Posts Tagged "fraud"

People Can Spot a Scam After Seeing Fakes

The old and the young are most susceptible to scammers using fake identities to extract money from their victims. People in their 50s who went to college are in the sweet spot and are much better at resisting them.

The question is how to prevent the vulnerable from falling prey to imposter scams, which account for a third of the dollars Americans report to the FTC they’ve lost in frauds every year. A new study finds that exposing people to a watered-down version of a scam they might see in the real world teaches them to recognize an actual scam that comes across the transom.

In the imposter scams that are the focus of this study, someone pretends to represent a trusted organization like the Social Security Administration, the Red Cross, or online retailer Amazon. The goal is to coax either money out of the victim or personal information that can be used to make money. Imposters arrive in many forms – phone calls, emails, or texts.

To educate the 1,000-plus people recruited to this study, the researchers assigned them to one of four different online training programs. The only training that worked was designed to effectively inoculate the participants against fraud by exposing them to simulated scams on an email platform.

After reading each email, they were asked to decide whether it was a fraudulent appeal under the guise of a trusted organization or a copy of a legitimate communication from the organization. To figure this out, they could inspect the source of the email or click on links.

One example of a legitimate Social Security email was “Need a replacement card?” One of the frauds that came from socialsecurity.org – the agency’s actual website is ssa.gov – asked the email’s recipient to “review your Social Security statement.” …Learn More

Lonely Seniors are More Vulnerable to Fraud

COVID has created perils that go beyond just the threats to our health. Reports to the FTC of financial fraud and identity theft shot up 68 percent in the first two years of the pandemic – double the pace during the previous five years combined.

Older adults with fading memories and declining cognition have always been especially susceptible to fraud. But the pandemic, by forcing them into isolation, may have worsened their vulnerabilities.

That’s one takeaway from a new study showing that older Americans who report feeling lonely or suffering a loss of well-being are more susceptible to fraud. The study, based on pre-pandemic surveys of people over 65, is also highly relevant post-pandemic and indicates that interventions to reduce social isolation might be effective in blunting their vulnerability.

For retirees with “high life satisfaction and fulfilled social needs,” the researchers said, “fraudulent opportunities promising wealth, status or social connection may be less appealing.”

The analysis relied on the Rush Memory and Aging Project, which monitors retired Chicago-area residents for signs of cognitive decline and its aftereffects. The periodic surveys include questions such as “If a telemarketer calls me, I usually listen to what they have to say” and “If something sounds too good to be true, it usually is.”

The surveys also measure loneliness, asking participants to agree or disagree with statements like “I miss having a really close friend” or “I often feel abandoned.” Well-being was determined by whether the individuals had a sense of self-acceptance and purpose, autonomy, mastery of their surroundings, and personal growth. …Learn More

How Scammers Use Emotions to Persuade

It’s an implausible ruse. Yet we are all human, and many people are taken in by it.

In the Social Security imposter scam, someone claiming to be from the agency tells the intended victim that he has been accused of a crime and that his bank account will be frozen. To prevent arrest and preserve the money, the individual is instructed to withdraw the funds and buy gift cards or exchange the cash for virtual currency such as Bitcoin. A government official, the caller claims, will return the funds tomorrow.

More than 300,000 people lost millions of dollars in this scam between 2018 and 2021. At a broader level, imposters purporting to be from various government agencies were the most common fraud reported in 2019 to the Federal Trade Commission (FTC), which tracks and investigates cases of consumer fraud.

A new study found that young adults in their 30s, and also minorities, were more likely than other groups to report being victimized by the Social Security imposter scam. But the victims who are over 70 lost significantly more money, on average. The typical loss among victims of all kinds was $1,500.

More interesting is what the researchers uncovered about how someone becomes ensnared in such an outlandish scheme. The insights came from victims’ first-hand accounts in 600 FTC complaints, as well as an involved process of coding the narratives in some 200,000 complaints to find the emotional words the victims used that would identify larger themes about the Social Security imposters’ methods of persuasion.

High emotional arousal “is an extremely effective tool” that overwhelms victims’ ability to process information rationally, the researchers concluded.

The victims’ accounts reveal a trove of psychological manipulation by the Social Security imposters to elicit anxiety and other negative emotions. Some imposters threatened to harm the victims or their families. In half of the complaints the researchers scrutinized, victims were threatened with arrest. …Learn More

Financial Troubles Hide in Soaring Markets

Texas Securities Commissioner Travis Iles says we’re living in a perfect storm – for financial fraud.

Bitcoin Isolated at home to avoid COVID, people are spending more time online, and he suspects that some have become more susceptible to fraud because they think a big win would take the edge off of the financial uncertainties of the pandemic. And social media only feeds the frenzy, giving scam artists a natural audience for selling their “investments” – and for recruiting others on social media to help them.

“People look for follows and likes and they’re dialed in on a lot of social media platforms that three to four years ago were very foreign,” Iles said in a recent interview. “It’s actually influencing people’s decisions about where” to invest their money.

In March 2020, just as the pandemic took hold, he began tracking how many administrative and enforcement actions his office had taken. Over the next 18 months, his office launched some 450 investigations, resulting in more than 60 actions against suspicious companies selling investments to Texans.

“We’ve never been more prolific in terms of output,” he added.

The craziness of these times can be seen in a recent cease-and-desist order issued by the Texas Securities Division against a company promising wild returns of 30 percent in 60 days or 50 percent in 90 days to investors in a nebulous operation: cryptocurrency cloud mining.

Cryptocurrencies such as Bitcoin are complicated enough – but mining cryptocurrency? As one law firm explains, it’s a treasure hunt that “involves validating cryptocurrency transactions on a blockchain network and adding them to a distributed ledger.” …Learn More

Beware of scam

Cognitive Decline Meets COVID-19 Scams

The federal government warns that older Americans are being targeted by a battery of financial scams, including telemarketers offering to do contact tracing – for a fee – or to reserve a slot for a future vaccine. Others are soliciting donations to charities purportedly helping people in need during the economic slowdown.

COVID-19 makes this a perilous time for people struggling with cognitive decline.

Few can escape a deterioration in their cognitive capacity as they age. It’s just a matter of degree and speed. But the faster it happens, the more damage it can do, the FINRA Investor Education Foundation concluded in a new study.

The study was based on surveys of more than 1,000 older residents in Chicago retirement communities and subsidized housing – average age, 80. The same people were periodically asked questions with varying degrees of difficulty about their general financial knowledge and investments and were asked to compare and calculate percentages.

The older people who either initially had less understanding of financial concepts or experienced a faster decline in their knowledge made poorer financial decisions in exercises that simulated real-world decisions.

This included a vulnerability to scams, which was assessed by asking the older people to agree or disagree with statements like this: “If a telemarketer calls me, I usually listen to what they have to say.” (Not recommended.) And this: “If something sounds too good to be true, it usually is” (Count on it.)

To prevent scams, older people – and their caregivers – need to anticipate the financial damage that cognitive decline can cause. …Learn More

Art of a thumbs up and heart

1st Quarter: Our Most Popular Blogs

People born smack in the middle of the baby boom wave, including many of this blog’s readers, are now in their mid-60s and have retired – or, at least, they were planning to retire before the stock market crashed.

Some of your favorite articles in the first quarter, based on the blog’s traffic, were about the nuts-and-bolts of retirement, including one that ranked retiree living standards by state.

The 10 most popular blogs listed below ran before the coronavirus changed our lives but they may still hold kernels of wisdom that will be useful in these trying times.

For example, one article reported on the $38 million in misplaced retirement funds from prior employers. If you think you have a long-lost retirement plan, search the unclaimed property account in the state where you worked.

Or, if you’d already committed to retiring before the market drop, it’s become more important to fashion a satisfying lifestyle. One blog explores how to prepare for retirement.

Our readers’ most popular blogs in the first quarter were:

Have You Misplaced a Retirement Plan?

Can’t Afford to Retire? Not all Your Fault

Mapping Out a Fulfilling Retirement

Most Older Americans Age in their HomesLearn More

Romance Frauds are Hiding in Plain Sight

Romance scammers follow a predictable script.

Find a willing person on social media or a dating website. Use the information she’s posted online to befriend her and then win her affection. Ask her for a loan for an urgent matter and promise to pay it back. After the money is wired, ply the victim for more money while promising to meet in person – a plan that never seems to pan out.

Despite the flashing red lights that say “fraud,” romance scams are becoming increasingly profitable. Last year, its victims were cheated out of more than $200 million. This is a 40 percent increase over 2018 and exceeds the losses for any other type of scam, according to the Federal Trade Commission. Middle-aged Americans, who are very active online, are the most common victims – and they’re often women. But the typical loss for someone over 70 is $10,000 – the most for any age group. Some people lose much more.

The number of romance lossesOne victim, a 76-year-old widow from Rhode Island, met her alleged perpetrator while playing Words with Friends, an online word puzzle. Over a two-year period, she gave him $660,000, which required her to refinance her home, sell property in Massachusetts, and withdraw money from her bank account.

A Texan in her 50s met a man on Facebook who claimed to be a friend of a friend. He persuaded her to turn over $2 million, which she doled out slowly over time as he promised to pay her back, told her he loved her, and arranged for them to meet. They never did.

“He was saying all the right things,” she told the FBI. “I felt there was a real connection there.” …Learn More