All About Scams
In today’s world there are many amazing things happening. Technology and innovation have brought humanity forward in ways that have yet to be counted. The broad benefit of cell phones, the internet, and other incredible tech has ushered in a new age of international commerce, jobs, social connection, and general progress. Yet, as we are well aware, with new solutions come new problems.
One issue that our clients face these days is the prolific and constant attempts by bad actors to scam them out of their hard-earned money. I want to go over some of the worst offenders to better prepare you to put your guard up against misrepresentation, scams, Ponzi schemes, and phishing attempts.
Text/Email Phishing
Text and email phishing is something that has become even more prolific than scam calls.
What it looks like:
You will receive a text message from a trusted institution like your credit union, bank, or government agency. The text will read something like “AFCU: A new PAYEE added to your AFCU account on 08/14 requires approval. Click the link to approve or cancel.”
What they are after:
They either want you to click the link which will take you to a download site for malware or other malicious software, or they will take you to a website that looks exactly like the login page for your credit union, bank, or other account. By putting in your username and password, you have just given that info to the scammer.
How to avoid:
Do not ever click links that you receive through text, email, social media, or other electronic message. Always set up two-factor authentication on your online accounts. When in doubt, contact the business or group through their legitimate phone number from their website to inquire about their communication with you.
Phones Scams
Phone scams have become savvier than ever.
What it looks like:
A frequent phone scam is that you will receive a call from someone claiming to be from the IRS. They are requiring you to speak with them or you will be audited or arrested.
What they are after:
They want you to call them back or be connected to a “representative” at which point they will solicit a large payment to cover your taxes or ask for sensitive info (SSN, DOB, etc).
How to avoid:
Be aware that the IRS will NEVER call you. Other organizations might, but it is best to be on your guard. If the caller can’t be verified, hang up and look up the organization’s phone number on their official website. You can then call them back and deal with their concerns knowing you have reached them through official means.
Bitcoin and Social Media Scams
Bitcoin and Social Media scammers are out in force these days, and they are clever.
What it looks like:
What they are after:
These types of scams will solicit payments or transfers of assets. If you give them anything they will always ask for more. Their goal is to get as much money from you as they can before you catch on that they are not really your friend or someone to be trusted.
How to avoid:
Generally, do not loan or give people large amounts of money with nothing but a verbal promise to pay you back or make you more money than you gave them. Don’t ever believe someone online is who they say they are if they are asking for your money.
Affinity Fraud:
Affinity fraud is all too common in the state of Utah. This is partly because we have a strong trust of our neighbors, friends, and fellow church members. It is quite common nationwide as well.
What it looks like:
In the case of affinity fraud, the fraudster is actually someone you know. They may be your friend or neighbor and, unfortunately, are very commonly an authority figure in your church or other social organization. The fraudster will court you with investment ideas or get rich quick proposals that can’t lose. They will use their relationship with you as social proof that they would not and could not be deceptive. The contrary is, all too often, true.
What they are after:
Usually, these fraudsters solicit investment into their business or money-making endeavor. They will often be actively running a Ponzi scheme and will occasionally deliver a profit to you to prove their earnestness before soliciting even more money. They use their authority and social network to find their marks and gather as much investment as they can before absconding or getting caught and imprisoned.
A recent example is Gaylen Dean Rust from Layton, UT who ran a fraudulent silver trading program. Gaylen Rust betrayed the trust of his hundreds of clients, many of them his own family, friends, and members of his church. For more examples you can visit the following website: https://www.mrm.org/ponzi-scheme
How to avoid:
There are some key categories of investment that are fraught with affinity fraud. They are: “Flipping” distressed homes, payday loan companies, hard money lending, forex trading, imports/exports, and many others. Before making an investment in any highly promissory opportunity, seek the advice and counsel of your trusted advisors here at Strategic Planning Group.
Some questions to ask are:
-Is this investment too good to be true?
-Do I understand the investment?
-Why does the company need my money?
-Can I afford to lose my investment?
-Have I spent sufficient time researching the company and its managers?
Financial Management Fraud:
This is a specific sort of fraud that bears mentioning. The perpetrators will claim to be a legitimate financial advisor.
What it looks like:
They will market their investment products through some of the traditional means, like online advertisement. The perpetrator will also use their personal network. They will claim that they have a set of investments in real estate, stocks, private holdings, or other typical investment types that will grow at a high rate over time. The presentation will seem reasonable, and they will use a more legitimate facade than most other fraudsters.
What they are after:
They will talk about their great investment performance and solicit you to invest. It may all look good, and sound official and verified, but it is nothing more than a Ponzi scheme in financial advisor clothing. The investment will not generally over-promise but will promise just enough to seem legitimate.
How to avoid:
1. Always check for the advisor’s license and history of business through the various government license checking websites like Brokercheck.finra.org or adviserinfo.sec.gov.
2. Always independently verify your account’s existence and
balance directly with the custodial institution the advisor claims to use (usually a big name like Fidelity, Charles Schwab, etc).
3. Make sure you always know account numbers and gain digital access through a corroborated and verified institution that matches what the advisor is reporting to you. In other words, ensure your account statement are coming from a third-party verifiable banking or finance institution.
4. Beware of special vague “privately managed” investments with no institutional custodian.
5. Be alert to outlandish return promises, today only offers, or guarantees.
6. Watch for suspicious transfers or withdrawals.
7. Make sure tax withholding from withdrawals are going to the IRA or State Tax Agencies and not to some other account. You can verify this by calling the taxing agencies directly.
In Conclusion
Finally, if you ever get a text message, phone call, email, social media message, or are solicited by a friend, family member, community member, door to door salesperson, or stranger online or in person and they are asking for your money for any reason that you cannot independently verify is legitimate, then call Strategic Planning Group and we can help you discover what is and is not a legitimate or worthwhile investment.