April is Financial Literacy Month. The importance of financial literacy cannot be understated. Financial literacy gives people the power to ensure their money is meeting their needs.
“Financial literacy is crucial to help Americans make informed decisions regarding the use and management of their money,” Gregory J. Anton, CPA, CGMA, chairman of the AICPA’s National Financial Literacy Commission, told ProLiteracy. “Finances impact every aspect of life. By helping Americans better understand and maximize their personal financial situation, we are giving them the power to take control and transform their lives.”
So, to close out the month, we are taking a look at financial scams and fraud and how your students can protect themselves. Educating students about financial scams is an important part of being financially literate.
Financial scams can come in a variety of forms. While there are many, Exposed to Scams includes common fraud in the form of online purchases, tech support, employment, fake checks/money orders, sweepstakes/lottery/prizes, debt collection, phishing, and tax collection. Scammers may target potential victims through the mail, in email, over the phone, on a website, or by social media.
3 Easy Safeguards to Avoid Being Scammed:
1. Use complex passwords
2. Activate credit usage alerts
3. Use two-factor authentication when available on accounts
--Gregory J. Anton, National CPA Financial Literacy Commission
The good news is that adult literacy students are no more likely to be scammed than those with higher levels of education.
Anton said that when it comes to being a target, everyone is at risk.
“There are many bad actors out there who know how to take advantage of people stressed about their finances, especially this year with so many people having been isolated for so long by the COVID-19 pandemic,” Anton said. “. . . Unfortunately, being targeted by a financial scam is not exclusive to any demographic, there is a scam or fraudulent scheme targeted for everyone.”
This is where being financially literate comes into play. According to multiple studies, low financial literacy is among the biggest indicators of being scammed. Educating people about phishing scams can drastically reduce someone’s vulnerability.
Part of training students is making them aware of where and how they might be targeted. While phone and email scams are common, the Exposed to Scams study found that most people who engaged and lost money did so through social media and websites:
“For example, 39 percent of respondents who said they were contacted by phone engaged with a scammer and only 11 percent lost money. In contrast, of those contacted by email, 42 percent engaged with the scammer and only 13 percent lost money. Of those who said they were exposed to a scam on social media, 91 percent engaged and 53 percent lost money. Similarly, 81 percent of respondents who were exposed to a fraud via a website said they engaged and 50 percent lost money.”
But detecting what’s real and what’s fake online can be tricky. Therefore, part of being educated is staying up-to-date on common scams.
And Anton points out that financially literate individuals should be monitoring and taking steps to protect their finances.
“The best way to avoid falling victim to a scam is to take proactive steps to protect and educate yourself. Do not wait for suspicious activity to occur. Taking time to review your bank statements and credit card activity for unauthorized transactions . . . can go a long way to mitigat[ing] the threat from financial scams,” Anton said. “Safe steps also include exercising caution when reading emails and clicking on links, being mindful of your online presence, and taking time every year to learn about the latest scams.”
Teaching students about credit and how to monitor their credit reports is not only good for their long-term financial health, it is also a way to ensure they have not been taken advantage of, Anton said.
“AICPA research found that Americans with a household income of less than $50,000 were found to be twice as likely to never have looked at their credit report than those with a household income of $100,000 (45 percent vs. 21 percent). Some may not realize the importance of making sure their credit report is accurate and free from fraud. A credit report lists all the debt taken in your name and serves a clear way to see if there are any inaccuracies such as someone taking out loans or credit cards using your identity which can ruin your credit score.”
Control Your Money, from New Readers Press, is a great resource to help students learn how to manage their finances.
Use this lesson in class from Level 4 of the New Readers Press series Journey to Success to help teach your students about how to protect themselves.