Three scams to avoid!

With criminals always poised to steal our hard-earned cash from under our noses, here are three popular scams and how you can avoid falling foul of them.

A friend of mine revealed that he was recently turned down when he tried to use his credit card. When he contacted his bank he was told he'd reached his (rather high) credit limit. On a card he barely uses.

Yep, you guessed it - he was yet another victim of a scam. Fraudsters had somehow managed to have a spending spree with his credit card.

And unfortunately scams like this are becoming all too common with increasing numbers of us falling foul of them. But there are a few things we can do to avoid becoming another statistic. Check out a few of the most common scams and how to guard against them.

Phishing

Ever had an email from a bank informing you that you need to update your bank's security details, and you should do so by clicking the handy link supplied?

Well be warned - this is an all-too-common scammers' trick known as phishing. Click the link and instead of entering your bank's website, you're sent off to a site created to look just like it. So when you happily enter and update your security details the information is captured and used by criminals to access your account. Arrgghh!

I've had plenty of these emails in the past, my 'favourites' being from banks I've never even held an account with! So what can you do to protect yourself?

How to protect yourself

Always ignore (or better still delete) emails purporting to come from your bank that require you to enter security information. Your bank will never ask you for information in this way.
Give away signs include grammatical errors and odd spelling in the subject box (this is an attempt to bypass spam filters).
When you do wish to access online banking, open your web browser and type in the address yourself.

Trojans

So as you can see, clicking on links in emails isn't a good move as you may become a victim of phishing. However, what's worse is that you could be directed to malicious websites where viruses can be installed on your machine without you even realising it.

Remember the story of the Trojan Horse - Greek soldiers hid inside it, allowing them to secretly enter the city of Troy. Then they crept out under cover of darkness, let in the rest of the army and destroyed Troy.

That's where Trojan viruses get their name - scammers send out what looks like an innocent link. However, when you click on it you're sent to a malicious website where vulnerabilities in your web browser are exploited to install a Trojan virus on your machine.

These viruses can be "keystroke loggers", which capture all of your keystrokes (including security information and passwords) or they can take screenshots of the sites you visit. All of this information will then be sent to the criminals over the internet which will allow them to pretend to be you.

How to protect yourself

Firewalls, up to date anti-virus and anti-spyware software provide the best defence against Trojans so ensure you have them installed.
As most Trojans exploit the Microsoft Internet Explorer browser, make sure you have installed the latest security updates (patches) from the Windows update website.
Alternatively, you may wish to consider using a different browser.
Some Trojans can be downloaded from emails themselves when the message is previewed or opened in HTML view. Try not to open emails from unknown sources or use "Plain text view" instead.

Money Mules

Finally, one thing many of us don't realise is that a lot of these fraudsters are located overseas. And as a result they have problems getting their hands on the money they've scammed through Trojans and phishing etc. (you can't make cross border transfers out of UK online banks overseas).

The solution is to find themselves a money transfer agent or mule. By advertising for a "sales" or "finance manager", many scammers recruit innocent people to carry out a few hours of work each week for their fake companies.

Once recruited, the mules find that funds have been transferred to their accounts, which is of course money that's been stolen from elsewhere. They must then transfer this money to an overseas account (minus a commission payment) using a wire transfer service, keeping the commission for themselves.

Sounds great doesn't it - you apply for a job, have to do very little work and make some easy money? Unfortunately, laundering money in this way, however innocently, is highly illegal and can result in your bank account being suspended as well as embroil you in a police investigation. What's more, as that commission payment you "earned" is a proceed of fraud you'll lose that too.

So how can you avoid becoming a money mule?

Be wary of unsolicited offers and opportunities giving the chance to make easy money, particularly if based overseas. Adverts may contain bad grammar and dodgy spelling plus they may seek people who bank with certain banks.
Verify any company that makes you an offer, in particular the contact details (address, email, phone number) and that they're registered in the UK.
Never give out your bank details to anyone unless you know and trust them.
Finally, if a job looks too good to be true, it probably is.

So there you have it, three of the most common scams and tips to help you avoid becoming a victim.

As a final point if you do bank online try and check your accounts regularly - this way you'll spot any discrepancies quickly. Check your credit report regularly too. And keep your wits about you - scammers will constantly try and get their hands on our cash but with a bit of common sense we can guard against them. Get a free credit report via lovemoney.com and check your transactions using the lovemoney.com online banking service.

Get help from lovemoney.com

If January is leaving you a little strapped for cash, lovemoney.com can help you boost that income!

First, adopt this goal: Make some extra money

Next, watch this video: How to save when you've got no money

Finally, why not have a wander over to Q&A and ask other lovemoney.com members for advice?

More: This mistake will cost you a fortune |The top 15 freebies for 2010