Financial Literacy

Avoiding Frauds and Scams

Have you ever heard the phrase “if it sounds too good to be true, it probably is?” Those e-mails promising you millions of dollars just for sending them a couple hundred, the DVD offers in the mail advertising five free DVDs and those phone calls telling you that you’ve won a free vacation are all scams. Scammers love to target pre-teens and teens because they know they are more easily influenced than their parents. However, knowing about the common frauds and scams can keep you from being their next victim.

Have you ever fallen for (or known someone who has fallen for) a scam like those listed above? Explain what it was and the effects that it had.

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Free!

Sometimes scams do not look like scams at first either. One of the biggest ways scammers get pre-teens and teens is by getting them to sign up for monthly subscriptions. Whenever you see an ad for a free ringtone or a free background, pay close attention. Somewhere on the screen or flyer, usually in small print, is a line explaining that the item is free because you agree to pay $4.99 a month, $9.99 a month or whatever the price of the subscription may be. The price of the subscription is typically added right to your cell phone bill, no credit card needed.

How can not reading the fine print get you in trouble?

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Win Big!

Contests are another way to get money from teens. Those ads that say “win a free iPad” or advertise other usually expensive products for free are usually too good to be true. If companies really gave away a lot of iPads, MP3 players, phones, laptops and TVs for free, they would be out of business pretty quickly. When you click on an ad offering one of those products for free, you are usually asked to fill out a bunch of surveys, sign up for some subscription services (which promise you can cancel at any time) and maybe buy another product or two. At the end of it all, you probably won’t get the iPad you were hoping for, but you may rack up a big bill and start getting a lot of spam in your e-mail account.

What types of products have you seen advertised for free online? Have you ever tried to get one?

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Identity Theft

When you sign up for free products, take surveys to get entered into drawings and respond to shady e-mails, you also put yourself at risk for something else: identity theft. You do not have to be an adult to become a victim of identity theft. Even though you may not be old enough to have your own credit card or make a lot of money, an identity thief can still use your information. All an identity thief needs to steal your identity is one or more of the following:

  • Your social security number
  • A bank card with your name on it
  • An ID with your name and address or other information on it
  • A passport
  • A birth certificate
  • Internet passwords
  • Banking information

You may not carry most of this stuff on you, but that does not mean you are safe from identity theft. Make sure your parents have this information hidden in your house. When you are online, never share your name, address or other information with people, especially people you do not know. Talk to your parents about identity theft too, making sure your entire family is safe.

What are some things you can do to protect yourself against identity theft?

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Suggested Activities
  1. Create a poster to help others avoid falling victim to scams.
  2. Write out a plan for keeping yourself and your family safe from identity theft. Share it with your parent(s).
  3. Create an ad for a free product, but make it realistic, warning others what will really happen if they try to get the product for free (you will spend a lot money, you will not actually get a free product, etc.)

Discussion Questions
  1. Why do you think it’s important to watch out for identity theft as a pre-teen or teen?
  2. What should you do if you get an e-mail that looks like a scam?
  3. What are some signs you should look for to tell if something is too good to be true?