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We Need to Talk About Financial Scams

Phishing emails. Fake charities. Deceptive robocalls. Sweepstakes fraud. Identity theft.

The number of financial scams seems to grow every day. Even if most of us are aware that no Nigerian princes want to give us money, if only we’d provide our bank account details, a diversifying threat landscape is making it increasingly difficult to protect against every potential assault.

One of our clients recently fell prey to fraud and authorized us to relate this story, because they don’t want others to be victimized. Even if you think you’re too savvy to be taken in, please read on to boost your own knowledge and then share this information widely to help safeguard others.

The Sound of Silence

The scam in question involved a bad actor posing as a grandchild in need of help. He preyed on a kind woman who had not only the means and desire to assist, but also wanted to shield his parents who had recently suffered a tragedy. With quick wit and masterful duplicity, the fraudster tricked her into sending him money “for a lawyer to get him out of jail.”

How did this happen to such a smart person? It all seemed so normal.

There are countless other examples—the electric company threatening to turn off your power in one hour if you don’t pay the bill. You’re sure you sent a check or processed a payment online, but wonder if it didn’t go through. You rush to the bank, only to be told the electric company never requests immediate payment.

Live and learn? No—I say pause and verify.

By taking just a few minutes to call the electric company directly, you can quickly discover such fraud. Similarly, finding a way to check the “grandson’s” story, such as offering to hire a lawyer directly rather than sending money, would have revealed a problem.

But these scams create a sense of urgency and, as the old saying goes, “haste makes waste.”

Learning to pause and verify is vital in building up our “financial defenses,” but this response is insufficient. Each of us must also commit to speaking out about financial scams—those we catch in the act, as well as those to which we or a loved one fall victim.

If you’ve suffered a loss, contact the police or, in the case of email hijacking, the FBI. You may not recover your money, but you will help law enforcement agencies investigate and catch these criminals.

Consider taking the next step, too, and share your story widely. That way you can help others avoid similar mishap.

You Are Vulnerable, Too

I know what you’re thinking—it could never happen to me. Many people believe that financial scams are only a problem for older people or those who aren’t savvy about email or the internet.

Not so! Anyone can succumb to impulsive or mistaken financial decisions.

The GameStop trading frenzy, for example, appealed primarily to a younger, internet-engaged crowd on Reddit. Within days, it created and destroyed about $30 billion in paper wealth and resulted in at least one suicide. Cryptocurrencies draw in a similar demographic and the volatility has been known to wipe out people’s investments overnight.

No one is immune to financial bubbles, get-rich-quick schemes, scams, or fraud.

Accepting that you have potential vulnerabilities is empowering, however, because you can be more strategic in protecting yourself. A fear of missing out (FOMO), for instance, is frequently a root cause. Who doesn’t want to take advantage of a little known secret to great returns? But if you realize that you’re susceptible to FOMO, you can be more mindful and make sure you’re not jumping on any bandwagons.

Other times, it can be awkward when a friend pitches their “can’t lose” business concept. Maybe investing a few thousand dollars is worth the stretch, right? If you’ve thought through such a scenario, though, you can have tactics ready to reduce the social pressure while you make an informed choice.

If It Touches Money

SC Financial offers clients another solution. If it touches money, get in touch! No matter what the issue or opportunity, if it involves a significant financial decision, give us a call or drop us a line.

When a buddy hits you up about a real estate investment that’s the ticket to passive income, tell them it sounds great and they should send the details to your financial managers (and go ahead, give them our contact info!). If you’re being asked for a large loan from one family member and don’t want to set off the gossip mill by getting a second opinion from another member of the family, discuss it with us instead. If you have reason to believe something might be a scam but are embarrassed to ask, contact us anyway.

The point is, we’ll weed through that prospectus your friend sends with your broader financial plan in mind. We’ll look for possible holes in the story you’re getting from a voice on the other end of the phone. Whatever the situation, we’ll give you an honest, outside assessment based on decades in the financial profession.

Everyone needs a third-party perspective from time to time. We hope that each person this article reaches will find trusted advisors to speak with about financial issues, because we all need to talk about these topics much, much more.