It's much easier for a scammer to deceive you into giving away your money or personal information than for them to break through a bank's security. If you authorize a financial transfer, even if you're tricked, the law doesn't require banks to refund your money. However, you can outsmart these scammers. The key is to avoid reacting impulsively – take a moment to verify their claims before taking any action. In fact, hanging up or disconnecting from a potential scammer and contacting your bank's fraud department directly doesn’t cost you a thing.
In 2023, imposter scams ranked as the most common type of fraud reported in the United States, according to the Federal Trade Commission (FTC). In fact, the FTC disclosed that these schemes took $2.7 billion out of victim’s pockets that year alone.
One of the most successful imposter schemes involves crooks who pose as “helpful bank representatives” while they actually drain their victims’ bank accounts.
How bank scams work
Bank imposters may text, call, email, direct message on social media, and even mail letters to connect with their victims.
They may use your responses to hack into your financial accounts and transfer funds into their own pockets, or they persuade you to transfer money into an account that they can drain.
Bank imposter communication may look like this:
Text messages: “XYZ Bank Fraud Alert: Did you attempt a purchase at XYZ Big Box Store for $2,306.43? Reply YES or NO.” When you reply, the fake bank rep immediately calls and pretends to be from the fraud department. They explain that to protect your account, you need to verify specific details. If you share the information, you end up compromising yourself rather than helping yourself as you intended.
Phone calls: “I’m calling from the fraud department at XYZ Bank to inform you your account has been compromised. I will walk you through the steps to restore your security. First, state your name as it appears on the account, say the last four digits of your Social, and the last four digits of your primary account. After that, I’ll text you a code that I’ll need you to repeat back for multi-factor authentication.” The scammer uses whatever information you divulge to hack into your account and wire money into their own accounts. Further, they may sell your information on the dark web or lock you out of your accounts.
Letters: You receive a legitimate-looking bank statement in the mailbox. The envelope sports a logo and return address, and the internal papers are printed on business letterhead. The communication may appear to be from a bank you’ve never heard of, or it might appear to be from one you use. Regardless, the sender included your correct name, address, and more on the documents. Because you don’t recognize the actual account the statement refers to, you call the number listed on the paperwork to clear things up. You’re transferred to a fake fraud department. The people in the “fraud department” extract your information and use it to drain your financial accounts.
How to avoid bank scams
To stay on the defensive against fake bank scammers, look for red flags and avoid the pitfalls.
Don’t trust caller ID. Scammers spoof numbers that look legit. In other words, your caller ID may display a number and caller name that seems perfectly safe. You may even call the number and get a message from a person who appears to represent the bank.
Don’t give in to urgent strangers or panicky automatic alerts. Be wary of anyone that asks for your personal information, one-time passcodes, PINs, etc., or asks you to verify the same. Especially watch out for those — live or automated — that require such information ASAP.
Don’t send payments or transfer funds at the request of a bank. A legitimate financial institution and its representatives would never instruct you to do so. One common tactic: A bogus rep says you need to authorize a fund transfer to solve a problem with one of your accounts.
Do get in touch with your actual bank. To verify what may seem like a legitimate bank inquiry, start fresh. Instead of calling numbers they list or suggest, instead of clicking on links they provide, and instead of responding directly to texts and DMs they send, use the contact information on your actual statements, the back of your cards, and on the company’s website.
Do cut off scammers. When you suspect a scammer is feeling you out as a potential mark, freeze them out. Hang up and block their number. Block their texts and (after taking notes and/or screenshots) delete the corresponding messages. Flag questionable emails as spam and block the addresses. Toss bogus paper letters into your shredder.
Do report the bank imposter. Document the attempted fraud (note dates, times, message content, contact information), and contact your bank’s fraud department online or by phone. Share the details of the attempted fraud. Then, file fraud reports on the Better Business Bureau’s Scam Tracker and with the FTC.
I was scammed, will the bank refund me?
Federal law requires banks to reimburse unauthorized transfers that cause you to lose money, if it’s reported in a reasonable timeframe. That’s because they are responsible for protecting your cash while they stow it.
However, if you authorize a transfer, even if you were tricked into doing so, you’re stuck in a loophole. Scammers know and exploit this because it’s far easier to trick people than it is to breach a bank’s defense systems.
If you do fall victim, report the fraud and then appeal to the bank (and any other financial group involved, like Venmo, PayPal, Zelle, etc.) to restore your funds.
