by Nicholas A. Hamner
Investment Advisor Representative & Director of Marketing
[email protected]
Folks over the age of 65 lost more than $3 billion (with a b) to scammers last year. And while a lot of the people who got scammed weren’t the most intelligent, (what was it George Carlin said about average intelligence?) and you might think you’re too smart to get scammed… a lot of people who got scammed were smart. Baby Boomers are sitting on the largest stockpile of generational wealth that humanity has ever seen, and scammers are as tenacious as they are hungry to get a bite of it. Even if you think you’re smart enough to not be fooled, don’t believe for a second that you’re not being targeted by some scammer somewhere. So please, take a minute to read this (without scoffing!) and do what you can to protect yourself.
Cryptocurrency Investment Scam
On its face, cryptocurrency is suspect. Its existence is questionable and its security even more so. But the high returns it can sometimes produce can lure even the smartest person down the dumbest of roads.
What happens? A person gets involved in an online community like Nextdoor, a political Facebook group, or some other social channel. The more comfortable they get, they start to see the same people over and over. Soon they’re talking to these online folks, and it just so happens, one of the online folks they’re talking to has a lot in common with them. Maybe they’re even flirty! Money comes up, passively. This online friend has a guy getting them great returns in crypto. Or maybe the online friend is in a financial bind and could use some help.
Before they know it, this person is giving real money to their online friend’s crypto guy. Not a lot, but just enough to buy in and test the waters. In return, they get reports and pictures of files showing fantastic returns and appeals to invest more. Any worry they have goes away at the sight of those returns on the reports and they invest more real money. More pictures, more reports, more great returns, and more investing.
Then they want to reposition or withdraw some of that money. Silence. Really uncomfortable silence.
The friend on social media disappears. The crypto guy disappears. The reports and website screengrabs? Never really existed, like the friend and the crypto guy. The investments and returns? All fake. And the money? Still real, but gone.
Aside from the financial loss, there’s the fallout. People have lost hundreds of thousands of dollars to these scams. How do you break that to your spouse? What changes do you make to your lifestyle?
I have been married 20 years and been in a relationship with my wife in some capacity for 25 years. If I bought a $200 used jon boat out of the paper without a conversation (the thought has occurred…) I might have to consult with an attorney by the end of the week. Imagine losing five hundred times that (or more!) to a scam. Nothing to show for it, no one to contact, and there’s nothing any law enforcement agency, the FDIC, or the SEC can do.
You’re going to have to tell and retell that story hundreds of times to your disbelieving, likely grieving spouse. They’re going to want to know every detail. Over and over. But no matter what you do or how you tell the story, the money doesn’t come back and the feeling of loss continues to gnaw. Some men have gotten involved in scams after reconnecting with an “old high school flame” that got back in touch with them on Facebook. Good luck to any man explaining that to their spouse.
Tragically, some people who have fallen for these scams have taken their own lives rather than break the news to their spouse or live with their mistakes and failure.
Email Intercept Theft
This one’s a slow burn, and it’s tricky. But talking with an IT group last week, everyone had a story like this, so I expect it’s growing in popularity.
Someone gets into your email. Maybe you fell for a fake website designed to steal credentials (aka phishing). Maybe they bought a list of email addresses and passwords from the black market sourced from any number of data breaches that happen each year. But they get into your email. Then they just wait. Could be months, could be years. But they wait until you make arrangements to wire or transfer money. You email back and forth as normal with a legitimate company and you confirm the banking details. The scammer still just watches. But then, at the last minute, you get an email asking you to transfer the money to a different bank account.
That’s the scammer.
The email looks like the bank’s email, you’re in the mindset to get this done, and you don’t even question it. Next thing you know, the money is gone.
Other Scams
The Cryptocurrency Investment scam is the one that is having the largest impact lately in terms of money lost, but it’s just a variation of “Pig Butchering”. Pig butchering, like the agricultural practice it’s named for, lures and fattens a pig before sending it to slaughter. Here, the scammer finds a vulnerable person and lures them in by playing on their emotions. In investment scams, they appeal to greed with too-good-to-be-true investment returns. In romance scams, it’s the promise of love, etc. They continue to fatten the pig by getting as much money as possible, and as soon as there’s a question… as soon as the money might stop… kill the pig. Reveal the scam. Disappear.
The only thing more surprising than the brutality and indifference shown by the scammers is the variety in ways the scams are deployed – adoption charity scams, car and real estate listing scams, tech support and “kidnapped grandchild” scams specifically targeting the elderly, and an infinite array of romance and extortion scams targeting people who are at their most vulnerable. It is unreal, and it’s constant.
What To Do
I was going to say, “If you’ve lost money to an online scam, there’s little you can do.” But that was too optimistic. If you lose money to an online scam, there is ZERO you can do. Every single interaction you had and every single transaction you made was to an entity that only existed long enough to fool you and take your money. There is no evidence, there is nothing for anyone to research or investigate. Bupkis.
If you have not been scammed, please understand that you are still being targeted. There are malicious people out there biding their time just waiting for the opportunity to take your money. But since nothing can be done after the scam has happened, everything you can do is precautionary. You have to do it before the scammer gets started.
• Change your passwords. It’s a safe bet that someone, somewhere, has your passwords. Who knows what they’re planning? You can check https://haveibeenpwned.com/ to see if your email address(es) is or are out there. Then take an hour or two to go change all your passwords.
• Know how to tell which received emails or texts are real and which ones are fake. Google put a test together for this exact purpose. Give it a shot here: https://phishingquiz.withgoogle.com/, and pay attention. I missed two.
• Assume any unsolicited interaction on social media is an attempt to exploit you. We’re on Facebook, and we post little tidbits on our feed for you guys to like and share, at your leisure. But we aren’t reaching out to contact you directly, and you should be wary of people who do. Someone pops up out of the blue claiming to be an old friend? Someone messages you on the side and says they agree with what you said? Assume the worst, assume they’re trying to exploit you. Ignore it and move on.
• Know what you can realistically expect from an investment. People get lured into investment scams by the promise of big returns that they aren’t able to get elsewhere. THERE IS A REASON YOU CAN’T GET THOSE RETURNS ELSEWHERE. Put it another way. When interest rates went up a few years ago, how many articles did you see about treasury bills? Hundreds… for a steady rate in the low 5s. The top ETFs, which are discussed daily across all finance media, rarely produce anything over 18% annually. Rest assured, if there was a product out there in any capacity that could produce fast money, the financial world would beat a path to its proverbial door. You would not have to hear about it from “a guy” on social media.
• Know what you can realistically expect from an advisor. At least here, no one is ever going to demand more money out of you. No one is going to throw wild numbers at you to entice you to increase your investment. An advisor should offer advice and guide your investments and expectations, not try to lure you in and tell you what you should be doing. Anyone out there trading in secrecy, boasting about huge gains and trying to get more money out of you is—in the best-case scenario—incredibly unprofessional. But there’s a good chance they’re more than unprofessional. You deserve better.
These articles are always hard to write because there’s so much to convey and, usually, within three months they are out of date. A better bet is to keep tabs on what the FBI reports and what the Consumer Financial Protection Bureau reports. These two agencies keep constant tabs on the changing nature of scams and schemes, and do a good job reporting what they find.
Good luck out there.