How to Identify and Avoid Common Phone Scams

Despite all the technology at our disposal, what do scammers most often use to defraud their victims? The good old phone.

Weird right? With our fancy internet, mobile devices, and worldwide connectivity, you would think that scammers would use something a little more sophisticated. But according to a recent report, instances of phone scams have increased by 30% since 2013. In fact, 86.2 million phone calls per month are related to scams!

Don’t worry though, because in this article we’ll help you learn what a phone scam is, why they’re so popular, how the most common ones work, and actionable methods you can use to protect yourself.

Let’s start from square one: the basics of a phone scam.

What Is a Phone Scam?

OK, this one might seem a little obvious, but it’s definitely worth covering. 

At its most basic, a phone scam is a scheme devised by a third-party, intended to trick victims into handing over their personal information, their money, or both.

There are literally thousands of different types of phone scams, although most of them fall within 8 different categories. We’ll delve more deeply into these in a moment.

For now, remember how we talked about technology previously? Sure, the basic idea behind what these criminals are doing is well over 100 years old (i.e. making a call), but how they’re doing this is uniquely modern.

What Kinds of Technologies Are Used in Phone Scams?

Voice over Internet Protocol (VoIP) 

As its name suggests, Voice over Internet Protocol (VoIP) involves making “voice calls using a broadband Internet connection instead of a regular (or analog) phone line. Some VoIP services may only allow you to call other people using the same service, but others may allow you to call anyone who has a telephone number - including local, long distance, mobile, and international numbers.”

Why do we bring this up? Because VoIP is perhaps the most integral technology used in scamming, since 53% of all fraud calls are made using VoIP. But if you’re a scammer, what’s so attractive about this technology? 

TechRepublic sums it up nicely:

“The problem is that with VoIP now widespread, scammers can use VoIP lines to set up sophisticated automated systems that appear to the caller to be the kind of system they would encounter when calling a large company. And these scammers can do it without needing much equipment, personnel, or money. Low or no-cost IP PBX software such as Asterisk allows them to do this easily.

“VoIP phone numbers look just like any landline number, so callers can't easily tell that they're dialing a VoIP number rather than a landline. And you can get a VoIP number with an area code in a completely different geographic location from your own physical location. It's also easy for technically-savvy scammers to engage in caller-ID spoofing, so the victim doesn't even see the scammer's real VoIP number on the caller ID display.”

And considering that 64.5% of all fraud calls come from international locations, it’s easy to see why VoIP is such an attractive option for scammers.

Once their VoIP line is in place, scammers need to choose another technology that can help them reach as many potential victims as quickly as possible. 

AutoDialers & Robocallers

Despite the fact that 1 out of every 6 calls made is a robocall, you might not have ever encountered the term. But the concept is simple: A computerized autodialer automatically calls a list of phone numbers, and when a person or answering service picks up, a prerecorded message is played.

With phone scams though, when someone picks up, there’s generally a live person on the other end, waiting to spring their trap.

Up to this point, we’ve learned how scammers can reach an international audience with VoIP, and how they can make thousands of calls to unsuspecting victims using the robocalling software.

Now, let’s find out how they cover their tracks.

Can You Trust Your Caller ID?

Scammers commonly use caller ID spoofing to prevent you from knowing who’s calling. This technology essentially allows them to choose the name and number that appears on your caller ID, which can even be randomized so that different information appears every time they make a call.

Whatever technologies they use to reach you though, phone scams generally fall into 8 categories, which we’ll discuss next.

8 Common Phone Scams

Scammers are constantly creating new storylines to play to your emotions and open you up to becoming their next victim.

Despite scammers’ seemingly limitless creativity though, phone scams generally fall into one or more of these categories: 

1. Government & Banking

This is by far the largest category, with a full 60 percent of all phone scams involving a caller pretending to be from a government agency or financial institution.

The spiel they use can vary—everything from fake grants to tax refunds from the IRS—but the main goal is to get you to hand over your money or your information.

2. Unexpected Money 

Here, scammers will try and convince you that you’re due a large sum of money—but there’s always a catch. 

Inheritance scams lead you to believe that you’ve inherited a large sum of money, but you need to send some of your own money first to cover related costs. Similarly (although there are dozens of variations), the ever-present Nigerian phone scam tricks victims into believing that a person has inherited millions of dollars, but needs help transferring it out of the country.

Reclaim (or reimbursement) scams pretend to offer you a refund from the government or another organization, but inform you that you just need to pay an advance fee or upfront payment of some kind. Sweepstakes and lottery scams work much the same way.

3. Dating & Romance

Scammers often have a keen understanding of triggers that make people susceptible to fraud, and there’s perhaps no greater time to trick someone into letting their guard down than when they’re falling in love.

They might claim that they just got arrested, kicked out of their apartment, or some other such nonsense, but it’s all a ploy to bleed your bank account dry.

4. Online Selling

This is a huge category but is most relevant to this topic when it comes to classified scams.

Basically, you post something for sale online, a scammer sees it, and uses it as an opportunity to steal your money. Since it’s such a large category, exactly how they go about this can vary, but it most often involves them overpaying for the item (usually a few hundred dollars) and requesting a refund.

However, by the time your bank informs you that their payment was bogus, they’re long gone on to their next victim, and your bank account is now a few hundred dollars lighter.

5. Fake Charities

Have you ever received a mid-evening phone call from a police or firefighter’s charity looking for donations?

While many of these organizations are legitimate with good intentions, many are not. They’re simply scammers hoping that you’ll willingly hand over your credit card number, so that can rack up as many charges as possible before you figure out what’s going on.

Or, they might want your personal information so they can commit ID fraud.

6. Investing Schemes

Another big category, these scams trick victims into handing over their money for investments that are either grossly overblown or that don’t exist at all. 

The “big investment” can range from seminars and “hot tips” to promissory notes and insider information that can’t be found anywhere else.

7. Employment and Work-At-Home Opportunities

More than half us are dissatisfied with our jobs, and scammers are experts at using this dissatisfaction to separate us from our hard-earned money. 

They also know that many of us long to work from home, so they’ll claim you can make ridiculous amounts of money doing some mundane task like envelope stuffing, assembling crafts, processing emails, and more.

In best-case scenarios, these “opportunities” won’t earn you anywhere near as much as you’re led to believe. In a worst-case scenario, you could be out thousands of dollars with nothing to show for it.

8. Call Back Scams

Last, we have the call back scam, also known as one ring scam.

Here, a scammer will call your phone (usually a mobile phone), let it ring once, and then hang up. The number comes with a domestic-looking area code, so your natural instinct is to call them back.

If you do, these scammers might convince you to listen to a lengthy message, or a live person on the other end might try and keep you on the line as long as possible.

It’s not until you get your phone bill that you realize you were duped into calling some kind of international hotline, with an expensive connection charge, as well as outrageous per-minute fees.

Alright, we’ve covered a lot of ground so far. We now know many of the most common tactics used to perpetrate phone scams, but what we don’t know is why they’re so effective.

Why Are Phone Scams So Effective?

Think of a magic trick; something as simple as a red ball disappearing in front of your eyes.

As adults, we know that the ball isn’t really disappearing. Instead, we recognize that the magician used a well-practiced sleight of hand to deceive our brains into thinking that it’s vanished.

In other words, the magician is exploiting the inherent weaknesses in our brains to make us believe something that hasn’t actually occurred.

Maslow’s Hierarchy of Needs

It’s much the same with phone scams (or any other type of scam, really). Scammers exploit our inherent psychological vulnerabilities in order to steal money or information. And most of these vulnerabilities directly relate to Maslow’s Hierarchy of Needs—the basic, primal needs that all humans require in order to thrive.

Is someone promising you a lot of money? This might trigger your physiological need to be as comfortable as possible or to be more attractive to a mate.

Is a scammer pretending to be a representative from the police department, IRS, or some other government organization? Are they threatening you? This triggers your basic need for safety.

Think you’ve found true love, but they require thousands of dollars to help with an emergency? Your need for love and belonging (as well as esteem) might override your better judgment. 

Does that work at home opportunity seem a little too good to be true? Your need for self-actualization (i.e. self-fulfillment and personal growth) could cloud your ability to see this scam for what it really is.

How to Avoid Becoming a Phone Scam Victim

Last week we outlined several tips that can help you avoid telemarketing calls, such as signing up for the National Do Not Call Registry, blocking calls, and requesting to be removed from the company’s list.

These are great tips, but they’re not applicable here. Why? Because you’re now dealing with criminals who have zero intention of following the law. But if these won’t help you avoid phone scams, then what will?

Separate Yourself from the Situation

Scammers understand that they only have seconds to hook you with their story, and mere seconds more to convince you to hand over your money. So, they’ll definitely put on the pressure and lead you to believe that you must act now.

But don’t ever feel rushed into a purchasing decision. Whether or not this call is a legitimate opportunity is beside the point. You’re in control of this situation and can take all the time you need.

Ask a Lot of Questions

One way to take additional time and become more informed about the “opportunity” is by asking questions. A lot of them.

Something doesn’t quite add up? Interested in why this person is calling you? Whatever it may be, ask. If it’s a scam, the person on the other end of the line will probably become impatient and add some pressure to the mix.

Stay strong and keep asking.

Never Give Out Your Information & Know When to Hang Up

After asking questions and refusing to give them personal, confidential information, is this person becoming frustrated? Perhaps even angry?

If you’re uncomfortable with the situation, don’t be afraid to say no and hang up. Remember, you hold all the cards.

More Don’ts to Keep in Mind

In addition to never handing your information over to a stranger on the phone, it’s generally a good idea to never:

  • Wire money or donate to charities over the phone
  • Invest in anything over the phone unless you initiated the call
  • Trust the number shown on your caller ID, since this can be faked

Believe everything (or anything) you’re told. If this person makes a claim, tell them you need time to verify it. If they state they’re from your bank, disconnect, look up the number on the back of your ATM card or statement, and call them back yourself. If they claim they’re from the IRS, look up the phone number yourself online.

Avoid These Area Codes

Call back scams are often associated with specific area codes. If you see one of these come across your screen, don’t call them back:

  • 473
  • 809
  • 284
  • 649
  • 876

Forbes also recommends avoiding calling these area codes as well:

242 – Bahamas 441 – Bermuda 784 – St. Vincent & Grenadines
246 – Barbados 473 – Grenada, Carriacou, Petite Martinique 809, 829, 849 – Dominican Republic
264 – Anguilla 649 – Turks and Caicos 868 – Trinidad and Tobago
268 – Antigua 664 – Montserrat 876 – Jamaica
284 – British Virgin Islands 758 – St Lucia 869 – St. Kitts & Nevis
345 – Cayman Islands 767 – Dominica  

If you took the time to read this whole article, you should be armed with all the essential information you need in order to avoid phone scams.

Do you have experience avoiding phone scams? Let us know in the comments section below.

» Read Next: Latest Robocall Phone Scam Uses Popular Question: Can You Hear Me?

Derek Lakin

With more than a decade of experience as a copywriter, Derek takes a detail-oriented, step-by-step approach to help you shop smarter. Whether it’s nutritional supplements or new scams, he believes an informed consumer is a happy customer.