Those of us who have been in the consumer protection field are always warning the public to "watch out". But just exactly who, and what, are you watching out for?
It would be so easy if fraud schemes had glow-in-the-dark warnings attached.
or if fraudsters looked like some cartoon villain.
Unfortunately, neither fraud nor fraudsters are usually that obvious. If they were, they'd unlikely be very successful.
The first rule is that fraudsters, scammers, and schemers look pretty much like everyone else. You might even say, hey that guy's all right, he reminds me of Uncle Joe. He can't be bad if he looks or sounds like Uncle Joe or Aunt Clara or your favorite elementary school teacher or your best friend from high school. Looks and voices are deceiving, however, and so are fraudsters' well practiced spiels and hard luck stories. For example:
Does this guy look like a scammer?
How about this guy?
Well, alright, maybe the last guy's name gave it away, Carlo Ponzi was the namesake of the fraud scheme popularly known as the "Ponzi scheme". But the other three could be just about anyone, right? Yet, they are all convicted Ponzi fraudsters (follow the links under the pictures for their particular stories- see if you can spot the gold toilet seat).
The bottom line is that fraudsters, including those above, do not fit any definite "psychological profile" so they truly could be anyone. And their victims were not just strangers. Joanne Schneider enlisted her family, friends and co-workers who all trusted her with their investment. Of course, Bernie Madoff used a false reputation and word of mouth to attract big and small victims alike. And although most fraudsters are still male (60%), that number is changing.
It also should be noted that not all fraudsters are of the multi-million dollar variety. Many work on the principle of volume which means making less on each victim, but having more victims. Charitable donation scams are infamous for this. A gracious donation of even $25 or $50 to an unknowingly fake charitable website or donation service (such as a false "Gofundme" account ) purportedly established for victims of a hurricane or other tragedy may not sound like much, but multiply that by 10,000 and the fraudster can have quite a haul ( note: Gofundme is actively taking steps against this abuse of their service). This "volume" approach is also often done through telemarketing schemes such as the grandparents scam or email or text where you are advised to click on an attachment or link. The result is if a fraudster makes 3000 calls, emails, or texts a day (through employees or robocalling) and 100 of those take the bait and send a $100, that's $10,000 a day!
So what to do? Look out for some of these common signs that a Fraud or Scam is just ahead!
- STGTBT: Say that 5 times fast! If the first rule of fraudsters is that they don't always look like or sound like fraudsters, the first rule/red flag of fraud is if it sounds too good to be true (STGTBT), it probably is!!!
- RUSH JOB: A victim is threatened to make a quick decision "or else". Examples: 1. If you don't send money right now grandma, I can't get the medical treatment or I'll have to stay in jail or I'll lose my passport and never come home; 2. Decide now to invest or I'm going to someone else; or 3. This is the IRS (or any government agency or debt collection service) and we will arrest you at 3pm TODAY if you don't pay us now. The schemes vary, but all aim to keep the potential victim in a heightened state of anxiety so they can't think straight. If you are being given the "now or else", it's likely a scam. No government agency nor any legitimate debt recovery company works this way. HANG-UP, SLOW DOWN.
- SSH! IT'S A SECRET: Scammers don't want anyone else to know what they're up to. A fraudster might say "just between us" or "don't get your family involved" or "no need to talk to the financial advisor or the family attorney". If you hear this, back away. Scammers do NOT want you to talk to someone who will see them as a scam. Big red flag!!!!
- OUT OF THE BLUE: If you are contacted about a debt, defaulted loan, taxes owed, commitment, contract, or anything else "out of the blue", chances are it may be a fraud. Don't be fooled even if they know your name and a few facts about you as this is easily obtainable over the internet (see below).
- FILLING IN THE GAPS: Someone calls pretending to be from your bank or somewhere else "official" and asks for your personal information for some reason (eg. they need to verify their records or their server went down, etc.) DON'T FALL FOR THIS! Even if the caller does have some personal information like your address, your child's name or even a partial social security number, they could have gotten this from the internet. They are trying to "fill in the gaps" by "social engineering". They use the information from the internet to fool you into giving the more information. Hang-up the phone and call your bank or wherever they say they're from at the number YOU know (NOT the one they give you). If this happens via email/text, do not click on any link, but go to the website on your own or call customer service.
- SEND MONEY UPFRONT FOR A PRIZE: Legitimate entities would not require "winners' to send money up front for any prize including shipping or anything else.
- REQUEST TO CASH A CHECK OR WIRE MONEY: You may receive a check/money order in the mail (out of the blue) or believe this is a legitimate "work at home" scheme. While there are legitimate work at home jobs where you buy items or handle monies, if the "job" involves transfer of monies OUT of your account, BE WARY. For example, you are instructed to deposit or cash a check, keep a certain amount for yourself and then wire the balance immediately to a third party. Problem is, it takes a few days for a bank to verify that check. When the check from the third party comes back insufficient, you are out of luck for the monies wired from your account. Same with buying "gift cards" with cash and sending them to a third party. Once that cash is gone, it's not coming back. And be careful, some of these tactics where a person is used as a financial go-between are really money laundering schemes for criminal enterprises. Even if you don't lose money, you might face some criminal liability. Yikes!
- WEBSITES/EMAILS/COMPANY LOGOS THAT LOOK "OFF": We've all seen them. Warnings that your Paypal or Amazon account has been locked or click here to track a UPS package you had no idea you're getting. Many of these emails/texts just don't look right with misspellings, grammatical errors or an URL that doesn't match the one you are used to when you highlight it. Even if they look pretty good, but it's odd you get them, be safe. NEVER click on anything in these or call the number they give. Always go the website independently or search for the customer service line. Not only will you be double checking, you can always let them know of the scam.
In summary, if you see/hear/read any of these, be alert! Do NOT fall into the scammers' trap, no matter how good looking or fast talking he or she is or how good a friend they are to your third cousin. Do NOT be rushed. Use common sense and check it out. Remember too, many of these frauds do not just want your money now, they want your personal information so they can victimize you again later. Next time we'll go deeper into some of these scams.
By the way, did you find the fraudster with the gold toilet seat? Now that should have been the biggest red flag of them all!
Be careful out there and as always, for just about any answer to any fraud, scam, scheme or question, check out www.ftc.gov.