Protect Yourself From 10 Menacing Financial Scams

How to recognize and combat these effective measures of fraud.

Students and families should be aware of scams when searching online for college scholarships.
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No matter how safe you might feel, everyone is a potential victim of scams. The world is filled with financial criminals looking to steal your bank account information, invade your computer, and swindle you with their false advertising. They have a slew of tools at their disposal—and they're efficient—but with the right precautionary measures and knowledge, you can build a strong shield to secure your assets.

"People should be alert to the possibility that the next unsolicited phone call, email attachment, or knock on the door from a stranger may be some sort of scam," says Sally Hurme, AARP's consumer fraud expert. "As a crime of persuasion, they must rely on charm, show kindness, and build a sense of trustworthiness as their weapons of choice."

Although scammers are often one step of ahead of consumers, they can be stopped in their tracks. Here's what you need to know about the Better Business Bureau's top 10 scams of 2012 (in no particular order) and how to avoid them:

1. Phishing emails. These scams capitalize on the fact that there is only so much spam blockers can do. Emails may frequently slip into your inbox, with the sender posing as your bank or another trusted institution—yet they're anything but.

[Read: Is This an Investment Or a Scam?]

The message may ask you to confirm your Social Security number, financial account number, or other sensitive personal information which, once obtained, can be used for fraudulent purposes. Other phishing emails contain a link that looks like it will direct you to an official website. However, clicking it can infect your computer with spyware or malware—jeopardizing your passwords, account numbers, and other personal information—or turn your computer into a system used to send phishing emails to other people, says Susan Grant, director of consumer protection at the Consumer Federation of America (CFA). "If you have any doubts, as I did when I got the first one that purported to be from AT&T, call the company or whoever they purport to be directly, or independently go to its website," Grant advises.

2. Advance fee loans. Consumers with poor credit may be tempted by advertisements promising "guaranteed" loans, but there's no such thing. Many lenders offering these so-called "pre-approved" loans instruct consumers to complete a credit application, assuring them the funds will be received once a fee is paid. Unfortunately, the loan never arrives.

These scam artists manage to dupe consumers since most are unaware that it is illegal for a company to charge someone a fee in advance to obtain a loan. Sometimes the fee is disguised as the first month's payment, but that still breaks the law. The Federal Trade Commission says people should always be skeptical of a lender that isn't interested in their credit history.

3. Gold scams. Selling gold can be a good option for quick cash, but you're better off not rushing into a deal without doing your research first. More and more gold scam artists have cropped up over the last few years as people are liquidating their assets—their jewelry in particular—to stay financially afloat. Emmett Murphy, spokesperson for the National Pawnbrokers Association, says fraudulent gold buyers temporarily set up shop in strip malls, garages, large hotel rooms, and sometimes even a person's home; these "rogue gold buyers" buy your gold for an unfair price and then disappear. Other gold scams occur on the Internet, which can be more dangerous than brick-and-mortar pawn brokers since online pawn shops don't have to be licensed like the physical shops do.

To avoid getting ripped off, visit at least three local pawn shops for bids before making a transaction. You'll find out how many karats your gold has, and if you get a range of offers, you can always negotiate, Murphy says.

4. Financial elder abuse. Scam artists see seniors as easy prey. They assume their age and physical limitations make them more vulnerable to persuasion. Scams on the elderly run the gamut and are constantly changing, making it difficult for seniors to protect themselves, says Jean Setzfand, AARP's vice president of financial security. However, one red flag to watch out for is someone who contacts senior citizens and dangles the prospect of wealth—"This investment is guaranteed to produce $10,000 a month in income!"—in front of people who are always looking to add to their retirement fund.