As my mother is aging, I worry more about her becoming a victim of a scam. She wants to answer every phone call and listen to every pitch. But, so far (knock on wood), she has been able to sidestep any issues, mostly through coaching from her children.
But it’s not just older people that need to be concerned about frauds and scams. They are everywhere, and any one of us can be affected. In fact, one of the most devastating scams we’ve run across as financial advisors affects intelligent, aware people and can involve big dollars.
Amidst the rise and assessability of artificial intelligence, scammers are getting more sophisticated. Below are some current scams to be aware of in the wild.
Wire Scams
Picture this: you’ve sold your home and are about ready to close on the purchase of your dream home. You have been working closely with your real estate company for months. It is still a tough housing market, so you made a cash offer and have scrambled assets together to make a cash payment. Your real estate company emails you the instructions to wire funds to close on the house. You follow the directions, and…you lose all those dollars.
This is a story that has been happening more and more frequently. We’ve heard of people losing significant money due to this scam. Bad actors are infiltrating the systems at real estate and closing companies, learning who is about to close on a house, and emailing fraudulent wire instructions to home buyers. Once funds are wired, it is difficult to get them returned.
How do you avoid this situation? One way is to not wire money. If you need to pay in cash, accumulate the cash in your bank account using established money links. Request a cashier’s check from the bank and hand deliver it to the closing company. Second, some builders have gone so far as to warn their customers to never wire money from email instructions and to only use their customer portals for instructions. Third, if you must wire without portal instructions, always verify instructions directly with the source using a known phone number, not a phone number you find in the email. Call the real estate or closing company and verify the wire instructions with them.
Investment Scam
A typical investment scam story goes like this: John receives an email from someone purporting to be a financial advisor saying that he is pre-approved for a high-yield investment that will provide good income at no risk. John is skeptical at first, but the email seemed convincing. He decided to give it a try, so he wired the money to the scammer and never heard from him again. It doesn’t even have to be an email but could be an investment that shows up on a Google search.
The FBI reports that over 847,000 complaints were made in 2021 and $6.9 billion dollars were lost due to internet scams.
Some ways to prevent yourself from falling for this is to do your research before investing in anything. Make sure you understand the risks involved and that the investment is legitimate. You can check with the Securities and Exchange Commission to see if an investment is registered and ask a financial advisor you are familiar with for help. Understand that with higher returns comes higher risk. If an investment is purporting a higher return at no or low risk, then it is probably too good to be true.
Romance Scam
Nowadays, the first meeting of a potential romance is over the internet or a dating app, but the scammer could also be someone they met in person. The scammer’s backstories are often elaborate. AARP describes a typical story as a person from or living in another part of the country or abroad on business. They seem smitten and eager to get to know you and suggest a private channel to converse, such as a chat app. There may be a medical emergency where your new friend needs money fast, or they need money to pay off debt so they can start their life with you debt free.
AARP recommends ways to protect yourself that include checking an online suitor's profile photo using a Google Image Search to see where else the image may be used. Talk with family and friends about a potential partner and watch for inconsistencies. Limit the amount of personal information you provide, and never send money.
Tech Support Scam
The process works like this: Susan received a phone call from someone claiming to be from Microsoft who says she has a virus on her computer, and they need her help to fix it immediately. Being scared about the virus she gives Microsoft access to her computer. It wasn’t Microsoft, but a scammer who just installed malware on her computer and stole her information. This seems easy to avoid. Most people realize Microsoft won’t call them, but what about tech support for the company you work for? People have responded to these calls as well, allowing scammers into their business systems.
One fix around this is to never give out information to a tech company that calls you or allow remote access to your computer without first calling the tech company or internal tech support to verify that the request is legitimate.
Stay Vigilant
There are many different ways people are scammed, and the above are just a few. The key is to stay vigilant and skeptical at all times. If something seems too good to be true, it probably is. Do your research before investing in anything and never give out personal information to people you don’t know or trust. If you receive a suspicious phone call, email, or text, hang up or delete it.
More resources on protecting yourself and loved ones:
How to protect Yourself from Identity Theft in 6 Steps
Elder Financial Abuse Red Flags: Is Someone in Your Family Taking Advantage of Your Parent?
Build Your Own Personal Firewall Against Scams, Fraud.
