Avoiding financial scams

Avoiding Financial Scams

People are concerned about cybersecurity and avoiding financial scams. This is of little wonder considering the headlines about data breaches and the rapidly changing technology. The explosion of digital communication has changed the medium but really hasn’t changed the techniques scam artists use. We invest a great deal of time, money, and effort into keeping your information and assets safe from on-line thieves. We have shared many ideas and best practices with you to help make you more diligent about your digital life. Today, we wanted to go back to basics and talk about the nature of frauds and scams in general.

Urgency appeals to greed, plays on fears

One of the main characteristics of a scam is to elicit emotions in the victim, usually greed or fear. Usually this is done by creating a sense of urgency. By forcing a quick decision, the victim doesn’t act on the red flags which are often present.

Financial scam artists love to appeal to our greedy side by building on our fear of missing out or “FOMO” as its often referred to these days. “You need to act now because I can’t hold a spot for you,” is a common line told to victims.

To combat the appeal to greed, we should remember the simple rule, “If it sounds too good to be true, it probably is.”  Risk and return are inseparable. Any promise of high return should not be entertained without a heavy dose of skepticism and the acknowledgement that if the return is high, the risk must also be high. Period. No exceptions.

Risk and return are inseparable. Any promise of high return should not be entertained without a heavy dose of skepticism and the acknowledgement that if the return is high, the risk must also be high. Period. No exceptions.

Urgency is also used to prey on one’s fears. We recently learned of a senior citizen who was scammed out of $10,000. She received a phone call from an aggressive scammer who convinced her she was in trouble with the Social Security Administration and that if she didn’t pay them immediately, using gift cards, authorities would arrest her.

Interestingly, she admitted later she was suspicious and had heard about scams like this but, “The guy on the phone was so forceful, it sounded real.” He overcame the skepticism of this victim in part because the Caller ID actually read “Social Security.” The bad guys are getting better at their scams.

Reports of fraudsters posing as Social Security, IRS, VA, FBI, Sherriff or other government agencies are on the rise. To be clear, no government agency is ever going to call you and threaten you for payment. Nor will they require payment by a wire or gift card.

Exclusivity and secrecy

Another way a scammer appeals to emotion is through the use of exclusivity or secrecy.

Exclusivity stokes FOMO in many people. Ever wonder how that smart, accomplished professional or businessperson got ripped off in an investment or real estate deal? Many times, it was the allure of exclusivity. It goes something like this, “Look, you worked hard to get where you are and now you can get the reward you deserve. We don’t offer this opportunity to the masses, so don’t tell anyone this is out there. Just know that if you don’t jump on it, it will be gone.”

man holding finger to lips to keep a secret - Dan Moisand discusses how to avoid financial scamsIt can be hard for some high-earning people to resist the pitch, especially if the scammer throws in a promise of a tax benefit.

Notice, the pitch included an admonition to keep it quiet. It is positioned in a way that suggests that if word got out, the opportunity would disappear.

No legitimate investment opportunity will make it difficult for one to perform adequate due diligence. If one must ask more than once for information, passing on the “opportunity” is very likely better. When information is received, independent third-party verification is the cornerstone of good due diligence. One shouldn’t rely on any legal or tax opinion letters a company may provide and should consult their own lawyer and tax advisor. Scam artists try to dissuade examination by third parties, usually by stating time is of the essence. Legitimate offerings welcome a thorough investigation.

No legitimate investment opportunity will make it difficult for one to perform adequate due diligence. If one must ask more than once for information, passing on the “opportunity” is very likely better.

Secrecy is also used when scammers seek to instill fear. Many of the government agency scams, like the Social Security one described earlier, harp on the need to keep the matter private. The woman who was victimized in the Social Security scam was indeed told not to involve her children or anyone else. In fact, she was told that if she spoke to her kids, the kids would face charges for delaying her payment!

Applying these elements to digital financial scams

Appealing to greed or fear through urgency, exclusivity, secrecy, or all three can prevent one from doing due diligence, research, or otherwise checking things out. These same principles of scamming are now employed digitally.

By now, anyone with an email account has probably seen a “phishing” scam. This is where you receive an email from an organization you know, such as the phone company, cable company, Apple, Google, Amazon, a bank, insurer, or brokerage. The email states the need to verify certain information immediately (urgency) or some bad thing will happen (fear), so please click this link or open the attached document (directs attention away from the red flag of urgency). Some of these emails can cause your computer problems from malware, viruses, ransomware and the like, but many are designed to dupe you into giving the bad guys personal information or paying them money.

One way to spot a bogus email and avoid problems is to hover your cursor over the link. In the lower corner of your screen, you will see the actual web address (URL) that link would take you to. If it looks odd in any way, you should assume it’s a phishing attempt and not click.

Your bank, brokerage, insurer, or other party knows your account number and would never need to ask you to verify it.

But scammers are getting craftier and many dangerous web pages use URLs which may appear legitimate. If the page a link takes you asks for your account number, DON’T fill that in. Your bank, brokerage, insurer, or other party knows your account number and would never need to ask you to verify it.

Never click a link, open an attachment, or call a number given to you by someone approaching you for information. Instead, verify things independently from the party who approached you. For instance, if the email looks like it is from your bank, use the phone number on the back of your ATM or credit card and call the bank directly. The email is designed to keep you from taking this important step.

a hacker trying to phish from a personal laptop - Dan Moisand discusses how to avoid financial scamsThe newest version of phishing is “smishing.” This is a phishing attempt initiated via text message. In this form of the scam, individuals receive fraudulent text messages that appear to be from a legitimate source, such as a financial provider. The fraudulent texts often include an urgent message and prompt recipients to log in to a spoofed website, thus granting criminals access to their account credentials. If you suspect you have inadvertently clicked on a fraudulent hyperlink and supplied any credentials, immediately change your passwords.

Scammers use many tricks to create their illusions, which is exactly what a scam is, an illusion. It is making something appear to be something it is not. Magicians create illusions to entertain an audience. Scammers do it to enrich themselves at their victims’ expense.

Don’t talk to strangers?

We don’t want clients living life suspicious of everyone they meet or message they receive, but not engaging with uninvited solicitations is the best defense against scams. For senior citizens, it is especially important they do not engage with potential scammers. Once a scammer engages a senior citizen, they tend to come back for more information or money.

Fortunately for our clients, hackers and scammers have a tough time getting to assets under our care. Knowing the red flags of urgency, exclusivity, and secrecy should help you defend yourself when you have money outside our management. Better awareness should give one pause when presented with an opportunity for riches or the threat of needing to pay for some alleged wrong. You can always call us, and we will help you determine if a stranger’s approach is legitimate.

Recommended reading:

Scam Me If You Can: Simple Strategies to Outsmart Today’s Rip-off Artists by Frank W. Abagnale, whose life as a professional imposter and con man inspired the 2002 film, “Catch Me If You Can,” starring Leonardo DiCaprio and Tom Hanks.

Common online scams

Get a call from the Social Security Administration? It’s the latest government imposter scam

Protect yourself against tax fraud and identity theft

Cybersecurity: What you need to know

How to prevent identity theft

News & Notes

Moisand recognized for impact on the financial planning profession Investment News dedicated its September 14th issue to the 50th anniversary of the founding of the financial planning profession. In their coverage, our own Dan Moisand was quoted several times and was highlighted as one of the “twenty most influential men and women” in the history of financial planning. The recognition comes largely based on Dan’s service as national President of the Financial Planning Association and the group’s successful suit against the SEC for lowering standards. Dan has long been a leading advocate for professionalizing financial planning and having financial planners act in a fiduciary capacity to clients at all times.

Welcome, Paula. We are pleased to welcome our newest team member, Paula Rocha, to the Orlando office after interning with us earlier in the year. Paula comes to us from the University of South Florida where she earned her Bachelor of Science in Personal Finance. Paula will be working on a wide variety of projects for the firm and assisting our advisors with their financial planning work as a Financial Analyst Associate.

Increase in Social Security checks for 2020 to be modest. The Social Security Administration has announced a 1.6% cost of living increase for benefits recipients in 2020. As expected this increase was lower than last year’s 2.8% increase. The consensus estimate for increases to Medicare Part B premiums is roughly $9 per month.

IRS expands use of Health Savings Accounts for preventive care. A new rule from the Internal Revenue Service expands the list of preventive care distributions from Health Savings Accounts eligible to bypass the deductible. These additions to the preventive care list include blood pressure monitors, beta-blockers, glucometers, insulin, and statins. https://www.irs.gov/newsroom/irs-expands-list-of-preventive-care-for-hsa-participants-to-include-certain-care-for-chronic-conditions


Please remember to call us: When anything significant happens in your life, including changes in your finances, family, or health that could affect your financial plan, please let us know so that we can adapt our planning and portfolio work for you accordingly. Also, if you ever fail to receive a monthly statement for one of the Schwab Institutional or TD Ameritrade Institutional accounts under our management, please let us know so we may assure the respective custodian delivers your statements promptly.


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Moisand Fitzgerald Tamayo, LLC is an Orlando, Tampa and Melbourne, Florida based fee-only financial planner serving central Florida and clients across the country. Moisand Fitzgerald Tamayo, LLC specializes in providing objective financial planning, retirement planning, and investment management to help clients build, manage, grow, and protect their assets through all phases of one’s life and the many transitions in between. If you have any questions or would like to discuss anything further, please give us a call or send us a note. If you are not a client and wish to receive emails notifying you of new posts – no more than once per month – fill out the subscription information in the sidebar to the right. For more frequent updates, follow us on FacebookLinkedIn, or Twitter.  

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About Dan Moisand

Dan Moisand is a fee-only financial advisor with Moisand Fitzgerald Tamayo, LLC. He is a regular contributor for multiple outlets, including Florida Today, MarketWatch, and The Wall Street Journal. His writing and financial advice have also been featured in Financial Planning, Investment Advisor, Wealth Manager/Advising Boomers, Forbes, Smart Money, and The New York Times, among other publications. He is the only two-time winner of the Journal of Financial Planning’s “Call for Papers” competition and has been named a top financial planner and advisor by multiple publications. Investment News named Dan one of the “twenty most influential men and women” in the history of financial planning. He currently serves on the Board of Directors for the CFP (Certified Financial Planner) Board.


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