How to Spot an Online Scam

Credit card with a fish hook through it on a keyboard representing phishing credit card for information

Peter Dazeley/Getty Images

Online scams all start from the same bit of economic rationality: When you can broadcast to millions of people, it's inevitable that someone, somewhere, will bite. That's why scams are so ubiquitous. Someone will always fall for it.

But not all scams are created equal; the Nigerian Banker may not fool you, but other and more subtle scams just might.

The Psychology of Scamming

Scams work because they prey on natural human inclinations to seek gain and avoid loss. An entire academic field—behavioral economics—outlines the instinctive choices we make, like:

  • Fear of Missing Out: You can get a big reward, but only if you act now!
  • Loss Aversion: If you don't act now, you'll face even bigger losses later!
  • Reference Dependence: The fee is just a small amount of your winnings!

Scams work because they target your emotions, not your logic.

Hallmarks of Scams

Most scams fall into one of three broad categories.

The Email Money Scam

So-called Nigerian Banker scams make many people laugh, with the fake formality and the odd language. So easy to spot, right? Variations of the Nigerian banker email scam use this approach, too. The challenge with this type of scam is that the goofy sentences act as a screener for the spammer. In other words: If, despite all the red flags, you still follow up, then you're self-selecting yourself in to a small, gullible pool of people.

The Friend in Need

Ever get an urgent Facebook Messenger note from a distant friend or acquaintance expressing some sort of emergency? For example, he or she lost a wallet while vacationing in a foreign country and needs you to urgently send some money by PayPal/Venmo/Western Union to help with documentation?

Hacked social-media accounts offer a vector for scamming because you're primed to trust the person on the other end of the line.

The Legit-Sounding Problem

A problem especially for seniors and people subject to debt collections, some scammers use personal information about you or your family to attempt to coerce an immediate payment for an alleged debt or to address some family emergency.

Best Practices for Online Safety

Business Scams and Frauds
Business Scams and Frauds to Avoid. Peter Dazeley/Getty Images

To protect yourself, think ahead:

  • Don't post private information on social media. The more you post (including those "20 fun facts you never knew about me" posts that are excellent data-sources for socially engineered scams), the more you empower the people who want to scam you.
  • Don't click unexpected links. If you want to check, e.g., your banking information, log into your bank's website directly. Don't click the login link in a message.
  • Always request documentation. If someone tries to pressure you, ask for documentation to be sent by U.S. Mail. Legitimate people will accommodate this request.
  • Never give passwords to people. No one, not even tech support, needs your password.
  • Never give money unless you initiated the transaction. When people need you to give them money, especially when there's "no risk" to you, then there's high risk to you. Unless you were the one who initiated a purchase or donation, never give money to someone who reaches out to you.