3 Warning Signs of a Financial Scam
Nobody likes to admit they’ve fallen for a financial scam, but it’s easier than ever to get caught up in one in today’s all-digital world, where practically every shred of data related to your personal and financial background can be found online. These days it’s nearly impossible to live your life without the web, and this net-based existence can feel somewhat unnerving for those of us who came of age while the tech revolution was already underway. However, for the elderly, who lived the vast majority of their lives offline, it can be absolutely overwhelming.
Combine their lack of tech experience with the fact that many of them are undergoing varying levels of cognitive decline and sometimes live lonely, isolated lives, scammers view seniors as easy targets. Some of today’s con artists are so sophisticated that even the most intelligent and educated can be duped.
To protect your aging loved ones and yourself from such predators, it’s critical to know the warning signs of a financial scam. The following are three big red flags to watch for:
1: Unexpected requests
If a family member or friend contacts you out of the blue asking for money, especially via email or text, you should be wary, and if the request comes from an unfamiliar email address or phone number, you should be extremely wary. While such requests aren’t totally unheard of, never send money unless you can verify the individual’s identity.
A popular con, known as the Grandparent Scam, involves someone calling and pretending to be your grandchild. The “grandchild” explains he or she is in trouble and needs money immediately. The caller then asks you to wire the money or give it to a third party, usually someone posing as a lawyer or police officer.
No matter how urgent the caller may sound, you should always verify their identity. One of the easiest ways to do this is by having the person call you back on his or her phone, or if the individual’s phone is dead or lost, you can ask them questions only the actual person would know the answer to, such as the name of their first pet. If they refuse, seem unusually aggressive, or act odd, do not send money.
Another ruse scammers use is pretending to be from the IRS or another government agency, demanding immediate payment of back taxes or some other debt. They might even threaten you with arrest, ruined credit, or additional fines if you fail to comply. If they don’t directly ask for money, they sometimes ask for verification of your personal information or direct you to visit a phishing website that secretly puts data-collecting viruses on your computer.
No government agency collects money by phone, email, social media, or text, and legitimate organizations will happily verify that they are who they say they are and will not demand on-the-spot payment. You should always be allowed to verify the legitimacy of the request and consult with a trusted advisor like us before making any financial transaction.
2: Unsolicited money-making ventures
If you are retired and on a fixed income, fantasizing about striking it rich is an allure many people experience, and scammers will use this against you. There are endless variations on this popular con, from wealthy foreign nationals needing assistance transferring money to more legitimate-sounding business deals offering huge payoffs with no risk. These messages sometimes appear as if they were sent to you accidentally, making it feel like fortune has finally favored you—just like you always dreamed it would.
However, strangers don’t just randomly offer such to-good-to-be-true opportunities. What kind of trustworthy businessperson would seek to partner with someone they’ve never met? If it is such a great investment, why not offer it to someone they already know, or do it themselves? Unsolicited money-making ventures from strangers is almost certainly a scam.
Keep an eye out for poor spelling, grammar, and/or unusual phrasing in such offers, as many of these scams originate in other countries where English is not their first language. Other tip-offs include messages containing the following or very similar language:
- You’ve won one of several valuable prizes.
- You’ve been specially selected for this one-time offer.
- You’ll get a free bonus if you buy our product.
- You’ve won money in a foreign lottery.
- This investment is low risk and offers a higher return than anything else.
- Our product is free, but we need to put shipping and handling charges on your credit card.
- Advance payments or fees are required to clear the promised funds or complete the offer.
3: Requests for personal information
If you encounter a situation that requires you to reveal personal information such as your credit card number, your Social Security number, or your mother’s maiden name, immediately back off. Ask them why they need this information and to verify their identity. Enquire about alternative methods of proceeding that do not require such information.
Reputable sources will respect your privacy and be more than willing to provide you with identity verification, or at least offer an alternate way for you to proceed without the need for such personal data. For example, if you receive an email request for your credit card number, look up the organization’s phone number using a source other than what they provide in the email and ask if you can call and give your information over the phone instead.
One such con has scammers call claiming to be from the Social Security Administration (SSA), and the number may even come up on your caller ID as the SSA. The caller says your Social Security number has been stolen, used in a crime, or suspended. To protect your funds, they direct you to withdraw the money in your bank account and transfer it to a gift card. The scammers then ask for the gift card PIN number for “safekeeping.” They also may try to get you to reveal your SS number by having you verify it over the phone.
However, the SSA does not suspend your Social Security number, nor will it ever direct you to withdraw money from your bank account. What’s more, any situation in which you’re told to buy gift cards and then give out the cards’ PIN number is undoubtedly a scam.
Today’s most sophisticated scammers don’t even need to ask you for your personal data: They can steal it simply by having you open an email attachment or visit a website that’s loaded with data-scraping bots. Don’t open email attachments from strangers—or even friends and family if the attachment seems unusual. Set all of your social media accounts to private so that your personal info isn’t public and invest in anti-virus and anti-spyware programs to protect your computer from hacking.
Protect your loved ones from all possible threats
By becoming familiar with how such deceptions work and knowing what to look for, you and your loved ones will be far less likely to be conned. At the same time, you should also do everything you can to safeguard your family’s finances from other threats that have nothing to do with fraud.
Without comprehensive estate planning, your family’s wealth and assets are in real danger of being seriously depleted or lost in the event of your death or incapacity. Meet with us as your Personal Family Lawyer® to learn about the best planning strategies to put in place to ensure your loved ones will be taken care of no matter what happens to you.
This article is a service of Levi Alexander, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.
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