Take Extra Steps to Stop Fraud Wolves on Clients’ Doorsteps

Any age can be duped, but older people more often are targeted.

By Linda Hildebrand 

“Grandma, I’m in jail in Mexico and afraid to tell my parents. Will you send $5,000 bail so I can come home?” the young voice begs from a distant phone number.

One grandmother asked for the warden’s phone number to call him back with Western Union delivery details — then, noting the international code was Canada and not Mexico, gave that number to the Royal Canadian Mounted Police, who arrested the home-based crime ring.

When financial advisor Andrew Crowell’s mother-in-law received a similar call, she asked what nickname her alleged grandson used to address her. The young man hesitated and replied, “Granny.”

That’s how she knew it was a scam.

A scam like that may have worked, though, for the 22% of Americans who say they’ve been personally scammed, according to a recent survey from D.A. Davidson Cos. Crowell is its vice chairman of wealth management.

Any age can be duped, but older people more often are targeted, “especially when the scheme plays on their heartstrings,” Crowell says. As people live longer in retirement and may be more isolated, their defensive instincts can lapse.

“The sad reality is that elder abuse by this kind of financial fraud is on the rise,” Crowell says.

Indeed, the FBI’s newly released 2023 Elder Fraud Report reveals an 84% uptick in financial theft in 2022 from the year before.

Investment fraud against American seniors was up 300%, largely due to cryptocurrency and instant-payment technology, according to data from the FBI’s Internet Crime Complaint Center.

The survey that Davidson Cos. commissioned found that only one-third of respondents felt “very confident” in their ability to detect personal financial fraud attempts. Fewer, about one-quarter, of the more than 1,000 adults polled in March, are confident they would notice when loved ones may be victims of financial fraud.

But it’s not just clients who are vulnerable, says Crowell.

“Our company gets phishing email every single day,” he says. “We as a financial service firm have to be on guard.”

“Advancements in technology have unfortunately made financial fraud more rampant, but financial advisors can help educate individuals on red flags to watch for and put guardrails in place that can protect against fraud,” Crowell says.

Knowledge to action

Only about two-thirds of those polled by Davidson Cos. had named a trusted contact on their investment accounts for their financial advisor to contact if they suspect financial fraud or deteriorating cognitive health is taking place.

“Taking precautionary steps like naming a trusted advisor on your investments account can go a long way in keeping your finances secure,” Crowell says, by permitting an advisor to call that backup person if the advisor sees a curious transaction, doubts cognitive abilities or can’t reach the client to verify a transaction about to take place.

More men (47%) than women (36%) reported having that secondary contact.

Crowell says that if he were to receive an email appearing to be from a client asking him to wire money because they’re traveling and can’t reach the client immediately, he would call the trusted contact to see if that were true.

“That trusted contact would be a buffer,” Crowell says.

A few vendors are offering products in a similar vein.

One, True Link Financial, sells a prepaid Visa credit card designed for people who are elderly, disabled or recovering from addictions.

The card won’t transact charges that aren’t within parameters the purchaser pre-sets for that card, such as value, vendor categories and distance from home, without first securing secondary authorization from a designated family member or friend, says Daniel Kimerling, founder and managing partner of Deciens Capital. Deciens invests in financial technology (fintech) designed for consumer protection, he says.

Grandma can use it like any credit card to buy her weekly groceries, say, up to $100 and her other usual local bills and purchases, which maintains her financial independence and dignity, says Kimerling.

“The founder had an elderly relative whose ID was stolen and used for illicit transactions. The bank resolved it by turning off her account access,” Kimerling says. “The jump to exclusion is not only disheartening for customers but often unworkable for family members, especially if they don’t live nearby.

“The founder said, ‘This shouldn’t be an all-or-nothing solution. There should be something in middle. She needs to go to market, but not wire thousands of dollars abroad,’” he says.

“People worked hard for their resources, so it doesn’t make sense to disenfranchise them,” Kimerling says.

For online purchases, Privacy.com offers virtual “burner debit cards,” PC World writes, that work “like a VPN for your bank account” to encrypt bank account numbers into unique numbers. Its basic plan is free for as many as 12 numbers a month, according to the website.

“The service also lets you set flexible limits on how much a card is able to spend, or you can create single-use cards for special purchases,” says PC World’s review. “If that burner card should ever get caught in a database breach, it can be disabled or deleted with a few clicks. Even if the bad guys do use it, the card won’t work anywhere except at the vendor it was stolen from.”

Urgency key to scams

Scammers typically deploy a false sense of urgency to dupe a victim to give them financial information, Social Security or Medicare numbers, and other personal data that can be used for ongoing unauthorized transactions, Crowell says. They seize on victims’ spontaneity and their rush on busy days to get tasks done on their cellphones.

Identity theft, alone, cost 40 million Americans $43 billion in 2022, according to an AARP-sponsored report from Javelin Strategy & Research.

Phishing calls and text messages that exploit instant-payment systems are replacing old wire transaction forms like Western Union, Crowell says. IP addresses can be spoofed worldwide to mask true origin, making it hard to track, and they can be made to mimic trusted websites.

One told Crowell’s wife that dangerous malware was detected on her computer, but he could remove it immediately to stop criminal activity — if she paid a fee on her credit card and gave the scammer remote access to her device.

She didn’t do that, of course, he says.

“We know older folks aren’t as tech savvy or alert to the schemes,” Crowell says.

Additional Reading: AARP: Stop Blaming Scam Victims 

Integration technology that synchronizes household electronic devices — from phone to laptop to Alexa to thermostats — add to the accelerating pace of financial fraud, he says. It has the capacity to give scammers more financial access, and more identity information, more quickly than ever before.

“The more ways technology develops … the less confidence people have in their in abilities to detect fraud in advance,” Crowell says of the survey results.

One constant red flag is when callers don’t want to provide their own name, address and phone number – or if they do, it either can’t be validated or turns out to be fake name, address and phone number.

“They don’t want you to call them back,” he says. “They want you to respond now.”

Tips to try

Davidson’s purpose in its survey was to take a pulse of Americans’ understanding and awareness of financial fraud. “It’s for discussions like this to determine what you can do to prevent it,” Crowell says.

A few more of Crowell’s suggestions:

  • Password-protect all devices.
  • Use VPN, especially when using public Wi-Fi or hotspots, where a device is visible to everyone. Be aware of your surroundings and how to encrypt communications end to end.
  • Don’t answer unsolicited communications, or if so, not immediately via that call, text or email. Independently locate information to contact the company or person it’s purported to be.
  • If tempted by an offer, pass it by a trusted someone. Remember the adage: “If it sounds too good to be true, it probably is.”
  • Don’t permit vendors to save your credit card information. Purchase as a guest. The vendor may be trustworthy, but if the company is hacked, the stored credit card numbers and passwords go up for sale on the black market.
  • Check your credit history periodically with the major credit reporting agencies — Experian, Equifax and TransUnion — to see if anyone has opened an unauthorized account in your name. Close old accounts or any you didn’t open.
  • Check credit card and bank account activity regularly. And ask a trusted family member to back-check those accounts.

Linda Hildebrand is a longtime newspaper editor and consumer reporter. 


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