As retirees or pre-retirees, it's crucial to protect your hard-earned money from financial scammers. Few things can disrupt your retirement plans faster than having your accounts emptied by a criminal. And unfortunately, this is no small risk. New Federal Trade Commission data shows that U.S. customers lost $8.8 billion to scammers in 2022, a 30% increase in total losses compared to 2021.
The scam business is booming, but you don’t want to be a customer.
So today, I’m going to tell you a story of a Seaside Wealth client who recently fell victim to a scam. He’s been thoughtful enough to share the details with me, in the hopes of helping others. We will discuss the red flags exhibited by the scammer. Then, we’ll review the major scams currently circulating throughout the United States. And finally, we’ll close with effective strategies you can employ today to help keep your funds safe.
I want to protect the identity of our client, so let’s call him “Bob”. And before we start, I want to say that Bob is a smart, savvy, and financially astute individual. I was shocked when he told me what happened. If Bob was tricked, then that tells me we all (including me) need to increase our vigilance when it comes to scammers.
OK, so a few months ago, Bob received an email from “McAfee” stating that his subscription had renewed for $350 annually. For those unfamiliar, McAfee is a popular antivirus computer software company.
Bob had used McAfee’s products in the past, but he hadn’t recently renewed his subscription. He figured the company inadvertently renewed his subscription, so he called the phone number on the email, spoke with a “representative”, and the latter agreed to refund his money in two installments, one for $200 and the other for $150.
The representative told Bob he first needed to fill out some paperwork in order to receive the refunds. The representative emailed Bob the documents, and Bob complied with the request. A few hours after Bob submitted the paperwork back to the representative, Bob got a call back saying that a big mistake had occurred. Bob missed a decimal point in the “$200.00”, and McAfee just refunded to Bob $20,000, and not $200!
Bob felt bad about the situation, and his guilt was compounded because it was Bob’s paperwork error that caused the massive refund. Moreover, the representative indicated the urgency of McAfee needing to be made whole. So, Bob sprang into action to right his wrong.
First, Bob attempted to wire $20,000 per the representative’s wiring instructions. But Bob’s bank blocked the wire. So, the representative instructed Bob to purchase Walmart, Lowes, or Target gift cards, and send the serial ID numbers on the back of the cards as payment.
In total, Bob sent $8,000 in gift cards to the “representative” before he realized he was being scammed. Bob’s guilt and urgency to resolve a mistake shifted to anger and embarrassment. And $8,000 of his hard-earned money was lost.
The Scammer’s Red Flags
Let’s take a step-back and discuss the red-flags exhibited by Bob’s scammer.
As you can tell, this criminal operated a fairly well thought-out and sophisticated scheme. But he did show some red flags. So for those reading, if a similar situation happens to you, and you can detect these red flags beforehand, you’ll be able to save yourself from becoming a victim.
Red Flag #1: A stranger contacted Bob out of nowhere.
Bob received a random email from “McAfee” even though he hadn't renewed a McAfee subscription. No doubt the email had forged images and fonts that made it look authentic. And I’m sure the “representative” sounded genuine as well. However, the fact is someone out of the blue contacted Bob. If this happens to you, whether it’s via phone, text, or email, take a step back and think through the situation.
Red Flag #2: Requests or details that don’t make sense.
Bob’s “representative” made three requests that don’t make sense. First, the scammer said McAfee would refund Bob’s money in two installments. Why? Second, Bob needed to fill out and return paperwork in order to receive the refund. Why? And third, the representative would accept gift cards as payment. Why? Additionally, the scammer said McAfee had accidentally refunded Bob $20,000 due to a decimal error. This is an outlandish claim. Odd requests or details are markers of scams.
Red Flag #3: Gift cards or other unusual payment methods.
If anyone EVER asks you to pay them via gift cards, it’s a scam. Don’t do it. Gift cards are meant for one thing: giving gifts to friends and family. Scammers want you to give them gift cards because they’re effectively cash and avoid pesky banking safety measures. Other unusual payment methods that scammers often request are via CashApp, Venmo, online wires, or cryptocurrency.
Red Flag #4: Shifting the burden, creating urgency, emotional manipulation, and threats.
Notice how the scammer contacted Bob, and then shifted the burden on Bob to act. Fill this out. Send us this. Wire us that. All red flags.
The scammer then created urgency and manipulated Bob emotionally, so that Bob would react with his heart, instead of his head. Urgency and emotional manipulation pump a person with cortisol, thus helping to temporality switch off critical thinking skills. So, if you’re dealing with a possible financial transaction, and someone is rushing you or making you feel bad in any way, that’s a sign they’re trying to manipulate you. So slow down and think about what’s happening. And any threats (“we will call the police”) are huge red flags.
Again, slow down. Take a deep breath. Sleep on it. The person and the money can wait.
Major Scams Currently Circulating in USA
Here’s a list of some of the more current scams happening in the US. By understanding these scams, you can better recognize warning signs and avoid becoming a victim.
Fake Check Scams: This involves receiving a fraudulent check, being asked to deposit it, and then requesting to send a portion of the funds back to the scammer.
Tech-Support Scams: Fraudsters pose as technical support representatives from supposed reputable companies to gain access to sensitive information or install malware on your devices. They may claim that your computer has a virus or technical issue and then offer “assistance”, which often leads to financial losses or identity theft.
Investment Scams: These target retirees looking to grow their savings. Scammers promise high returns or exclusive investment opportunities, and persuade victims to invest their money in fraudulent schemes. These scams often result in significant financial losses.
Medicare Scams: Fraudsters pose as Medicare or healthcare representatives, attempt to obtain identity information, or sell bogus products or services.
Grandparent Scams: Scammers exploit seniors’ emotions by pretending to be a grandchild in distress. Scammers typically call and claim to be in an emergency situation, requesting immediate financial assistance. They rely on the victim's love for their grandchild to coerce them into sending money.
Phishing Scams: Phishing scams are fraudulent emails that appear to come from a genuine company, like your banking or mortgage provider that request people to reply or click a link and provide identifying information. Fraudsters then use that information for identity theft purposes.
Strategies to Protect Yourself
Let’s close with some effective strategies you can deploy today to reduce the risk of falling victim to fraud.
1. Get a Second Opinion: If you have any suspicions whatsoever about a situation, run it by a trusted family member or friend. There’s absolutely no shame in doing so. And you can call or email me (or anyone else at my office) at any time. I’m happy to help. Additionally, consider involving trusted family members or friends in all major financial decisions regardless of the circumstances. This provides you with an extra layer of protection just in case.
2. Monitor Your Accounts: Keep a close eye on your financial accounts for any suspicious activity. Review your bank, credit card, and investment account statements regularly for any unauthorized transactions. If you notice any discrepancies, report them to your financial institution immediately. If someone contacts you saying money was accidentally deposited into your account, check your account first before taking any action. They can wait.
3. When It Comes to Money, Have a Critical Mindset: No one wants to spend their entire life being overly critical of everything and all people. But when it comes to money, and especially when it comes to unsolicited calls, emails, or messages that regard money, that’s the time to become hyper critical and carefully question everything.
4. Independently Verify Information: Understand that some scammers are true professionals. Email templates that mirror those of the real companies, “call centers”, advanced software, etc. So if you receive an unsolicited email, and for any reason something seems off to you, independently verify if the information on the email is the same per the company’s official website.
5. Stay Informed: Knowledge is a solid defense. Stay up to date about the latest scams targeting retirees, and educate yourself on how to identify and avoid them. Regularly read reputable sources of information, such as government websites or trusted financial publications to stay updated.
6. Safeguard Personally Identifying Information: Only share your personal information on a "need-to-know" basis. Avoid providing your Social Security number, email, phone number, or address unless you are confident in the security of the request. If you receive an unsolicited phone call, and a supposed representative asks you to verify your personally identifying information, end the call, pull up the company's customer support number on their official website, and call that number to inquire if the company is trying to reach you. Once you’ve verified the legitimacy of the call, then you can give your information over to them.
Final ThoughtsProtecting your finances requires vigilance, knowledge, and caution. By watching for red flags, staying up to date on current scams, and utilizing certain strategies, you can minimize the risk of becoming a victim. Your hard-earned money deserves to be protected, and taking proactive measures is crucial to ensuring your security.
Remember, I’m always available via phone or email if you ever have any questions with regards to these issues. If I can’t help you, I will get you in contact with someone who can!
And thank you to Bob for trusting me with your story. I’m happy to hear your losses were minimal, and I appreciate your courage to share what happened in the hopes of helping others.
Be well everyone!
This commentary reflects the personal opinions, viewpoints and analyses of the Seaside Wealth Management, Inc. employees providing such comments, and should not be regarded as a description of advisory services provided by Seaside Wealth Management, Inc. or performance returns of any Seaside Wealth Management, Inc. client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Seaside Wealth Management, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results