5 Investor-Targeting Scams to Warn Clients About

Dec 3, 2019 Share This 

Scams That Rob Investor SavingsFraud continues to be a major problem, especially for older Americans. Criminals are becoming increasingly cunning and resourceful in the ways in which they defraud individuals. While phone and mail continue to be used as outlets for criminal activities, online schemes have swept the globe, allowing criminals to target thousands or millions of individuals with the click of a button.

Even the most leery individuals could fall prey. Take time to talk with your clients about the top potential risks of fraud and help them avoid the devastating consequences that could threaten a lifetime of retirement savings.

1. IRS Impersonation Fraud

When someone pretending to be from the IRS calls or emails your client, claiming that back taxes are owed or that a new provision in the healthcare laws have resulted in additional penalties, it can strike fear. Some scammers threaten arrest or exorbitant fines if individuals don’t comply. Payment is often requested immediately via wire transfer, credit card, direct deposit or other means.

Inform your clients that the IRS will never initiate contact via phone calls, emails or social media, and that individuals will never be threatened with jail time. The IRS also will never request financial information such as debit cards or bank account numbers over the phone. If there is a legitimate IRS dispute, your clients will have opportunities to make an appeal or confirm the information, and not be subjected to pressure tactics to respond immediately.

2. Medicare Fraud

Fraudsters are prone to target Medicare and its recipients more often than any other type of health insurance fraud. Why? Criminals aren’t required to research multiple healthcare plans to understand its inner workings, just one. And because every U.S. citizen over age 65 automatically qualifies, scammers can easily determine who their next victims should be. Fraudsters will use many tactics to rip off seniors — from emails and phone calls to showing up at an individual’s door posing as a Medicare representative.

Clients should not respond to requests to divulge their Social Security number to obtain a new insurance card, nor should they pay fees to obtain new supplemental policies or comply with new healthcare regulations. Medicare numbers should only be divulged at the time of service at a healthcare facility or other approved provider, and responding to mailers claiming that Medicare will cover a medical device should be thrown in the trash where they belong. If someone calls or shows up at your client’s door, encourage them to hang up or shut the door.

3. Investment/Timeshare Schemes

Timeshares are often double trouble for many investors. Initially, they’re sold timeshares under high-pressure sales presentations after being lured in by a free seminar or luncheon. Often, they regret their decisions soon afterward and look for ways to resell them, opening opportunities for even more susceptibility to fraud. Under the guise of helping the investor sell a timeshare, swindlers will request money for advertising, title searches or other administrative fees. Some even make promises to guarantee a sale within 90 days, but disappear after they’ve made their money.

As an advisor, encourage clients to consult with you about any larger purchases, including a timeshare, to help assess its legitimacy. Remind clients that anytime they feel pressured to make a decision quickly, it should serve as a red flag. If your client already owns a timeshare and wishes to sell, they should work directly with the resort when possible, and ensure that any sales commissions are paid only once a sale is made and not a moment before. Clients should also hang up on any phone pitches promising to pay a large amount to rent their timeshares during their week in exchange for an upfront finder’s fee.

4. Phishing Scams

Millions of people are the target of phishing scams each year through email, websites and social media private messages. Hackers try to get unsuspecting users to click on suspicious links to lock them out of accounts in exchange for payment to restore service. Other scams direct people to a fake website that mimics a reputable company with which a person does business in order to get them to enter password information. Once they do, hackers can gain access to personal information associated with the real account such as credit card numbers, bank routing numbers, birth dates and more.

Help clients understand the dangers associated with phishing scams and to be on the lookout for digital correspondence issuing fake invoices or contest winnings, and to be wary of unexpected attachments, requests to update account information and inconsistent urls or poor grammar. These are sure clues that something’s “phishy.”

5. Phone Scams

It’s important to remind clients that phone scams, like many of those noted here, may involve caller ID spoofing. Criminals can make a phone number appear as though it is a local call, or make the name of a trusted organization, such as a bank or local business, appear on caller IDs. In general, advise clients to not answer or return calls from unknown numbers — if it’s legitimate, the caller will leave a voice message. And follow the principles of not disclosing personal information over the phone.

As more and more personal information of your clients is stored in the Cloud, however, a growing number of criminals may emerge who want to access it. Older adults lose an estimated $2.9 billion each year to financial scams,1 robbing them of their hard-earning savings and compromising their futures. The next time you connect with a client, talk about the dangers and highly deceptive tactics of today’s cybercriminals and fraudsters.

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1AARP, Older Americans Lose Billions to Scams, Senate Report Says, January 18, 2019


Topics: Client Relationships