The Internal Revenue Service (IRS) calls saying you owe back taxes and threatens you with a lawsuit or jail time if you don’t immediately pay the debt with a wire transfer, prepaid card or gift card.
What’s wrong with this scenario? If you owe taxes, the IRS won’t call you. Instead, the agency will contact you by mail. Also, the IRS will never ask for money using those payment options or threaten to arrest or sue you.
Security tips: If you receive a call like this, hang up immediately without providing any personal or financial information. Then report the call to the Treasury Inspector General for Tax Administration (TIGTA) or Federal Trade Commission (FTC).
Charity fraud
Using the name of an organization that’s similar to a well-known, reputable charity, fraudsters employ high-pressure tactics (usually during the holidays) to encourage you to donate on the spot.
Security tips: Ask for detailed information about the organization and take the time to confirm it’s a trustworthy charity. Don’t feel the need to give money on the phone. You can always donate later through the charity’s site.
Have you ever received a call from someone telling you there’s a serious problem with your computer? It’s likely a fraudster seeking remote access to your device in order to “fix” the issue. Instead, they’ll infect your computer with malware.
Security tips: Never grant access to your device when you receive this type of call. Don’t provide the caller with any personal, account or computer-related information. Instead, ask the caller for their name, as well as the name of their company. Then hang up, and call back using the official phone number for the company.
Be leery of people you’ve met online–often through dating or social media sites–who initially seem romantically interested in you. But, as time goes on, they ask for money (usually by wire transfer, gift card or cryptocurrency) to pay for a medical emergency, the cost of travel to visit you or some other reason.
Security tips: Avoid sending money or gifts to someone you’ve never met in person. Ask anyone you meet online plenty of questions and look for discrepancies in their answers. If you feel someone is trying to scam you, stop all contact with the perpetrator immediately.
While the details of these schemes vary, they all involve a fraudster asking you to pay a small fee upfront in exchange for a larger return later. The payout you’re promised may be connected with an investment opportunity, lottery winning or special gift. After paying the fee, you’ll receive little or nothing of value in return.
Security tips: Don’t conduct business with someone you haven’t researched on your own to confirm their authenticity. You may want to search for information online about the individual, check with your local police, contact the Better Business Bureau or speak to your Financial Advisor or lawyer.
Also, don’t sign any non-disclosure or non-circumvention agreement that’s designed to prevent you from independently verifying the credentials of the person offering the opportunity.
Designating a Trusted Contact to Help Prevent Fraud
Another line of defense is designating a Trusted Contact to your accounts, which can help protect against fraud and is permitted by FINRA.1 A Trusted Contact is a person appointed by a client who serves as a point of contact in case a concern arises about the client’s health status, financial activities or wellbeing. It is important to note that a Trusted Contact is not authorized to act on your behalf or make any investment decisions.
Financial scams can impact data security, fracture families and lead to a potential loss of trust. The best prevention may lie in being familiar with the latest scams and taking action when suspicious activity occurs.
