How to avoid financial scams in the digital age

In an era where every phone is a bank, scams are evolving faster than ever before. Financial advisor and coach Margaret Njeri has witnessed these tricks first-hand, and warns that today’s fraudsters are becoming increasingly sophisticated.

She divulges that the most common scams people fall for today include fake investment schemes, mobile money reversals, phishing messages, romance scams and get-rich-quick offers online. Others are duped by fake job or loan offers that request processing fees or personal details in advance.

Technology, she says, has given scammers new playgrounds. Using social media and artificial intelligence, they are now able to mimic legitimacy. She notes that scammers use social media platforms, AI, and fake websites to appear credible.

They create professional-looking profiles, duplicate company logos and run sponsored ads. She warns that WhatsApp groups and TikTok ‘investment tips’ have become hot spots for fraud.

Even financially literate people aren’t immune to this, as they also take the bait from scammers, stating that intelligence doesn’t protect against manipulation. According to her, scams are psychological and not necessarily intellectual. They prey on urgency, fear of missing out, or greed.

“Even the smartest people can make emotional decisions when the scam looks too polished or promises quick returns,” she says.

Margaret lists a few red flags that should stop anyone in their tracks, including unrealistic or guaranteed returns, pressure to act fast, secrecy, lack of verifiable address, or requests for upfront payments.

Some of the most dangerous frauds right now, both in Kenya and globally, involve crypto trading, fake forex platforms, and mobile loan apps that harvest personal data. On a global scale, deepfake scams — where criminals use AI-generated videos to impersonate real people — are rising significantly.

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The antidote, she insists, is to always verify before investing your money. Always confirm that any investment is registered with the Capital Markets Authority (CMA) or the Central Bank of Kenya (CBK). Avoid sending money through personal mobile phone numbers or unregulated wallets. If an investment lacks transparency on ownership or regulation, don’t touch it.

Even legitimate-looking financial apps can be traps. Before using one, she advises checking its licensing, privacy policy, and verified customer reviews. You can also confirm with CMA (www.cma.or.ke), SASRA (www.sasra.go.ke for SACCOs), or the Insurance Regulatory Authority (www.ira.go.ke) for insurance companies.

For daily users of mobile money and online banking, basic cyber hygiene is essential: strong passwords, two-factor authentication, and never sharing PINs or OTPs. Avoid public Wi-Fi for transactions, double-check recipient details, and delete suspicious messages immediately.

The greatest battleground is emotional, where scammers thrive on urgency, whether through fear of “your account will be closed!” or excitement of “you’ve won!”

“When a message triggers panic or thrill, that’s your red flag. Pause before acting. Scammers rely on you reacting fast,” she says.

Before investing, she encourages asking yourself who is behind it and if it is regulated. If you aren’t able to, she advises not proceeding.

Beyond that, she urges people to guard their personal data as fiercely as their money. Use different passwords, shred financial documents before throwing them away, and keep your phone software updated.

If someone suspects they’ve already been conned, quickly report to your bank or mobile provider immediately to freeze transactions. Then file a complaint with the DCI’s cybercrime unit, preserve all evidence, and warn others.

For official help, victims can also contact the Central Bank of Kenya (for unlicensed institutions), CMA or IRA (for investment or insurance scams), or visit Huduma Centres.

“Recovery isn’t always guaranteed, but reporting helps authorities trace and stop offenders,” she admits. ”

Fortunately, banks and financial institutions are improving their defences with fraud detection systems and public advisories, but she stresses that security is a shared responsibility.

“The system can protect you only so far. You must stay alert and proactive,” she says.

To prevent future victims, she encourages financial education at all ages. Using real examples, people should be taught what scam messages look like and how to verify before acting and be helped with how to set up PIN protections and trusted contacts.