promise.
Financial Insight: These scams prey on excitement. Never pay money to receive money. Real sweepstakes never ask winners to pay upfront.
7. Work-from-Home Job Scams
These scams often advertise high-paying jobs with flexible hours. You’re “hired” quickly, then asked to pay for job materials or accept a check with instructions to refund part of it. The check later bounces, leaving you in debt.
Why it’s dangerous: You may unknowingly give out your banking info, overdraw your account, or damage your credit by cashing a fake check.
8. Fake Internet or Cable Discounts
Scammers call or text you offering huge discounts on popular services like Spectrum, Verizon, or AT&T. They’ll ask for account info or payment in gift cards to “activate the deal.”
Warning Sign: Always initiate contact with your service provider via their verified customer service line. Never act on unsolicited discount offers.
9. USPS or Delivery Text Scams
These appear as texts from shipping companies (like USPS, FedEx, or UPS), claiming there's an issue with your delivery. You’re directed to click a link to resolve it—where you're asked for payment or personal information.
Tip: Always track your shipments through the official website or app—not from random links.
How to Protect Yourself from Financial Scams
Being proactive is your best defense when it comes to protecting your finances and credit. Here's how you can stay one step ahead of scammers:
Recognize Red Flags
Scammers often rely on emotional manipulation, urgency, or confusion to trick victims. Knowing the common warning signs can help you avoid falling for their tactics:
- High Urgency or Pressure: Phrases like “Act now!” or “Your account will be shut down in 10 minutes” are classic tactics to push you into making a quick, uninformed decision.
- Unusual Payment Methods: Requests for gift cards, cryptocurrency, or wire transfers are huge red flags. These methods are hard to trace and almost impossible to recover.
- Poor Grammar and Design: Legitimate companies take time to craft well-written, visually clean messages. Sloppy language, typos, or blurry logos can signal a fake.
- Requests for Sensitive Information: Be highly suspicious if someone asks for your Social Security number, credit card number, bank account details, or login credentials.
Tip: Always take a step back when something feels off. Scammers count on emotional responses—slowing down is your superpower.
Verify Identities
Even if a caller or email seems official, always verify before taking any action:
- Don’t Trust Caller ID: Phone numbers and email addresses can be spoofed to look legitimate. Just because it says “IRS” or “Your Bank” doesn’t mean it’s real.
- Hang Up and Call Directly: Go to the official website of the organization (bank, government agency, retailer) and call the number listed there. This simple step can protect you from a major loss.
- Ask for Written Proof: Scammers will resist this. Legitimate businesses won’t hesitate to send written communication.
SEO Tip: Search for company reviews, complaints, or scam alerts using terms like "[company name] scam" or "fraud report."
Use Secure Technology
Protecting your digital footprint is crucial, especially when you're banking online or using credit apps:
- Install Antivirus and Antimalware Software: These tools detect and block malicious software that may try to steal your personal information.
- Enable Multi-Factor Authentication (MFA): MFA requires more than just a password to access an account, such as a fingerprint or text confirmation code. It adds an extra layer of security.
- Use Strong, Unique Passwords: Avoid using the same password for multiple accounts. Use a mix of uppercase and lowercase letters, numbers, and special characters. Consider using a trusted password manager to store them securely.
Why it matters: Secure tech habits help prevent account takeovers and identity theft, two major causes of credit damage.
Monitor Your Credit
Ongoing credit monitoring helps you catch suspicious activity early—before it becomes a major issue.
- Check Your Reports: Review your credit reports from Equifax, Experian, and TransUnion at least once a year (you can do this for free at AnnualCreditReport.com). Look for unfamiliar accounts, hard inquiries, or incorrect information.
- Use Alerts: Many banks and credit monitoring apps send instant alerts for suspicious transactions or new account activity.
- Enroll in Credit Monitoring Services: Services like Ava Finance can provide real-time credit updates, helping you stay on top of your score and spot fraud early.
Reminder: Monitoring your credit is like having a home alarm for your financial identity.
What to Do If You've Been Scammed
If you think you’ve been targeted or tricked by a scam, don’t panic—but act quickly. Taking the right steps can reduce damage and speed up recovery.
1. Report It
Reporting the scam is crucial to:
- Prevent it from happening to others
- Create a record for legal and financial institutions
- Possibly aid in recovery if law enforcement gets involved
Where to report:
- FTC ReportFraud.ftc.gov
- Better Business Bureau Scam Tracker
- FBI Internet Crime Complaint Center (IC3)
Be as detailed as possible: include dates, communication methods, amounts, names used, and any payment details.
2. Call Your Bank or Credit Card Issuer
If you sent money or shared account details, contact your bank immediately:
- Report any unauthorized transactions
- Request a stop payment or chargeback if possible
- Freeze your account if needed to prevent further fraud
If you use a payment app like Venmo, PayPal, or Zelle, contact their support teams ASAP.
Time matters: The sooner you notify your financial institution, the better your chances of getting your money back.
3. Freeze Your Credit
A credit freeze prevents anyone—even you—from opening new credit accounts in your name without lifting the freeze first. This stops scammers from:
- Taking out loans
- Opening credit cards
- Renting properties in your name
Where to freeze your credit:
Optional: Place a fraud alert instead of a freeze, which notifies lenders to take extra steps before approving credit.
4. Scan for Malware
If you clicked on a suspicious link or downloaded a questionable file:
- Run a full antivirus scan on all devices you use (phone, tablet, computer)
- Remove any flagged malware or suspicious software
- Avoid logging into sensitive accounts until your system is clean
Tip: Change passwords only after your device is malware-free to avoid handing them to a scammer.
5. Update Your Passwords
Assume your information has been compromised. Take the following steps:
- Change passwords for all critical accounts: banking, email, credit apps, utilities
- Use strong and unique passwords for each account
- Avoid reusing old passwords
- Turn on multi-factor authentication wherever available
Strong password habits are a cornerstone of credit protection and identity security.
Final Thought: Protect Your Credit with Confidence
In a world filled with digital threats, protecting your credit is more important than ever. By educating yourself on the most common financial scams and staying proactive, you can stay ahead of fraudsters and safeguard your financial future.
If you’re serious about improving or repairing your credit, consider using Ava Finance—a secure and trusted credit builder app that helps you grow your credit score through smart habits, on-time payments, and identity protection features. Ava Finance is committed to your financial success—without hidden fees or predatory practices.
