You’re relaxing at home, winding down for the evening, when all of a sudden, your phone rings. It’s not a number you recognize, but the area code matches yours, so you pick up.
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The voice on the other end of the line is urgent yet calm. They’re from your bank’s fraud department and even reference your bank by name. They know your full name and the last four digits of your account. They tell you they’ve detected “suspicious activity” — a large transfer request you didn’t initiate.
Concerned and caught off guard, you follow their instructions to “confirm your account number for security purposes” and move your funds to a “secure, temporary account” while the fraud investigation is underway — assuring you that you’ll be able to access the money again soon.
Sure enough, you soon find out — the hard way — that this friendly-sounding neighborhood fraud agent was not what they seemed. They were the real fraudster, and now your hard-earned money is padding their personal coffers. It’s unfair, but it’s a scam that Andrew Lokenauth, a financial expert who writes TheFinanceNewsletter.com and founder of Be Fluent in Finance, has seen before.
Throughout 15 years on Wall Street and in banking, Lokenauth has learned the ins and outs of how scams work — and how to stop them. As part of our Top 100 Money Experts series, GOBankingRates caught up with him to discuss the smartest ways to protect yourself from being scammed.
Lock Down Your Passwords
Is it a pain to create a variety of complex passwords for each of your accounts? Yes. Do you have to do it anyway to stop scammers from strolling into your finances and treating them like a personal piggy bank? Also yes.
“From my years at JPMorgan, I’ve seen too many cases of identity theft that could’ve been prevented,” Lokenauth said. “Let me tell you about a client who lost $50,000 because they used the same password across all their accounts. The scammer got into their email and, within hours, drained their savings.”
It’s a common mistake, Lokenauth said — one that even the experts make. “Don’t write your passwords down anywhere. I made that mistake early in my career and learned the hard way.”
Instead, he recommends using a password manager. “LastPass or 1Password are solid choices. I personally use LastPass to generate unique passwords for every single account.”
Another must? Multifactor authentication, or MFA. Lokenauth calls it non-negotiable for every single account, but especially financial ones.
“I’ve never seen a major fraud case where MFA was properly set up,” he said. “The extra 10 seconds it takes is worth it.”
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Learn To Spot a Scam
Staying aware of the latest and not-so greatest scams can help you recognize one when it matters — as in, before you’re reciting your account number to a supposed fraud prevention agent. Even a quick online search can keep you up to date on the tricks fraudsters are using to prey on hardworking people.
“The most devastating scam I’m seeing hit my clients lately is the ’emergency bank fraud’ call,” Lokenauth said. “The scammer poses as your bank’s fraud department, telling you there’s suspicious activity on your account. They create panic — and panic makes people ignore red flags.”
That opening story? It happened to one of Lokenauth’s clients. She received a call claiming to be from her bank’s fraud team. The caller knew her name and the last four digits of her account — just enough to seem legit. She was convinced to move her money “somewhere safe.” She lost $25,000 before anyone realized what had happened.
“These scams work because they exploit trust in financial institutions,” Lokenauth said.
Lokenauth also warns of “business email compromise” scams. These are especially dangerous for small business owners.
“The scammer hacks a company email, monitors communication patterns, then sends fake invoice or wire instructions,” Lokenauth said. “One of my business clients almost sent $100,000 to a scammer who’d copied their supplier’s exact email format.”
If something feels even a little off, stop and verify. Hang up and call the contact using the number you already have. Forward the email to a known address to ask if it’s legitimate. “A few minutes of prevention can save you a lot of money,” Lokenauth said.
Adopt Fraudproof Habits
Lokenauth’s time managing high-net-worth clients has taught him that the smallest, simplest habits can prevent most fraud.
“I check my own bank accounts daily — but only through official apps, never through links in emails,” he said. “It takes five minutes and catches issues fast.”
He’s also a fan of using credit cards instead of debit cards whenever possible. “Credit cards have much better fraud protection,” he said. “When my own card was skimmed at a gas station, Chase caught it immediately. I didn’t lose a single penny. With debit cards, your actual money’s at risk.”
If you haven’t gone paperless already, what are you waiting for? Lokenauth points out that paper statements are a gold mine for dumpster-diving identity thieves. He’s switched all his clients to paperless documents.
And his biggest pet peeve? “For the love of everything, stop carrying your Social Security card in your wallet,” he said. “One client did this, got their wallet stolen, and spent months dealing with identity theft.”
Time Is of the Essence
Sometimes, despite your best efforts, a scammer gets through. While you might be tempted to kick yourself while you’re already down, your first move should be quick action.
“Time is absolutely critical. I’ve seen the difference 15 minutes can make,” Lokenauth said. “First thing: Call your bank’s actual fraud department — use the number on your card, not any number a potential scammer gave you.”
You’ll also want to file a police report ASAP to create an official record of the crime for your insurance claims and any fraud investigations. While you’re at it, Lokenauth recommends freezing your credit with all three bureaus. It’s free — and effective.
“I’ve had clients hesitate on this — big mistake. A credit freeze prevents scammers from opening new accounts in your name,” he said. “Had a client wait on this once, and the scammer opened six credit cards before we caught it.”
Also, document everything, including times, phone numbers, and email addresses. And if you run a business, alert your insurance carrier immediately.
“Most commercial policies include cyber fraud coverage, but there are strict timelines for reporting,” Lokenauth said.
Bottom Line
In a world where fraud is getting more sophisticated by the day, Lokenauth’s advice is simple: Stay informed, stay vigilant and take action fast. Because in the battle between scammer and victim, knowledge isn’t just power — it’s protection.
This article is part of GOBankingRates’ Top 100 Money Experts series, where we spotlight expert answers to the biggest financial questions Americans are asking. Have a question of your own? Share it on our hub — and you’ll be entered for a chance to win $500.
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This article originally appeared on GOBankingRates.com: 4 Top Ways To Spot and Avoid a Scam, According to an Expert
