How To Go On The Defense Against Financial Scams
Paul K. Fain, III, CFP®
Knoxville estate attorney Lisa Gammeltoft is on a mission to raise awareness about financial scams. The holidays are a peak season for fraud.
I recently attended one of her presentations, “From Catfishing to Pig Butchering: Scammers Are Stalking Your Clients.”
“People never think that they are going to be the one falling for a scam. We say to ourselves ‘I’m too sharp to fall for that kind of thing’ or ‘That sort of thing would never happen to me.’ But the truth is, plenty of smart, competent people of all ages fall for scams,” said Gammeltoft.
As she explained, scammers are dedicated professionals. Scamming is their full-time job and they are very good at it. Scammers particularly prey on those who are grieving, lonely or have diminished capacity.
Sophisticated scams manipulate neurotransmitters and hormones like dopamine, which helps us feel pleasure, with get-rich investment scams; oxytocin, which helps build relationships, with long cons based on misplaced trust in the scammer; and adrenaline, which triggers the body’s by fight-or-flight response to “urgent” fake scenarios.
For example, “pig-butchering” scams involve fraudsters gaining the trust of victims and duping them into making investments in fake cryptocurrency projects.
“Catfishing” is when a person uses false information and images to create a fake identity online with the intention to scam another person. Americans reported losing almost $740 million to romance scammers in 2022.
The Social Security Administration or the IRS do not call or send emails to taxpayers. Neither agency is going to cancel your Social Security number, stop your Social Security payments or issue a warrant for your arrest if you don’t call back or do what these people say. The real IRS does not accept payments via wire transfer, prepaid debit cards or iTunes gift cards.
In the “grandparent scam” impostors pose as a relative, claiming they are in trouble and need money. Voice cloning and artificial intelligence bring a new wrinkle, allowing criminals to use a TikTok, Instagram or YouTube clip of your loved one’s voice to impersonate them.
New scams emerge continually. Here are some defensive measures you can take to protect yourself:
- Keep your operating systems on your devices up to date to protect yourself from web vulnerabilities.
- Do not ever sit at your computer and let someone give you commands to type into it.
- Never share personal financial information with individuals you have not met in person.
- Be wary of situations in which you have met someone online who subsequently provides unsolicited financial advice.
- Be cautious of random messages received via text or messaging apps from unknown numbers.
If you are ever in doubt as to whether an offer, prize or emergency is real, before sending any money, reach out to a trusted family member, adviser or even the manager at your local bank and get a second opinion. There are times when two heads are better than one. “If someone says you are being scammed, believe them.” said Gammeltoft.
This article originally appeared in the Knoxville News Sentinel online on November 29, 2024.
