Editor’s Note: We recently became aware of an elaborate scam targeting investors at certain brokerages (namely Schwab). As far as we’ve heard, it hasn’t yet affected any of our readers, but I wanted to bring the situation to your attention so you can better protect yourself.
I’m also sending along some of Chief Income Strategist Marc Lichtenfeld’s past insights on how to identify and avoid scams. I hope you’ll give them a read below.
– James Ogletree, Managing Editor
A few years ago, a member of my family got sick. In addition to her physical ailments, her mental clarity took a nose-dive. Not only was I worried about her health, but I was also very concerned she’d be vulnerable to fraud, as there were caregivers in her house.
However, even healthy seniors sometimes fall prey to financial abuse and fraud.
It turns out there is a physiological reason for this.
According to a UCLA study, older people have less activity in the part of the brain that is responsible for what is known as “gut feeling.” Oftentimes, it is that gut feeling that tells a person when someone is not trustworthy or something doesn’t seem right.
As we age, these changes in our brains can cause us to become more trusting and focus on positive thoughts and memories. This makes us more likely to help someone out, but it also makes us easier to deceive.
There’s another factor that’s making it a whole lot tougher to avoid scams: artificial intelligence.
With AI, scammers can use information about you to produce official-sounding emails from what appear to be banks or government agencies.
Software that can replicate voices and videos of loved ones can make a convincing argument that they are in fact in trouble and need cash. It may even capture your voice to fool your bank.
Here are a few ways to avoid scams in the age of AI…
Be skeptical of anyone claiming to be from your broker: Schwab customers have been getting calls, emails, and texts from someone claiming to be a Schwab representative, sometimes from the fraud department. They may already have some of your information, including an account number.
Do not disclose or confirm any information to anyone who calls you from your broker. Do not click on links.
The only thing you should do if someone claiming to be from your broker contacts you is log in to your broker’s site and reach a representative through the site. You can either chat online or get a phone number from the website. Any representative should be able to help you if there is a real issue.
Also, don’t Google Schwab, as the fraudsters are using search engine optimization to ensure that dummy websites and phone numbers appear in Google searches.
Don’t send gift cards or crypto: There is not a single legitimate business or investment in the world that will ask you to send gift cards. Choosing to purchase a gift card for a loved one or friend is fine. But if you are ever asked to purchase gift cards and send them, run – don’t walk – away. It is a scam.
The same can mostly be said about crypto. For the most part, being asked to send crypto is a giant red flag. There may be a few exceptions, such as businesses in the crypto industry. But cryptocurrencies are often used by criminals and hackers because they are mostly untraceable. Never convert cash to crypto to send to someone.
Have some family “code words”: AI voice scams are becoming pretty sophisticated. With just a few snippets of a loved one’s recorded voice, fraudsters may soon be able to create an entire conversation with you, pretending to be someone you know.
Have an in-person discussion with your family about a code word or specific family event that can be referenced if one of you receives a phone call like this.
For example…
Caller: Grandma, I’ve been arrested. Please don’t tell Dad, but I need $1,000.
You: Bobby, what’s the code word?
Or…
You: Bobby, where did we celebrate your 4th birthday?
If you use some kind of family event or story, it should be something that cannot be found online or on social media. It should include some detail from family lore that a criminal would not have access to.
Avoid saying “yes” or “I agree”: If you don’t know who you’re speaking with, do not say the words “yes,” “I agree,” “I confirm,” or anything similar. Scammers can use your voice to create requests for your financial institutions, so if they have a recording of you saying “yes,” that’s going to make their lives that much easier.
Don’t answer the phone if you don’t know the number: I never answer the phone if I don’t recognize the number. If it’s important, they’ll leave a message. It not only saves me from potential fraud but also saves me time and spares me the aggravation of dealing with cold callers, survey takers, and anyone else I don’t want to talk to.
Remember that government agencies will NOT email you if you’re in trouble: If you have a real problem concerning the IRS, Social Security Administration, FBI, etc., they will let you know by mail. They will not email you, insisting on secrecy and asking you to click a link and send money. In fact, just the opposite is true. They will often encourage you to get help from a professional, such as a lawyer or accountant.
Remember, AI will know a lot about you, so these emails may look real. If you are ever in doubt, go to the government’s website or call. Look up the number yourself. Don’t call a number that’s included in the email.
Never give money to a romantic partner you haven’t met: With online profiles, you may think you’re communicating with a beautiful woman from Minneapolis, but in reality, you’re talking to a 23-year-old dude in Indonesia. AI will allow these types of scammers to know a lot about you and figure out what moves you emotionally.
Never, ever, ever send money to someone you haven’t met in person. Even phone calls may be AI-generated conversations.
Be Alert
Our bodies change as we age – and that includes our brains.
Simply being aware of the chemistry shifts in your brain and the ever-growing power of AI can help you be vigilant and question things that sound too good to be true.
These scammers are getting more sophisticated every day. Keep your guard up.