Whether it’s a scam or just an honest mistake, the wrong online transaction can cost you money. But fear of scams is also making some people wary of transactions that are perfectly legitimate.

A few weeks ago, I saw an advertisement on Facebook from a bank that was offering a cash bonus plus a higher-than-normal interest rate for new customers. I wouldn’t say it “seemed too good to be true,” but I was suspicious given the number of scams that are out there. And the fact that it was on Facebook was no consolation. Just this week, California Attorney General Rob Bonta issued a warning about a growing wave of investment scams on Facebook, Instagram, WhatsApp and other online platforms.

Verifying, test payment

Before transferring any money, I looked up the bank’s phone number on its official website, carefully checking the web address (URL) to be sure it was legitimate. When I called, I was told the offer was real. I felt reassured but remained cautious, so instead of clicking the link in the ad, I typed the bank’s URL into my browser and found the offer.

I read the URL very carefully to be sure it wasn’t a lookalike string of text and looked for the lock icon to confirm it was a secure site. Still, out of an abundance of caution, I didn’t make a large deposit. Instead, I transferred $1. I then verified online that the dollar went to the right account and, to be extra cautious, called the bank back to make sure they received it before making the full deposit. I also checked with the bank the money was coming from to be sure the correct amount was debited.

This process took time, but it was worth it to be certain I wasn’t being scammed or making a mistake.

This isn’t the only time I’ve sent a $1 test payment. I sometimes use Venmo, PayPal, or Zelle to send money to friends, like a friend in New York who bought show tickets for me and my wife. Years ago, I accidentally sent a payment to the wrong person. It’s easy to do, especially if you’re not completely sure of someone’s email address or phone number. So instead of sending the full amount, I sent her $1 and followed up with a text to confirm she received it. Once she verified that the dollar arrived, I sent the rest of the money.

Non-refundable transactions

It’s always important to be careful when making any kind of online transaction, especially when buying nonrefundable tickets or hotel reservations. I once booked a nonrefundable hotel room and later discovered it was for the wrong month. I simply hadn’t been careful enough when clicking through Expedia’s calendar. When I discovered the error days later, I called Expedia, but they said they couldn’t refund my money. I then called the hotel directly, and they were kind enough to rebook my room for the correct month, even though they didn’t have to.

Now I’m extremely careful when making any nonrefundable reservation. I’m also grateful that airlines typically give you 24 hours to cancel or change a booking. Even after making a reservation, it’s smart to review the confirmation email or webpage carefully to be sure you got exactly what you intended. Sometimes I even ask my wife to take a look, just to be sure.

Be extremely careful when buying stocks, bonds, or mutual funds online. If you purchase the wrong security or enter the wrong dollar amount, it’s usually not reversible once the trade is executed. And if you’re buying bonds, pay close attention to whether you’re entering the amount based on cost or number of bonds. Some bonds, including Treasury, corporate, or municipal, are sold in $1,000 increments. If you type in 50 thinking you’re investing $50, you could actually be investing $50,000.

Bonds may be sold in $1,000 increments
Bonds may be sold in $1,000 increments 

 

Be cautious, but not overly cautious

Although it’s always good to be cautious, it’s also possible to let caution keep you from taking advantage of something positive. We had an out-of-town house guest who needed medical care, but because she was worried about Medicare fraud, she didn’t carry her Medicare card or know her Medicare number. As a result, she had a great deal of difficulty getting care.

This was a case where concern about a very unlikely risk, fraud that would have been against the government, not her, got in the way of a far more likely need, getting medical care while traveling. I also know people who refuse to make online purchases, bank deposits, or reservations out of fear of being victimized. That’s unfortunate, because they’re missing out on real benefits and conveniences.

Anyone can fall for a scam. I’ve seen it happen with very smart people, including a friend with a Ph.D. But there are steps we can take to reduce the risk. Use strong, unique passwords. Turn on two-factor authentication whenever possible. Be wary of phishing by avoiding links in unsolicited emails or texts. And always verify any offer, whether it comes by email, text, or phone, before you send money or share personal information.

It’s a lot to deal with, but a little extra caution can go a long way toward protecting both your finances and your peace of mind.

Larry Magid is a tech journalist and internet safety activist. Contact him at larry@larrymagid.com.

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