Maybe someday we’ll be able to write an article here on The Blog that describes how financial scams are actually declining, and how fewer seniors are being victimized by financial scam artists. Sadly, though, that say seems a long way off. In fact, the opposite is true: experts say financial scams today are at a “crisis level.” On the scam front, the danger of being victimized is increasing.
That, at least, is the inescapable conclusion from this recent article from CNBC. In the article, reporters Sharon Epperson and Stephanie Dhue review some of the current most common scams and provide some helpful tips to avoid becoming a victim. All we can add is our own loud warning to seniors and their families and friends to take this problem seriously. Once the money is gone or the identity stolen, the damage is often done.
Financial Scams Becoming More Sophisticated, Costly
Between increasingly advanced artificial intelligence tools and sophisticated technology, the article’s authors write, scams are getting harder and harder for consumers to spot.
“Fraud cost U.S. consumers more than $7 billion during the first three quarters of 2023, according to the Federal Trade Commission. Those figures are up 5 percent compared to the same period in 2022,” the article states.
Kathy Stokes, director of fraud prevention programs at AARP, warns that the creators of these scams are experts—sometimes even associated with organized gangs working in vast national networks—and they are only getting smarter. “Fraud is at a crisis level in this country,” she says. “[Criminals] have the money, they have the time and they’ve got the playbook to get you into that heightened emotional state. It’s us against them.”
Knowledge is Power: Awareness Brings Greater Protection
It may seem like a cliche, but in the case of scams, knowledge truly is power. When you prepare for the possibility of crime and discuss it openly with friends and family, you add a layer of awareness and protection to yourself and your community that’s invaluable.
The article states, “When people are aware of a specific scam, they are 80 percent less likely to engage with it, and if they do engage, are 40 percent less likely to lose money or sensitive information, according to the FINRA Investor Education Foundation.”
The article’s authors go on to provide the following list of the top five financial scams presently active in 2024, along with ways to avoid being victimized. Let’s take a look.
Financial Scam #1: The Grandparent Scam
As cruel as it sounds, fraud almost always hinges on targeting a victim’s emotions, especially the love they feel for their family and close relationships. Scamsters often pose as someone that the victim cares about in order to convince the target to give them money. Artificial intelligence is making this charade easier to pull off.
The article explains, “The grandparent scam is becoming a more damaging version of imposter scams with advanced technology. Thieves can capture a voice recording and then generate an imitation version of your voices that can be used to impersonate you. Fraudsters may call and pretend that they are a family member in immediate jeopardy — for example, that they have been arrested or are dangerously ill — and urgently needs money.”
The effectiveness of this scam isn’t just in the emotions involved, but also the illusion of isolation that the criminals invent, making up a reason why the victim can’t consult with anyone else (including family or law enforcement). For example, they may say that a case is under a “gag order”, which is nonsense – but sounds convincing, to a panicked grandparent.
In these frauds, some scammers may have a third conspirator pose as a courier and go to a grandparent’s home to pick up the money.
“Elder fraud and elder abuse are reprehensible crimes,” U.S. Attorney General Merrick Garland said in a statement to CNBC. “I urge all Americans, particularly older Americans, to be on the lookout for potential scams, to pause before turning over personal information, and to report fraud and abuse when it occurs.”
How to Avoid the Grandparent Scam:
Ignore the Call: “Don’t answer any emails or phone calls from unknown persons,” advises Michael Bruemmer, vice president of global data breach and consumer protection at Experian. “All they need is less than a 10-second voiceprint.”
Use a Safe Word: Select a “safe word” or “password” that only grandparents, family members, or loved ones know, and use that word when you call in an emergency situation so that they know it’s you.
Confirm Calls and Texts: No family member will ever be offended by you confirming their identity, and it’s always worth the extra step. The article states, “If you get a call or text from someone claiming to be a loved one but using an unfamiliar number, call or text the usual number that you use to reach that person to confirm they called.”
Confirm Money Requests: Always confirm emergency financial requests with other family members. There is no reason why such a thing would ever be kept a secret, so don’t believe anyone who tells you not to reach out for help.
Financial Scam #2: The Romance Scam
Along similar lines to the emotional targeting of grandparent scams, romance scams have been around for a long time and are only growing in frequency, again thanks to new tools.
“These scams often start with private messages on social media or dating apps, after thieves review the information posted on these accounts,” the article explains. “Once the new ‘love interest’ gains your trust, they may claim that someone close to them is sick, hurt or in jail. They may claim to be in the military or need help with an important delivery. After telling the lie, they’ll ask for money or a purchase [to be] made on their behalf.”
According to Ted Rossman, a senior analyst at Bankrate, one way to spot these scams is that the fraudsters will often ask for payment in ways that are difficult to trace or reverse, such as gift cards or direct peer-to-peer services like Venmo or Zelle. “Be very suspicious if someone that you don’t know asks you for one of these payments,” he says.
Cryptocurrency is also very popular with these types of scammers. If a potential love interest asks for your help in investing in cryptocurrency, be suspicious. “While many victims of romance scams send money with a gift card, the most significant dollar losses — more than one-third of losses to romance scams in 2022 — were in cryptocurrency, according to the FTC,” the article states.
How to Avoid the Romance Scam:
Tell Your Friends: As awkward as it can be, talk to friends or family about any new love interests in your life, and pay attention if they’re concerned. Their concern could save you from serious heartache and financial loss.
Keep Personal Data Secure: There’s no reason to share any personal information with an online love interest, such as usernames, passwords, or any other identifying details that could be used to access your accounts or steal your identity.
Don’t Send Money: “If someone you’ve just met tells you to send money because they’re in trouble or to receive a package, the FTC says you can bet it’s a scam,” the article warns.
Financial Scam #3: The Cryptocurrency Scam
While the other types of scams are extremely popular, the FTC states that investment-related scams are the most costly, “with total losses of more than $3.8 billion in 2022.” The median loss was reported to be $5,000.
Cryptocurrency is very useful for scammers because it isn’t protected with the same legalities as credit or debit cards, and payments often aren’t reversible.
The article explains, “With investment scams, crypto is central in two ways: It can be both the investment and the payments that can’t be reversed. Besides claiming to be a love interest who needs you to send them money, crypto scams may start with an ‘investment manager’ calling you out of the blue with a tip that seems too good to be true or a scammer claiming to be a celebrity who can quadruple your money.”
How to Avoid the Cryptocurrency Scam:
Keep Things Separate: “Don’t mix online dating and investment advice,” the article advises. In other words, if you meet someone on a dating site and they want to talk to you about crypto—either investing in it, or sending it—it’s a scam. Without question.
Be Suspicious: Legitimate businesses and government entities will never email, text, or message you on social media to ask you for money, and they certainly will never demand that you use cryptocurrency to engage with them in any way.
Always Avoid Cryptocurrency: The article states, short and sweet: “Don’t pay anyone who contacts you unexpectedly demanding payment with cryptocurrency.” For most of us, cryptocurrency represents a murky pit filled with risk.
Financial Scam #4: The Employment Scam
Sadly, employment-related scams are also very popular types of financial fraud, and experts expect that they will be on the rise in 2024 with the increase in companies laying off workers.
“Some scammers use enticing, hard-to-detect tactics to lure victims through interviews with a company that may seem legitimate,” the article explains. “Then this fake employer sends you a fake email to collect personal information, or says they’re using a third party, which is also fake, to do a background check. Once they have your personal identity information, it’s an easy step to get into your bank account.”
There are other variations on the job scam theme, like promising guaranteed or easy income if you purchase a program, or job opportunities that require the receiving and sending of money.
How to Avoid the Employment Scam:
Do a Little Digging: Thanks to the power of the Internet, most things are easily searchable these days. Look up the name of the company or the person who’s hiring you, and include the words “scam,” “review” or “complaint” in your search to see if anyone else has been scammed by this person or company.
Don’t Click That Link: “Never click on a link from an unexpected text, email or social media message, even if it seems to come from a company you know,” the article warns. It’s always good advice to avoid any and all links from unfamiliar sources.
No Fee Required: No job should require paying a fee. If someone asks you to pay upfront, or they require you to buy cryptocurrency as part of the job, it’s definitely a scam.
Financial Scam #5: The Online Account Tax Scam
There are plenty of trained, responsible, trustworthy experts out there who can help you handle your taxes and other finances. But scammers know that, too, and this final example of fraud targets that very idea.
The article explains, “In this scam targeting individuals, swindlers pose as a ‘helpful’ third party and offer to help create an online account at IRS.gov to pay taxes. Bad actors can use the taxpayer information in such accounts to file a sham tax return where the scammer gets the refund. The information can also be used for other financial fraud or identity theft, such as to get a loan or open a line of credit.”
IRS spokesperson Eric Smith says, “Any of the process that you’d go through to set up an account or check on a refund or just to look at payments that you’ve made, all of that would start at IRS.gov. If someone contacts you saying, ‘We’ll help you set up an IRS account and send us all of your information,’ that’s bogus.”
How to Avoid the Online Account Tax Scam:
Create an Online Account Yourself: Do not use a third-party assistance for the task of setting up a taxpayer’s IRS Online Account. It’s important that you do this yourself.
Email is Not Secure: The article warns not to store financial records and information in an email account. “If a criminal gets in there, they have a roadmap to everything,” says Haywood Talcove, CEO of LexisNexis Risk Solutions’ government group.
By staying savvy and aware, you can avoid most (if not all) of the scams that you encounter on a day-to-day basis. But there’s no shame in getting scammed; criminals are smart, and this is what they do for a living. If it happens, you do have recourse.
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(originally reported at www.cnbc.com)