Financial Red Flags and Scams to Watch Out For
While AI can be a powerful tool for good, criminals are also using it to create more sophisticated scams. Your best defense is awareness. As you explore new financial technology, it’s critical to be vigilant and recognize the warning signs of fraud.
Scam 1: AI-Powered Phishing and Voice Cloning
Scammers use AI to write highly convincing emails and text messages that look like they are from your bank, the IRS, or a company like Amazon. These messages are now more grammatically correct and personalized than ever before, making them harder to spot.
Even more frightening is AI voice cloning. A scammer can take a small audio sample of your grandchild’s voice from a social media video and use AI to create a phone call where “they” are in trouble and desperately need you to wire money. This is an evolution of the classic “grandparent scam.”
- Warning Signs: A sense of extreme urgency (“Your account will be closed in one hour!”). A request for sensitive information like your Social Security number or password via email or text. Any request for payment via wire transfer, gift cards, or cryptocurrency.
- How to Protect Yourself: Never click on links in unsolicited emails or texts. If you get a worrying message, contact the company directly using a phone number or website you know is legitimate. If you receive a frantic call from a loved one asking for money, hang up and call them back on their known phone number to verify the story.
Scam 2: Fake “AI Trading” Investment Platforms
You may see online ads or get emails for platforms promising enormous, guaranteed returns using a “proprietary AI trading algorithm.” These websites often look very professional, with flashy charts showing incredible profits. This is almost always a scam designed to get you to deposit money you will never see again.
- Warning Signs: Promises of guaranteed high returns with zero risk. This is the biggest red flag in investing. High-pressure sales tactics urging you to “act now before the opportunity is gone.” Vague explanations of how their “AI” actually works.
- How to Protect Yourself: Remember that all investing involves risk. There is no such thing as a guaranteed high return. Only use well-known, regulated investment firms. If an offer sounds too good to be true, it absolutely is.
Scam 3: Data Privacy and Insecure Apps
Not all apps are created equal. When you link a financial app to your bank accounts, you are trusting it with your most sensitive data. A malicious or poorly secured app could expose your information to hackers.
- Warning Signs: The app has very few reviews or a lot of negative reviews mentioning security problems. The app developer is unknown or has no professional website. The privacy policy is unclear or non-existent.
- How to Protect Yourself: Stick to well-known, highly-rated apps from reputable companies. Before downloading, do a quick search for “[App Name] reviews” or “[App Name] scam.” Always enable security features like two-factor authentication (where you need a password and a code from your phone to log in).
To protect yourself from scams and for consumer information, consult the Consumer Financial Protection Bureau (CFPB) and the FTC.
