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Client Conversations: Old Scams, New Twists

Protect yourself from financial fraud in the digital age.

Client Conversations gives financial advisors an easy way to communicate with clients on topics influencing financial markets; it highlights common investor behaviors and offers ways to address the challenges investors face. Share this article with your clients, and remember to follow your firm's policies that govern sharing content with clients and prospects.


A real-life prince emails for Your assistance. He needs help getting millions of dollars relocated from Nigeria. You’re promised a share for transferring the money.
It’s a long-standing scam—a clichéd joke now, even. No one would fall for that old trick anymore.

Right?

Well, actually, millions of dollars are lost each year to con artists still pulling this scheme today.1

An estimated $1 billion was taken from Americans last year, and 70% of reported fraud began with a phone call, according to the Federal Trade Commission. They say phone-based scams stole nearly $300 million, while online fraud took $141 million. Email-based schemes accounted for another $100 million.2

Victims aren’t always the stereotype painted for us—a naïve centenarian on the verge of senility. It could just as easily be any of us. The sad truth is many of those taken advantage of are unknowingly willing participants. They simply don’t have the training to spot when they’re being taken advantage of by a scammer.

 

Bad Guys Are Real

Attackers. Bad actors. Malicious users. No matter what you call those trying to scam you, they’re certainly not good guys. Worst of all, these callous criminals are becoming more sophisticated. With additional data about you from multiple sources—including social media—floating around the Web, it’s not out of the ordinary to get an unsolicited phishing email that passes for a legit communication. They know more info about you than you may suspect.

More often than not, they’re trying to get you to do something. Click, call, or reply. Is some unknown person coming into your life asking for something? Be skeptical. Even a quick survey can turn into a thorny trap.

With an online interaction or a phone call, people tend to let their guard down. They’re more inclined to do the requested action because there’s an inherent level of trust on a computer or phone that’s not there if asked in person. The misconception is the email can only come from whom it says it’s coming from.

Seasons Don’t Fear the Reaper… 

Volatility is, by definition, a rapid and unpredictable change. It’s not an enjoyable experience. But there’s something to be said about staying the course despite the discomfort.

And if we step back and examine six of the previous VIX spikes above 40, indicating extremely high fear levels, there’s a trend. Within three years of volatility-induced declines, the market not only recovered its losses, but also produced additional positive returns in each case. Five years out, those gains remained positive, too.

A takeaway, then, is that while volatility is difficult to endure, it can present opportunities for long-term investors. When the broad sentiment is fear and others are selling, it may be time to be contrarian: consider it an opportunity to not only stay invested, but to buy while prices are depressed.

Seasons Don’t Fear the Reaper… 

Volatility is, by definition, a rapid and unpredictable change. It’s not an enjoyable experience. But there’s something to be said about staying the course despite the discomfort.

And if we step back and examine six of the previous VIX spikes above 40, indicating extremely high fear levels, there’s a trend. Within three years of volatility-induced declines, the market not only recovered its losses, but also produced additional positive returns in each case. Five years out, those gains remained positive, too.

A takeaway, then, is that while volatility is difficult to endure, it can present opportunities for long-term investors. When the broad sentiment is fear and others are selling, it may be time to be contrarian: consider it an opportunity to not only stay invested, but to buy while prices are depressed.

 

Be Alert When You Receive an Alert

Here’s a three-step action plan to think through the next time you get an unsolicited email or phone call:


1. Stop—Don’t just jump in and open any email or answer any phone call. Take a timeout.

2. Think—Does it make sense? Are you expecting an email communication or call?

3. Protect—Verify the sender. Once you open an email or pick up the phone, investigate whether the person is asking you to do something. If you’re still confused, call back the individual or organization with a number you have from a business card, the back of a credit card, or from an official website.

Here’s a specific example:
You receive an email from your bank. It informs you of fraudulent activity on your account. You need to log in immediately to verify your information. They’re trying to help you stop someone from further hurting you financially. The communication looks like it’s from your bank. It has the same look and feel of your monthly statement.
Since it’s from your bank, do you do what it’s asking?

Turns out, the email’s not from the bank at all. It’s from the bad guys. They’ve put the login page on a phishing site that’s been designed to steal your information. You log in, and now they have your info. The same trick can happen over the phone.

Numbers on caller ID can be spoofed, too. In fact, scammers are now calling from numbers that look like they’re local. They know you’re more likely to answer if you recognize the area code.

The bottom line: Don’t trust anyone—even someone claiming to be from a place as reputable as a bank. Don’t willingly share personal information over the phone. Verify the identity of anyone asking you for anything. Then take the time to process it. You probably don’t have all of the facts. Do a quick Google search to determine as much as you can while speaking with them. Why are they reaching out to you in the first place?

(See “9 Top Scams To Be Aware of Today” below for more information on possible scenarios.)

Seasons Don’t Fear the Reaper… 

Volatility is, by definition, a rapid and unpredictable change. It’s not an enjoyable experience. But there’s something to be said about staying the course despite the discomfort.

And if we step back and examine six of the previous VIX spikes above 40, indicating extremely high fear levels, there’s a trend. Within three years of volatility-induced declines, the market not only recovered its losses, but also produced additional positive returns in each case. Five years out, those gains remained positive, too.

A takeaway, then, is that while volatility is difficult to endure, it can present opportunities for long-term investors. When the broad sentiment is fear and others are selling, it may be time to be contrarian: consider it an opportunity to not only stay invested, but to buy while prices are depressed.

 

Victims come in all shapes and sizes  

People think fraud can’t happen to them. Often, it takes somebody close to us to fall victim for us to accept that this is a very real possibility.

Seniors aren’t the only victims. However, older folks are prime targets, as they tend to be less comfortable working with new technology. There is an opportunity for someone to take advantage of that lack of comfort.

Unfortunately, the public receives virtually no training on how to deal with these situations. So, there’s little awareness of what to do. And this threat will never ever end. Defend yourself from being a victim.

Learn how to take shelter from financial fraud—in whatever form it may come. And sometimes, maybe more often than we may want to think, that comes in the form of a Nigerian prince.

 

Seasons Don’t Fear the Reaper… 

Volatility is, by definition, a rapid and unpredictable change. It’s not an enjoyable experience. But there’s something to be said about staying the course despite the discomfort.

And if we step back and examine six of the previous VIX spikes above 40, indicating extremely high fear levels, there’s a trend. Within three years of volatility-induced declines, the market not only recovered its losses, but also produced additional positive returns in each case. Five years out, those gains remained positive, too.

A takeaway, then, is that while volatility is difficult to endure, it can present opportunities for long-term investors. When the broad sentiment is fear and others are selling, it may be time to be contrarian: consider it an opportunity to not only stay invested, but to buy while prices are depressed.

9 Top Scams To Be Aware of Today

Here’s a compilation of the biggest schemes perpetrated on seniors. Learn the various methods used and how you can best prevent falling victim.

1. IRS impersonation
Victims are told they’re due a tax refund or that they have unpaid taxes. The IRS will never initiate contact via phone calls, email, or through social media.

2. Sweepstakes and lottery scams
Seniors are contacted to inform them that they’ve won a financial prize, but are required to advance payment of a fee to collect the winnings.

3. The grandparents scam
Scammers pose as grandchildren and ask for money to solve some unexpected financial problem. Or, someone calls on behalf of a grandchild who is either (fictionally) in jail, a hospital, or another country.

4. Tech support
A fake technical-support representative calls to fix a nonexistent computer issue with the goal of gaining remote access to a victim’s computer.

5. Medicare scams
Perpetrators may pose as a Medicare representative to obtain personal information.

6. Counterfeit prescription medicines
Cheap prescription drugs online, where seniors increasingly go to find better prices, are often bogus counterfeit medications.

7. Funeral home and cemetery scams
Money is extorted from relatives of the deceased to settle fake debts. Disreputable funeral homes could capitalize on unfamiliarity by adding unnecessary charges to the bill.

8. Investment schemes
Bad guys—posing as financial advisors—gain access to retirement funds and savings, take money, and then disappear.

9. Homeowner/reverse-mortgage scams
Seniors are pressured to take out equity in their home to use as payment for reported necessary repairs.

 

Sources: National Council on Aging, 2018; USA Today, 2/17

Seasons Don’t Fear the Reaper… 

Volatility is, by definition, a rapid and unpredictable change. It’s not an enjoyable experience. But there’s something to be said about staying the course despite the discomfort.

And if we step back and examine six of the previous VIX spikes above 40, indicating extremely high fear levels, there’s a trend. Within three years of volatility-induced declines, the market not only recovered its losses, but also produced additional positive returns in each case. Five years out, those gains remained positive, too.

A takeaway, then, is that while volatility is difficult to endure, it can present opportunities for long-term investors. When the broad sentiment is fear and others are selling, it may be time to be contrarian: consider it an opportunity to not only stay invested, but to buy while prices are depressed.

Client Conversations gives financial advisors an easy way to communicate with clients on topics influencing financial markets; it highlights common investor behaviors and offers ways to address the challenges investors face. Share this article with your clients, and remember to follow your firm's policies that govern sharing content with clients and prospects.


1 “Louisiana Man Charged in ‘Nigerian Prince’ Scheme,” New York Times, 12/31/17
2 “More fraudsters are scamming senior citizens through technology— and it’s costing them millions,” USA Today, 3/18

 

 

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