image source: stanford.edu
“The IRS left a message on my machine that I owe them money and may take me to court. Do you know if it’s real?”
This question (and others like it) is one that advisors like us get all too often. A fellow advisor and colleague reported the following to me when he was asked the same question:
“I asked my elderly client if she’d saved the message and arranged to listen to it. It turned out to be an extremely scary message talking about a ‘Treasury Action,’ threatening a grand jury investigation, and repeating the admonishment that she ‘not ignore this message.’ Significantly, it did not specifically say it was from the IRS. There was a number to call.
“I Googled the phone number and, sure enough, there were countless warnings that this was a scam. It was making the rounds; three weeks later I had the same voice and threat on my own answering machine.”
There seems to be an unending stream of scams and threats, both illegal and legal, via Internet, phone, and even regular US mail. While most of us, being the savvy, modern people that we are, do a decent job of avoiding these threats, that can’t be said of everyone; after all, if no one responded to these scams, they’d stop. Right?
It would seem obvious that those who are generally unsophisticated with technology and who also have financial resources to be scammed are prime targets. This makes the elderly population a perfect demographic for the scam artists, and it also means that for most financial advisors, the majority of their clients are potential victims. If you are suspicious of being targeted, talk to your advisor before taking action. Chances are someone else has already asked the same question.
From the same advisor mentioned above, here is a list of the more egregious scams floating around out there:
- “The old, but still popular, ‘Nigerian’ e-mail scam is still apparently effective even today. This strategy revolves around some foreign entity wanting to move large amounts of money, but needing seed money to make that happen. Send a few hundred or a few thousand and share in tens of thousands more. Other variations of this include lottery winnings to be shared and, well, anything offering something for nothing.
- ‘Phishing attacks’ — crooks have become very good at copying financial institution letterhead and website graphics. Taking a page from the headlines, the latest scam is to send an official looking e-mail warning of an identity breach that asks the recipient to verify their identity by clicking the included link and entering their username and password. The message and link ‘look’ legitimate, but they aren’t. When the victim types in their information, they enter it directly into the thief’s database.
- After noteworthy disasters, relief funds are often created and well publicized. And for every legitimate fund created, there are probably a dozen fakes. Other common scams on this theme include e-mails from friends or relatives stating that they’ve lost their money and passport overseas and are requesting urgent financial help. Because the e-mail address “looks” real, many victims get stung when they follow the directions to help.
- We’ve received countless phone calls, e-mail solicitations, and letters telling me that I’ve been chosen to participate in special vacation getaways. These include cruises, hotel stays, airfare, and more. The way these scams work is that only after financially committing to the basic offer does the victim learn of the small print requiring vastly more money (or a time-share hard sell) to enjoy any part of the basic promise.
- Finally (at least for this blog but not anywhere near ‘finally’ in the real world), there are still a vast number of computer malware threats running amok in the virtual world. While our antivirus programs do protect against the majority of these, clicking on unexpected e-mails or web links is still the primary cause of these infections. Perhaps the scariest one in recent years is called ‘ransomware.’ The unsuspecting victim clicks on a link that quietly downloads a program that encrypts the user’s hard drive and displays a message—often a ticking clock—demanding a few hundred dollars within 72 hours for the key to unlock the computer (an example is Cryptolocker, which the Justice Department went after in June). The victim will then have to pay up or lose their data—all their data—forever. To date, thousands have fallen prey to this to the tune of millions of dollars lost. Unfortunately, there is no cure; for most, the only solution is to pay up and hope the crooks provide the unlock key.”
When faced with these threats, use common sense and caution and to follow a few simple rules:
- There is no free lunch; and if something looks too good to be true, it probably is. So when induced by someone to think you can get something for nothing, stop and think again.
- Don’t click on links that you’re not expecting (even from family or friends), no matter how funny, cute, or interesting the e-mail suggests it is. If you’re not sure, send them an e-mail to make sure their message is legitimate.
- If asked by a financial institution for personal information, do not click on the link provided. Instead, log into the institution’s website via your normal method (or better yet, call them!)
- The same goes for charitable giving. For those who want to donate, go to the charity’s website or follow only the links you find on reputable media.
- Make sure your computer software is up to date, your data is backed up, and you have an up-to-date antivirus program installed.
- See Rule No. 1.
Source: much of the content above comes from the valuable work of Steve Salvage of Litman Gregory.
