Fraud, Scams, and Tips to Help Protect Yourself: Part 2

February 26, 2018 | Financial Abuse

fraud

This is part two of three in the series, “Fraud, Scams, and Tips to Help Protect Yourself,” written by William Palmer III.

 

2) Lottery and Sweepstakes Scams.

Have you ever received a letter, a phone call or even an email stating that you won a lottery or sweepstakes? You may not remember entering any lotteries or sweepstakes, but the idea of winning millions can be exciting. If it sounds too good to be true, though, it probably is.

There are legitimate foreign and domestic lotteries. However, it is a violation of federal law for any U.S. citizen to participate in a foreign lottery. Legitimate lotteries and sweepstakes never ask for money in order for you to receive your prize. However, in most lottery scams, you are asked to pay taxes, bank fees and even shipping or storage charges. Some lottery scams may indicate sponsorship by famous people or legitimate companies.

 

Red Flags:

Be alert if you:

  • Are asked to send money to pay for taxes, bank fees and even shipping or storage charges
  • Are asked to pay minimal taxes compared to the amount of winnings (e.g., $2,000 in taxes for $150 million in winnings)
  • Never entered a lottery or sweepstakes
  • Are contacted by a lottery purportedly sponsored by U.S. government officials or corporations

 

Tips to protect yourself:

  • Treat all unsolicited offers with extreme caution.
  • Verify any potential financial gains with your financial advisor.
  • Conduct due diligence to fully investigate all people, companies, services, investments and situations.
  • Follow your instincts: When in doubt, don’t do it.

 

Reporting the fraud:

For additional information regarding lotteries or sweepstakes, contact the Federal Trade Commission at 877-FTC-HELP (382-4357) or visit www.ftc.gov.

 

3) Grandparent Scam.

Grandparents often have an emotional bond with their grandchildren. When a grandchild calls with a problem, the grandparent most likely feels compelled to help. But what if the voice on the other end of the line is really a scam artist?  This scam preys on the emotions of older adults who want to help their grandchildren and other family members.

Sadly, scammers often use any personal information they can gather to help “validate” their story and form an emotional bond with the victim. The more personal the information, the more effective they can be.

 

Red Flags:

  • You receive a call from someone who doesn’t readily identify himself or makes you guess who he is.
  • A grandchild contacts you instead of his or her parents to ask for money.
  • The caller wants you to act immediately because of some urgent, impending deadline and begs you not to tell anyone, especially his or her parents.
  • The caller asks you to wire money to a person or place that you don’t recognize, or to a country other than where the caller says he is located. (For

example, the caller might claim to be in a Canadian jail but ask you to wire money to Jamaica.)

 

Tips to protect yourself:

  • Ask the caller a question he should be

able to answer, such as his mother’s or father’s first name.

  • Remain calm despite the “emergency” nature of the call. Take the time to do your research so that you make a decision based on facts rather than emotion.
  • Be careful with what you say – do not provide information the caller can use.
  • Ask family members whether the grandchild actually is traveling outside the country.
  • Call the grandchild back at a phone number you already have rather than one supplied by the caller.

 

Reporting the fraud:

If you believe you have become the victim of a grandparent scam, please contact your local law enforcement agency and immediately notify the financial institution(s) the funds were sent from.

 

4) Long-distance relationship scam.

Scammers often use email and other social media channels to contact their victims. The scammer will typically say he or she is temporarily overseas and needs help. Reasons given include a lucrative job or government contract, an inheritance issue, or an ill friend or family member. As the email relationship develops over time, so does your trust. At some point, the scammer will request that money be wired for an urgent need that will tug at your emotions. The scammer may say he or she has exhausted all other resources and that “you are my last hope.” The scammer wants to prey on your emotional state and take advantage of your trust, generosity and goodwill. If you send an initial payment, inevitably more money will be needed, either for the same reason (with a new twist) or a completely new fictitious one. The scammer hopes to empty your accounts before you become aware of the scam.

 

Red Flags:

The following red flags may indicate a long-distance relationship scam. Beware if the friend:

  • Asks that money be wired to another country and an unknown friend, saying the friend will help get the funds to him or her
  • Asks that money be sent via Western Union or prepaid cards
  • Asks that money be wired to a country other than where the friend is located, saying that the money is going to a “holding” or “correspondent” bank for no valid reason
  • Gives an account name (either a company or an individual) that does not match his or her name, or is a name that is easily verified
  • Cannot provide verifiable information (address, Social Security number, etc.)
  • Needs the money as soon as possible
  • States that you are the last resource
  • Provides outrageous reasons for needing the money
  • Indicates a kidnapping ransom
  • Says he or she has been involved in some sort of accident
  • Cannot receive emergency treatment until a medical facility is paid
  • Says he or she is on the verge of receiving a large inheritance
  • Needs money to pay taxes upfront or attorney’s fees
  • Mentions government payoffs
  • Promises to share his or her wealth with you or reimburse you as soon as the friend returns to the U.S. – but only if you can send money immediately

 

Tips to protect yourself:

  • Be leery of people you meet over the internet, even if it’s through a trusted social media site. Remember that it is easy to impersonate someone online.
  • If the friend requests money to be wired, ask for a copy of his or her driver’s license and/or Social Security number. Your financial institution can quickly perform additional research to verify the person’s identity. If the person refuses or cannot produce this information, chances are good that he or she is impersonating someone and is not a U.S. citizen.
  • Request other documentation, and ask questions regarding the friend’s background. In this digital age, photos and documents can be easily altered, but these changes are not difficult to spot. If the information provided cannot be verified, take a step back and look at the facts.
  • Simply refuse to wire the funds. If this ends the relationship, then you will know the friend just wanted your money. Keep in mind that the scammer may become angry or try to make you feel guilty for refusing to help. This should further confirm that you were being scammed.
  • Confide in a family member, a trusted friend or your financial advisor. Someone who is not emotionally involved often can assess the situation more rationally.

 

Reporting the fraud:

Contact the financial agency or financial advisor immediately.

You can find additional information on financial planning by downloading the Washoe Caregivers Guidebook at https://washoecaregivers.org/documents/washoe-caregivers-guidebook/

 

By, 

William Palmer III

Financial Advisor

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