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The NSPA Blog

Staying One Step Ahead of Financial Scams During a Pandemic

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Posted on May 5th, 2020 by Guest Blogger, under Take Charge, Tips & Resources

Our blog post this week is a little different from previous ones. With this post, we want to advocate for our readers’ empowerment not to fall victim to online scams that have seen a surge in recent weeks. While relatively few scams specifically target the elderly, they are at a higher risk for falling victims to these schemes. Unfortunately, we have observed this ourselves with our clients. 

We have come across a very comprehensive, understandable, and educative guide on financial scams on interest.com. With permission from the author, Michael Rand, we are guest-posting parts of his guide here. For the entire guide, please click on the link to the article. https://www.interest.com/personal-finance/staying-one-step-ahead-of-covid19-financial-scams/

Staying One Step Ahead of Financial Scams During a Pandemic

Pandemics put a massive strain on the resources of consumers, leaving many vulnerable to scams that promise support in making ends meet. By looking our for common scammers’ tactics, you can protect both your health and finances and get through any outbreak in one piece. 

Scammers are particularly active during times of crisis, relying on people’s fear and uncertainty to trick them into giving up their time, money, and personal information.

The most recent example was the uptick in financial scams during the 2008 financial crisis. The stock market lost $8 trillion in value between 2007 and 2009, and unemployment climbed to 10% by October 2009. Many Americans were desperate to make up for their lost income, so they became more willing to engage in risky ventures.

Older adults and young adults are more likely to be scammed than other age groups, in part because they are targeted by scammers more often. Studies show that older people lose as much as $36 billion each year from financial exploitation. Meanwhile, in 2017, the Federal Trade Commission reported 40% of Americans in their 20s who reported fraud said they lost money because of it — more than any other age group.

As the COVID-19 pandemic continues, we will likely see another resurgence of financial scams as criminals attempt to prey on people’s fear for financial gain. Here are some of the scams to watch out for and what you can do in the interim to keep yourself safe.

In this article:

• Where do we currently stand?

• Spotting financial scams

• Mortgage-specific scams

• Stock market scams

• Fast money scams

• Get healthy quick scams

• Work from home scams

• Tax scams

• Charity scams

• How to stay one step ahead 

• What to do if you’ve already fallen for a scam

• Don’t become another statistic

[With our clients in mind, we will reprint only the parts of a more immediate impact on our clients as we have observed. For the complete discussion, please read the entire article.]

Where do we currently stand?

The number of novel coronavirus cases identified in the United States increases daily.

In addition to economic consequences, the rapid spread of the virus has also had some serious psychological implications. When people are forced to stay home for long periods, they may grow restless and irritable. Living each day with the knowledge that a deadly virus is active in the community can lead to anxiety and a feeling of helplessness. Unfortunately, these feelings of fear and vulnerability can also make people more susceptible to falling for scams.

[…]

Spotting financial scams

Not all financial scams are obvious, and they can come to you in a variety of ways. Telephone scams have become more common thanks to autodialing and caller-masking technologies. However, online channels like email, social media and even online dating apps are prime platforms for scammers.

Currently, one in ten adults fall victim to fraud each year in the United States, and the majority of fraud occurs online. Here are a few of the scams you should watch out for and what you can do to avoid them.

Stock market scams

News of the coronavirus has sent stock prices in a downward spiral. Many investors are selling their assets to recoup their losses and avoid further loss. If you’ve suffered a substantial loss in the market, you may be anxious to recover the funds. This makes you a primary target for stock market and investment scams, which prey on emotions like desperation and loss.

The most obvious investment scams are of the “get rich quick” variety. These are relatively easy to spot because they sound too good to be true, and they often come with bogus money-back guarantees. You may receive a phone call, an email or even an ad promising you exponential returns for a small initial investment, only to find out later that the promises were false.

Subtler scammers may offer you an “insider” deal, claiming they have special knowledge of a specific stock that nobody else does. They may even offer you inside information for a small fee.

In the current context, you can expect scammers to say they have inside knowledge of treatments or products that “cure the coronavirus,” which could lead to high returns if you invest immediately. These types of scams are often broadcast across social media and the internet.

Signs of this scam and how to avoid it

In most cases, you should rely on your gut instincts to avoid these scams. There is no way to game the market and there is always risk when investing. No firm can legally offer you a guarantee of a return. If an opportunity sounds too good to be true, it probably is.

You should also stick to what you know. Only invest in legitimate business entities that have a presence online and in the markets. You may wish to work with a financial planner to keep yourself safe.

Otherwise, watch out for these signs:

• They promise you high returns with little or no risk.

• They say they have insider information.

• They pressure you to buy or invest.

• They aren’t registered to sell investment products.

• They want you to invest in a company you’ve never heard of or can’t learn anything about.

If you’re new to investing, stick to the basics first, or work with a professional.

Charity scams

During a crisis, both people and organizations want to find ways to help those in need. But scammers will try to exploit peoples’ charitable spirit for their personal gain.

In the current situation, scammers might pretend to be a charitable organization looking for donations. Thinking they are helping in the fight against the coronavirus pandemic, victims will send the scammers money or even personal information.

Signs of this scam and how to avoid it

Common indicators of this scam include the following:

• The email was sent from an unregistered domain.

• The login page for the charity’s website has an unfamiliar URL.

• They use poor grammar and sentence structure.

• They lack identifiable logos and charity information.

• You don’t recognize the charity or can’t find evidence of it online.

• The messages urge you to act quickly or use threatening language.

If you’d like to give, you should start with nonprofits that are easy to recognize, such as the American Red Cross or The Center for Disaster Philanthropy. You can also use a tool like Charity Navigator to find top-rated charities that are trying to help.

How to stay one step ahead

While it can be challenging to remember all the different types of scams you need to watch out for, there are a few steps you can take to keep ahead of scammers during this pandemic, including:

• Never disclose sensitive information to anyone who contacts you by phone or email.

• Set up two-factor authentication on any accounts that have a login.

• Regularly check your credit report for fraud.

Finance and security experts also have some tips for staying one step ahead of scammers. Stephen Ritter, Chief Technology Officer at Mitek Systems, Inc., says, “People need to pay extra attention to their emails, especially ones that look like official communications from work or the government about the outbreak. Check that links are safe and lead to a legitimate domain. Do not give out personal or financial information to an entity that you are not 100% sure about. If a bank or business calls you, hang up and call back via the number on their official website. Taking extra precautions can prevent detrimental identity theft incidents.”

During a pandemic, fake advertisements that lead to malicious sites are also common. According to Milos Varaklic, Vice President of Operations at MDG, “Nothing should ever be purchased from an ad. Only purchase directly from the retailer or marketplace. Do your research before purchasing from a website to make sure it’s legitimate, trusted, and has real customer reviews. Make sure the company has a contact page and contact them before making a purchase.” Varaklic also recommends you read through their about page. “Make sure that it makes sense and falls in line with what they’re actually selling. Oftentimes, bots will generate scam websites selling products you were recently looking at, at extremely cheap costs, yet they will lack a working contact, address, and credible about page.”

Jan Youngren, cybersecurity researcher at VPNpro.com also suggests avoiding pop-up websites related to the virus: “Right now, the vast majority of coronavirus-related domains are being used for online fraud, malware distribution, or are obvious scams peddling cures, vaccines, and supplements. Avoid these at all cost! Your source of coronavirus-related news should not come from email nor social media nor Google, and especially not a mobile app. These are some of the oldest playgrounds for scammers, where attachments and benign-looking links result in stolen personal data or even banking info.” 

What to do if you’ve already fallen for a scam

If you believe you have been scammed during the COVID-19 pandemic already, don’t panic. There are steps you can take now to recover your identity and reduce the chances of significant financial loss.

First, you should stop all contact with the scammer. Next, contact your financial institutions. Even if you only surrendered your personal information, scammers may try to target your financial accounts. If you sent money through a service like PayPal or Venmo, you should contact them as well.

Then, change all your passwords to newer, more complex ones. You can use a password keeper to keep track of them all, but the safest method is always writing them down. Start with the email address you have listed in your most crucial accounts. Once a fraudster gets access to your email, they can use it to request password resets on your other accounts.

Finally, report the scam to the authorities. You can start with your state’s Consumer Protection Office, then you can contact one or some of the following organizations:

• FINRA Investor Complaint Center – Investment scams

• The FBI – Financial crimes involving high dollar amounts

• The U.S. Securities and Exchange Commission (SEC) – Securities fraud

• The Federal Fraud Enforcement Task Force (FFETF) – Fraud committed by companies and their employees

• The Internet Crime Complaint Center (IC3) – Internet fraud

econsumer.gov – International scams

There are also private support services available that can help you recover your identity and protect against future scams. If being scammed has taken a toll on your mental health, don’t hesitate to contact your primary care physician or a mental health provider for help.

Don’t become another statistic

This is a trying time, but you should always think before you click on a suspicious link or invest in something that seems too good to be true. Be wary of misinformation about the pandemic, cures for the virus, or financial opportunities that appear to profit from the pandemic.

For legitimate information on the COVID-19 pandemic, trust in recognized sources like the Centers for Disease Control and Prevention (CDC) and the World Health Organization (WHO). You can also follow the government websites listed above to stay appraised of new scams related to the virus.

Resource

Staying One Step Ahead of Financial Scams During a Pandemic. By Michael Rand. Interest.com.

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