Identity Theft and Financial Scams are two of the fastest growing crimes in the United States. According to the Federal Trade Commission, consumers lost more than $10 billion to fraud in 2023 alone. This marked a 14% increase from the previous year, and this type of crime is only going to become more prominent as the majority of consumers move their finances online. Before joining The Arkansas Financial Group in 2023, I worked for four years in Banking in the financial crimes and anti-money laundering compliance division. Here I saw firsthand the complexity and severity of these types of targeted attacks. In the following article, I am going to share some of the information I picked up along the way concerning these types of fraud and outline some common scamming tactics to look out for. The red flags for these attacks often vary by tactic, however the techniques normally have commonalities. The three red flags I will discuss are unusual communications, sense of urgency, and promises being too good to be true.

Unusual Communication

The first red flag that you should be aware of is any sort of communication that is out of the ordinary. Did your grandson, who always calls you to communicate, suddenly send you a message on Facebook requesting that you send him money for his rent payment? Or did your internet provider randomly send you a request to update your direct deposit information for your upcoming payment, even though it has been working properly? Is the communication full of spelling and grammar mistakes? Were you expecting to receive this message or call? When receiving a request that is out of the norm, I advise you to take a second and think about whythe request was made. If available, you can reach out to the person through a trusted source (like a known phone number or email address) to see if they truly initiated the communication. If you are uncomfortable about a situation, it would be smart to contact a friend or relative for their opinion on the communication before acting. 

Sense of Urgency

Another common tactic used by scam artists is creating a sense of urgency. This psychological manipulation tactic triggers your natural instincts, causing you to fear potentially missing out on something or possible negative consequences if an action isn’t taken immediately. They will often use tight deadlines and demanding or threatening language to get you to act quickly out of fear. An example of this is when there is an offer for a heavily discounted vacation or product, but you must pay a deposit within 15 minutes to reserve the deal. In the end, there is no vacation. A darker approach used by some scammers involves lying about the victim’s family members being in danger and needing money immediately. Some examples of this may be asking for money to get them out of jail, repair their car, or pay their hospital bill. Scammers often use emotions to manipulate victims that they are trying to take advantage of.

Too Good to be True

Other scams start with an offer that is too good to be true. These can be represented on varying monetary scales. One of the most common types of financial scams involve fake investment gurus promising a large return on your money in a short period of time. As you know, there are very few guarantees in the investment world. Another example is that you may receive an email from “Toyota” congratulating you on winning a drawing for a brand-new car, where all you must do is pay the sales tax online and schedule a time to pick up your new car. You then find out that there was no drawing, and you have been the victim of a fraudulent attack. On a smaller scale, you may search the web for a coupon for a gift you are purchasing for a loved one. In your search for a coupon, you enter your name and email address on an unknown website to see if they have any offers. Admittingly this seems harmless, but you just gave a potential scammer two verified sources of information that they may use to steal your identity. That is why it is crucial to always question before giving out your personal information. 

As technology and artificial intelligence becomes even more advanced, these tactics are likely to evolve. There are two recent trends I would like to bring to your attention. Using Artificial Intelligence (AI), scammers are now using a new tactic dubbed “Deep Fakes.” Deep Fake calls are phone calls that use AI to impersonate a person, usually a trusted individual, to steal money or personal information. This can also be done with videos. Another new scam technique starts with the scammer sending a physical package to your home that is labeled as a gift. After opening the package, you find that it is a gift from an unknown friend. You are then prompted to scan a QR code to see who sent the gift. By scanning this QR code on your phone, you unknowingly have granted a scammer access to your home’s Wi-Fi connection, where they can access your stored personal data.

Sharing this information is not meant to scare you, but instead to educate you on potential red flags to watch out for. My best advice to you is that if something doesn’t seem right, you are probably correct. Please be vigilant when online, and always feel free to contact us for a second set of eyes. 

Jake Spradlin, CFP®

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