About once a year I am reminded of how dangerous the modern world has become due to financial scammers. Like most bankers, investment advisers and other financial services industry professionals, I receive annual training regarding issues related to financial fraud, but despite this training I am still often shocked and surprised at how pervasive this problem is in the United States, and the bad news is, it’s only getting worse.
By this time, I think most Americans are on to the traditional scams about African princes and oil moguls who just need U.S. bank accounts to “store” money while they work out the details to get the funds repatriated to the United States (with the generous offer to share the money, of course), and although I do still see these types of letters and emails forwarded by clients from time to time, nearly all just illicit laughter at this point.
Unfortunately, as Americans have gotten wiser, the scammers have also gotten smarter. The rapid expansion of the government programs due to COVID over the past 15 months has provided the perfect environment for the fraudsters to leverage these various government programs, and the confusion surrounding them, to trick Americans.
No longer do the scams involve emails with poor grammar and promises of overseas riches; this year most of the action seems focused on impersonating actual U.S. government agencies through emails and phone calls attempting to obtain bank information and, in some cases, even direct payments from victims.
One of the most tragic incidents, and the one that inspired this column, occurred when the family member of someone close to me was contacted by phone from someone representing themselves as the IRS. The IRS impersonator told the victim his social security number had been used to rent a car that ended up abandoned in another state known for drug and money laundering. To make a long story short, the victim was told his bank account had been compromised due to the issue and that his money had to be moved to an IRS safe account to protect his assets. You can guess how it ended from here, and the poor victim ended up being defrauded out of the money he had saved to buy a home.
The IRS seems to be the agency du jour this year for impersonators, and as I was writing this column another scam email purporting to be the IRS was shown to me. The email was requesting bank information for a tax refund, and looked so authentic the only way to tell it was fraudulent was to hover over the embedded hyper link in the email to see the web browser was actually pointing to a non-government website.
I wish I could say defending from these types of frauds was easy, but it's not. Getting contacted by IRS can be intimidating, and the fraudsters know this. In my experience the IRS communicates through written correspondence, so my advice is to never participate in an unsolicited call, text or email from the IRS. if an email or phone call is received only use 800-829-1040 to return the call, and if possible, communicate by registered mail regarding tax issues. While the IRS can be scary, I have found them to be very professional and helpful, although admittedly hold times on the official number above can be long.
The IRS has provided a list of FAQs and best practices on its website at www.irs.gov/privacy-disclosure/report-phishing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stock investing includes risks, including fluctuating prices and loss of principal. Marc Ruiz is a wealth advisor and partner with Oak Partners and registered representative of LPL Financial. Contact Marc at marc.ruiz@oakpartners.com. Securities offered through LPL Financial, member FINRA/SIPC.
