Identity Theft Protection: How to Spot and Avoid Today's Financial Scams

Identity theft and financial scams are becoming increasingly difficult to spot. Even the "easy-to-spot" scams of the past, like phishing emails and spam phone calls, aren't nearly as obvious as they once were.

Technology is making these scams more convincing, too. Artificial intelligence can help criminals create realistic messages, imitate voices, and build convincing websites. And because scammers can combine multiple tactics and communication channels, knowing how to protect personal information is more important than ever. In fact, a study from Deloitte's Center for Financial Services suggests that fraud schemes aided by generative AI could cost US consumers and business as much as $40 billion in 2027.  

Protecting your identity is much more complicated than it used to be. The good news is that a few simple habits can go a long way toward protecting your finances and reducing your risk of identity theft.

Common identity theft and financial scams to watch for in 2026

Scammers are constantly changing their tactics, but many of today's most common scams rely on the same basic strategy: impersonate someone you trust, create a sense of urgency, and convince you to hand over information or money.

Here are some of the scams consumers should know about.

Phishing and smishing

Phishing scams use emails to trick you into providing sensitive information. Smishing uses text messages to accomplish the same thing.

You might receive a message claiming there's suspicious activity on your bank account, a problem with a package delivery, or an unpaid toll. The message includes a link that takes you to a convincing-looking website designed to steal your login credentials, Social Security number, or payment information.

These scams can become even more convincing when criminals combine multiple channels. For example, a scammer might send a text claiming to be your bank's fraud department and ask you to call a phone number. When you call, the scammer spoofs the bank's phone number and continues the deception over the phone.

Bank impersonation

A scammer may contact you by phone or text pretending to be from your bank's fraud department. They might tell you someone has attempted to access your account and claim they need to verify your identity.

The scammer may then ask for a one-time authentication code, password, or other sensitive information. In another variation, they may tell you that your money is at risk and instruct you to transfer it to a supposedly "safe" account.

And of course that's a scam. Your bank doesn't need to move your money to a different account to protect it.

Fake customer support

Fake customer support scams often impersonate companies that consumers know and use, like Amazon or other major retailers and technology companies.

A scam might begin with a fake security alert, pop-up, or email claiming there's a problem with your account. The scammer may offer to help you resolve the issue and ask you to install software that gives them remote access to your computer.

Once they have access, they may be able to steal passwords, financial information, and other personal data.

Romance and investment scams

Romance scams begin by establishing a relationship with a victim through a dating app, social media platform, or other online community. The scammer may spend weeks or months building trust before introducing a financial emergency or investment opportunity.

Investment scams can work similarly. A scammer may promote an apparently lucrative investment through social media, messaging apps, or an online relationship. Victims are directed to professional-looking but fraudulent investment platforms that display fake profits. When they attempt to withdraw their money, they're told they need to pay additional taxes or fees.

Government impersonation scams

Government impersonation scams use fear and manufactured authority to pressure victims into paying money or providing personal information.

A scammer might claim to represent the IRS, Social Security Administration, police, courts, immigration authorities, Medicare, or a toll agency. They may say you owe money, are connected to a crime, or need to pay a fee immediately to avoid arrest, fines, or another consequence.

Legitimate government agencies generally won't demand payment through an unexpected call or text or threaten you with arrest if you don't comply immediately.

Social media shopping scams

Social media can also be a gateway to financial scams. Advertisements may promote products at unusually low prices and direct you to a counterfeit online storefront.

You may receive an inferior or counterfeit product, receive nothing at all, or unknowingly provide your credit card information to a scammer.

Family emergency scams

In a family emergency scam, a criminal pretends to be your child, grandchild, or another relative who urgently needs money.

The scam may claim that your loved one has been arrested, injured, or kidnapped and needs money immediately. Criminals can use spoofed social media accounts, text messages, and even AI-generated voices to make the story seem legitimate.

If you receive an unexpected emergency request, contact your family member directly using a phone number you already have, rather than responding to the message or number provided by the caller.

How to protect your personal information: 6 steps to stronger identity theft protection

Unfortunately, there's no way to eliminate your risk of identity theft completely. However, practicing good digital and financial security can make it substantially harder for criminals to access your information.

Here are some of the most important steps to include in your identity theft protection strategy.

Turn on account alerts

Enable alerts for your bank accounts, credit cards, investment accounts, and other financial services.

Depending on your institution, you may be able to receive notifications when:

• A purchase or withdrawal occurs
• A transfer is made
• A new recipient is added
• Someone logs into your account
• Your password or security settings change

These alerts can help you spot unauthorized activity quickly.

Use strong, unique passwords and multifactor authentication

There are few things more annoying than creating a password and being told that it's not long or complicated enough, but there's a good reason websites want to do more than just put an exclamation point at the end of your cat's name. It's genuinely important to use a strong, unique password for every account, particularly your email, banking, investment, payment, and mobile phone accounts.

Multifactor authentication adds another layer of protection by requiring something beyond your password to access an account.

However, remember that your authentication code is private. Never give an unsolicited caller or texter a one-time security code. A legitimate institution should not need you to read that code to them.

Protect sensitive information

Be careful about where and how you share sensitive information, including:

• Social Security numbers
• Bank account information
• Passwords and PINs
• Authentication codes
• Driver's license information or photos
• Tax documents
• Financial statements

Avoid sending sensitive information through ordinary email or text messages when possible. Shred financial statements and other documents containing sensitive information before throwing them away.

You should also be mindful of what you share publicly online. Information such as your full birth date, home address, phone number, travel plans, or answers to common security questions can potentially help scammers piece together information about you.

Consider freezing your credit

A credit freeze can make it more difficult for an identity thief to open a new credit account in your name. Freezes are free at all three nationwide credit bureaus, but you do need to place one with each bureau separately.

A freeze doesn't prevent all forms of identity theft, and it won't stop someone from accessing an existing account. But it can be an important layer of identity theft protection if you're concerned about someone opening new accounts using your personal information.

Remember that you'll generally need to temporarily lift or "thaw" your freeze before applying for a new credit card, loan, or other account that requires a credit check.

Protect your phone and computer

Our devices contain a significant amount of personal and financial information, so protecting them is an important part of learning how to protect personal information.

Use a strong device password or biometric authentication, such as FaceID, and enable automatic screen locking and turn on device-finding features when available. Keep your operating system, apps, and security software updated.

Slow down when someone creates urgency

Scammers want you to act before you have time to think. They may tell you that your account is about to be closed, your money is in danger, a loved one is hurt, or you've won something valuable. Fear and excitement can make people more likely to overlook warning signs.

If someone is pressuring you to act immediately, stop and verify the situation independently before providing information, clicking a link, or sending money.

Common mistakes that can put your information at risk

Knowing how to protect personal information also means understanding the habits that can make you more vulnerable.

Trusting caller ID or email addresses

Caller ID, phone numbers, email addresses, and text messages can all be spoofed. Seeing a familiar name or number doesn't necessarily mean you're communicating with the person or organization you think you are.

Reusing passwords

Using the same password across multiple websites creates a domino effect. If one website experiences a data breach and your password is exposed, criminals may try that same password on your other accounts.

Sharing too much information

Even seemingly harmless details can help criminals build a profile of you. Think carefully before publicly sharing information that could be used to answer security questions or impersonate you.

Waiting to report suspicious activity

If you see an unfamiliar transaction or believe your information has been compromised, don't wait to see what happens. Contact the relevant financial institution and take steps to secure your accounts as soon as possible.

Where credit monitoring fits into your identity theft protection

Credit monitoring can be another useful component of identity theft protection. Monitoring can help you identify changes to your credit report, such as new accounts or inquiries you don't recognize.

However, credit monitoring isn't a substitute for good account security. Someone can steal money from an existing bank account or credit card without opening a new account in your name, and those incidents may not immediately appear on your credit report.

For more comprehensive protection, combine credit monitoring with account alerts, strong passwords, multifactor authentication, and regular reviews of your financial accounts.

If you believe someone has used your identity, don't wait for a credit monitoring alert to take action. The sooner you respond, the more opportunity you have to limit the damage.

Common warning signs include charges you don't recognize, bills or collection notices for accounts you never opened, a sudden drop in your credit score, and mail that stops arriving. Our identity theft survival guide covers the full list of red flags and what each one usually means.

What to do if you think you've been the victim of identity theft

If you think you've been the victim of identity theft, secure your accounts first, then report the theft at IdentityTheft.gov and work through the recovery process. Discovering that someone has accessed your information or stolen money can be overwhelming, so it helps to take it in that order.

Depending on what happened, your first steps may include:

• Contact your bank or credit card company. Report unauthorized transactions and ask whether your account or card needs to be locked or replaced.
• Change compromised passwords. Start with the affected account and your email account, then change any other accounts where you used the same password.
• Secure your credit. Consider placing a fraud alert or credit freeze if your personal information has been compromised.
• Review your credit reports. Look for unfamiliar accounts, inquiries or other activity you don't recognize.
• Report the identity theft. The Federal Trade Commission provides resources for reporting identity theft and creating a recovery plan through IdentityTheft.gov.
• Keep records. Save correspondence, account statements, police reports, and other documentation related to the incident.

If the scam resulted in debt or financial losses, you may also need to take a closer look at your overall finances and determine how to handle any new obligations. If those obligations are more than you can manage on your own, seeing what a debt management plan could save you is a low-pressure place to start.

Frequently asked questions

What does identity theft protection actually include?

Identity theft protection is less a single product than a set of layers. It includes the settings you control, such as account alerts, strong and unique passwords, multifactor authentication, and a credit freeze, along with monitoring that tells you when something changes, and a plan for what to do if something goes wrong anyway. No single layer stops every kind of identity theft, which is why combining a few of them works better than relying on one.

What is the first thing I should do if my identity is stolen?

Contact the bank or credit card company where the fraud occurred and ask them to lock or replace the affected account. Then change the password on that account and on your email, place a fraud alert or credit freeze, and report the theft at IdentityTheft.gov to get a written recovery plan. Taking it in that order limits further losses before you start the longer reporting process.

Does freezing your credit stop identity theft?

A credit freeze stops most new-account fraud, because lenders generally cannot pull your credit report to approve a new account while the freeze is in place. It does not protect the accounts you already have, so someone could still make fraudulent charges on an existing credit card. If a freeze feels like more than you need, a fraud alert is the lighter option: it asks lenders to verify your identity first, and you only have to contact one bureau, which then notifies the other two.

Do you have to pay for identity theft protection?

No. The steps that prevent the most damage are free: account alerts, strong and unique passwords, multifactor authentication, a credit freeze at each bureau, and regular reviews of your accounts and credit reports. Paid services can add convenience and broader monitoring, and some people find that worth it, but they work best as an addition to those basics rather than a replacement for them.

Can you get your money back after a financial scam?

Sometimes, though it depends heavily on how the money moved. Unauthorized transactions, meaning charges or transfers you did not approve, generally carry stronger consumer protections than payments you were persuaded to send yourself, such as a wire transfer, a payment app transfer, or a gift card. Report the incident to your bank or card issuer as soon as you notice it, because the protections that do exist are often tied to how quickly you report.

What if identity theft or a scam left me with debt I can't repay?

Start by disputing anything that isn't yours, since fraudulent accounts should come off your record rather than be repaid. For debt that is yours but became unmanageable after the disruption, a nonprofit credit counselor can look at the whole picture with you.

How MMI can help after identity theft or financial fraud

Protecting your identity is only part of the recovery process. If identity theft or a financial scam has left you with new debt or disrupted your finances, you may need help figuring out what to do next.

Once you've reported the crime and taken steps to secure your accounts, MMI can help you review your debts, income and expenses and create a plan for moving forward. Our trained counselors can help you develop a spending plan and explore debt solutions based on your individual circumstances.

If you're concerned about your finances and aren't sure where to start, MMI offers free online financial counseling to help you understand your options and determine your next steps.

Don't wait until a financial problem becomes a crisis. Get the guidance you need to protect your financial future.