Money Management

Most Americans who report being scammed don’t get their money back. Discover how to avoid online fraud this holiday season. 

The old Wild West has nothing on internet scammers. It’s every-shopper-for-themselves out there. According to the recent McAfee Global Holiday Shopping Scams study, 36% of Americans have been scammed during the holidays.

The sheriffs are few and far between. There are a few cops in town who’ll get you your money back (more below), but it’s a long shot. Of Americans who reported getting shot through the wallet, 75% never recovered their money.

The solution may be to take holiday shopping safety into your own hands. Discover 12 holiday shopping hacks to stay safe from online fraudsters — darn hooligans.

1. Pay with credit

First off — someone is going to get scammed. Could be you. Could be me. The key is to have a plan B if and when things go south. A credit card offers that. The Fair Credit Billing Act protects you from paying more than $50 for credit card fraud, assuming you report it fast.

Hold up, partner. Got a spending problem? A whopping 69% of Americans do. In that case, you might prefer to spend using cash or a debit card instead. It could keep your spending reasonable. Just be extra vigilant — checking accounts (and therefore debit cards) offer less protection for fraud than credit cards do.

2. Buy gift cards online

It takes a special kind of villain to steal from a gift card, but it’s happening. The Better Business Bureau warns that some scammers snatch gift cards, scan the numbers, and return them to store shelves. Once someone buys the card and activates it, the scammers drain it.

Talk about highway robbery. Fortunately, villains can’t steal what you don’t buy. Avoid this particular scam by shopping for gift cards directly from merchant websites. Buying a Macy’s gift card? Google Macy’s, navigate to gift cards, and buy one that matches your desired amount.

3. Go directly to the merchant’s website

Straight shooters win. When in doubt, go directly to the source. See an Insta ad for shoes? Google the company instead of clicking the ad. Got a text saying you made a purchase? Google the provider. Got an email saying your package from Amazon has tracking issues? To check, use a trustworthy search engine to navigate to Amazon (or open the app) and log into your account.

For the love of God, don’t click the links! (Or pictures, in the case of ads.)

You can gallop past all sorts of wanton crime by navigating your own path to your online destination. Scammers want to take the reins of your holiday shopping by getting you to click on scammy links and advertisements. Don’t let them. Walk your own road.

4. Look for signs of grift

Beware the signs. They exist. A big one is the “Lock” symbol in the address bar next to the URL of whatever website you’re browsing. If it’s there, it means your website is secured. If it’s not, you’re leaving yourself vulnerable to scammers. It may be wise to shop elsewhere.

Another sign of grift is shoddy spelling. Serious websites triple-check things like spelling and grammar. Grifters don’t have time for that. You may want to pack your bags and shop elsewhere if you stumble across weird spelling or grammatical errors on websites.

5. Shop from home

Home may be safer than you know. According to the AARP, private wifi networks are safer than public ones. Better to shop from your home’s secured wifi network than from Starbucks. That way, you’re less vulnerable to malicious hacks of all stripes.

Update your search and cybersecurity software to get the latest security features. Whether you pay for a cyber service or use free providers like Microsoft Security, it pays to keep it updated. It could make the difference between staying safe and getting your identity stolen.

6. Choose your charities

Some scummy scammers imitate charities or make fake ones. Get ahead of these lawless no-gooders by choosing your charities ahead of time. Free websites like Charity Navigator track legitimate, high-quality charities to which you can donate. You can also use this free IRS tool to confirm a charity is tax-exempt and, therefore, actually a charity.

7. Filter fake reviews

If you can’t spot it, make a robot do it. A personal favorite of mine is the FakeSpot extension, which filters Amazon products by review quality. You can install it for free from the Google Chrome store. It also works on some websites outside of Amazon.

FakeSpot isn’t perfect. Nor is it the only fake-review spotter out there. Just be sure to do your research before installing a new extension. By doing so, you let third-party companies read your search results. I don’t mind, but you might.

8. Keep your SSN secret

Your Social Security number (SSN) is the key to your identity. Thieves want it. Some financial institutions, such as your bank, need to know it to verify your identity. Most don’t. They might ask for your last four digits, but be highly skeptical of any shopping website or caller that asks you for your whole SSN. Chances are, you’re about to get online-mugged.

9. Check first, pay later

Speaking of the Wild West, in-person reselling platforms like Facebook Marketplace offer less purchase protection than typical. Word to the wise: check the goods before you pay.

Even if you pay with popular payment apps like Venmo, you’re not guaranteed a refund if it turns out that you’ve been taken for a ride. Venmo doesn’t give refunds, typically. Nor does it help you recover money you’ve sent over the platform. Same goes for other peer-to-peer apps.

10. Delete your information

Burn it all down — said the shopper to third-party information brokers. Your name, email address, and SSN may be floating around the interwebs. Unscrupulous identity thieves sometimes collect this information to impersonate you.

You can delete your information from the internet in a few ways. One is to opt into free services like Discover’s data deletion service, which regularly tells some online brokers to delete your information. Another is to send data deletion requests to brokers individually.

Erasing your digital hoofprints is tricky. You leave more tracks than you might think, and internet privacy laws are in their infancy. Don’t expect to be completely clean. Do know that you can report identity theft to the FTC on its official website.

11. Don’t pay via wire transfer or gift card

Red flag alert, three miles out. The AARP warns that any time someone prompts you to purchase by wire transfer or gift card, it’s a scam. Run for the hills if a business asks you to pay for something via these two methods.

12. Shop in person

Don’t have time for all that balderdash? You can skip right on past much of online fraud by doing your shopping in person. It’s not for everyone — I think shopping online is plain easier — but it’s an option that many shoppers take. To each their own and all that jazz.

If you must take away only one thing from these 12 holiday shopping hacks, have it be number three: go directly to the merchant’s website. That way, you can stay safe from some of the most common forms of online fraud, even if you’re one of the 1 in 3 Americans who’ve been scammed already.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Cole Tretheway has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Starbucks. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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Higher earners may be in for an unpleasant tax surprise in the new year. Read on to learn more. 

Paying taxes is a part of life in the U.S. This holds true whether you work or are fully retired. But when you work, you face different taxes on your income.

Federal income tax is one type of tax you’ll face on your earnings. Federal taxes are imposed on a marginal basis, so you pay more tax on your highest dollars of earnings than your lowest. You can refer to next year’s tax brackets to see what tax rate might apply to you, based on your income.

What’s more, many states impose income taxes of their own, though not all. And the amount of state tax you’re liable for might also hinge on your earnings.

Then there’s Social Security and Medicare taxes. You might notice a line item on your pay stub for FICA taxes, which stands for the Federal Insurance Contributions Act. The tax rate you’ll pay there is 6.2% of your wages for Social Security, and 1.45% for Medicare, assuming you have an employer. If not, and you’re self-employed, these rates double, leaving you on the hook for a total of 15.3% in FICA taxes.

Now, for most of these taxes, you’re looking at paying based on your total income. But there’s an exception for Social Security (not Medicare).

Each year, there’s a wage cap put in place that limits the amount of income that’s taxable for Social Security. But that cap is rising in 2024. So if you’re a higher earner, you might lose an even bigger chunk of your paycheck to taxes.

Workers with high wages should prepare to pay more

In 2023, earnings are exempt from Social Security taxes once they exceed $160,200. But next year, that limit is rising to $168,600. So all told, higher earners will face Social Security taxes on an additional $8,400 of income.

Let’s assume you work for an employer and therefore only have to pay 6.2% toward Social Security. If you earn $168,600 or more in 2024, it means you’re looking at an additional $521 in Social Security tax. If you’re self-employed, you should double that for a total of $1,042.

How to reduce your tax bill

Even if you earn a decent wage, it can be a big blow to lose more of your income to taxes. Let’s also remember that while a salary of $168,600 might seem quite high, in certain parts of the country where housing costs are exorbitant, that salary means you might barely be getting by, especially if you have a family to support. The good news, though, is that there are steps you can take to reduce your taxable income.

First, aim to max out your traditional IRA or 401(k) for the year. If you earn enough for this increase in Social Security’s wage cap to impact you, it means you may be in a position to contribute the maximum amount to either account. In 2024, that’s $7,000 for an IRA ($8,000 if you’re 50 or older) or $23,000 for a 401(k) plan ($30,500 if you’re 50 or older).

Next, be mindful of business-related deductions you may be eligible for. If you’re self-employed, you can deduct expenses that allow you to earn money, whether it’s equipment, internet service, or travel. Keep meticulous records so you know which deductions to claim.

Finally, manage your income strategically. This is something you can do if you’re self-employed. If you work for an employer, you likely get paid on a preset schedule.

Perhaps you’re able to earn $170,000 in 2024. But if you wait until 2025 to invoice clients for your last $10,000 in income, you’ll only have $160,000 in reportable income for 2024.

Of course, that won’t work if you’re doing work for clients in August — you don’t want to wait five months to get paid. But you may be able to defer December invoices to January.

Nobody wants to see their taxes increase. It’s important to stay aware of the changes so you can do your part to offset increases as they happen.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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