How To Protect Yourself From Scams

Amid an uncertain and vulnerable economic climate, we want to make sure you are informed and protected now more than ever.

Top Scams For You To Be Aware Of

IRS impersonators – In 2019, over 2.4 million Americans fell victim to fake IRS demands for money, costing a collective $72.8 million. Scammers use fear and intimidation to convince victims they will be charged late penalties, lose their homes or suffer other drastic consequences if they refuse to turn over a large sum of money immediately.

Robocalls – Fraudsters use fake phone numbers to make international robocalls look like legitimate domestic calls. They induce targets to give up personal information, such as bank account or Social Security numbers.

Sweepstakes scams – Although scammers make “winning the sweepstakes” sound sweet, these are commonly aimed at seniors. The caller informs the target they won but must also pay taxes and fees before receiving the winnings.

Grandparent games – In one of the most diabolical scams, fraudsters impersonate the victim’s grandchild. The scammer spins a tale of woe, such as being in prison or trapped in a foreign country, and begs the victim to send money by Western Union or another service.

Phony Social Security calls – By pretending to be an employee of the Social Security Administration, the scammer tries to get a person to reveal private information, including Social Security number, birthdate or mother’s maiden name.

Lawsuit lies – Scammers call elderly victims, pretending to be with a government agency, law enforcement agency or attorney’s office, and demand money in exchange for dropping a charge or lawsuit.

Identity theft – In 2018 alone, scammers used identity theft to swindle 1.4 million people out of $1.4 billion.

Scammers’ Strategies

Scam artists don’t quit because their crimes often succeed and are very lucrative and difficult to detect, so be aware of scam techniques and the psychological strategies scammers often use.

Most con jobs come down to a three-step process: gain trust, make promises and create fear. Because well-designed cons play on emotions, even educated and intelligent people can be taken in.

For example, look at what happens with the sweepstakes scam. The caller first establishes trust by using a fake phone number and an authoritative tone. Then the caller promises a tempting prize. Finally, the scammer demands money up front. For the scam to work, the target’s fear of missing out on the sweepstakes prize must override any doubts about whether the caller is legitimate or not.

Scam artists routinely rely on a limited set of psychological tricks and change the details to keep their acts fresh. Even The Wizard of Lies, Bernie Madoff, used the same three-step process: build trust (his impeccable reputation and stature), make promises (the unbelievable returns from his investment fund), and create fear (convincing victims that questioning or hesitating means missing out).

Dos and Don’ts

Do plan ahead – Create a proper plan to protect your assets.

Don’t give personal information – A good rule of thumb is to never give personal information out over the phone.

Don’t rush – Time kills all cons. If someone puts you under a time crunch, refuse to make hasty decisions. Get the facts and consult trusted sources.

Do form a secure relationship – A rock-solid relationship with your financial advisor creates a strong barrier against fraudsters. Don’t hesitate to contact us when you see red flags appear.

Don’t be afraid to say no – Make sure you never say yes out of fear.

[Adapted with permission from an article on 4/21/20 by Brandy Purcell who is the director of regulatory affairs compliance of USA Financial.]

[Financial Planning and Investment Management Services offered through Dickinson Investment Advisors, Registered Investment Advisor. Statistics and market information provided by Litman Gregory Advisor Intelligence.]

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