4 Common Scams and How to Avoid Them

4 Common Scams and How to Avoid Them

October 10, 2018
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These days, there’s no shortage of scams or fraudulent schemes lurking behind bogus voicemails or email subject lines. Thanks to social media, email, and online business, individuals’ private information is at risk of getting in the wrong hands more than ever. Knowledge is power when it comes to outsmarting con artists. Here are a few common scams and how to avoid falling prey to them.

The scenario: Congratulations, you won! You are offered fake lottery or sweepstakes winnings by mail, email or phone. But there’s a small catch: to redeem your prize you must pay an upfront fee via wire transfer.

How to handle this scam: If it sounds too good to be true, it probably is. Lottery and sweepstakes scams were the third-most common type of fraud reported to the Federal Trade Commission agency in 2017.1 Stay on guard; being asked to wire money or share gift card information is a big red flag that a scam is afoot.

AARP suggests putting your address on opt-out lists with the Direct Marketing Association. This should cut down or eliminate junk mail sent to your home, thus stopping false offers from getting into your mailbox in the first place.2

The scenario: You receive an urgent phone call. The person on the line claims to be your grandson and states that he has been arrested abroad and needs money immediately. The caller has gathered enough information off social media or online directories to make the request believable—he calls himself by your grandkid’s name and he knows where they go to college. He insists that you help him by sending a wire transfer right away.

How to handle this scam: The “grandparent’s scam” is a classic. Fraudsters prey off your emotions in the hope that you help your grandchild out of “trouble.”  The best course of action when receiving a suspicious call like this is to hang up, then call your grandchild or another family member to find out the facts. Consider unlisting your phone number so scammers have a harder time getting it.2

The scenario: You receive a phone call or email indicating there is an activation fee for your new Medicare card. You’ve heard that Centers for Medicare & Medicaid Services is rolling out new cards by April 2019, but you’re not sure of the distribution process or cost to you. A twist on this scenario is being told that you must pay a fee for a “temporary card,” or that you are receiving a refund on your old card. In all cases, the scammer claims you must provide them payment or bank information.

How to handle this scam: Unfortunately, the roll out of new Medicare cards has opened the door for new scams against seniors who do not know what to expect. There is no cost to beneficiaries receiving new cards, no activation fee, and no temporary cards. Medicare will never initiate calls or ask you to verify your information over the phone. To know if a caller’s claim is legitimate, contact the organization using the phone number off your card or off their official website. In this case, you can call 1-800-MEDICARE for accurate information.3

The scenario: Someone impersonating you contacts your bank or financial advisor and attempts to make a fake wire transfer in your name.

How to handle this scam: This is where an ounce of prevention is worth a pound of cure. Thieves will use your personal information to “be you” and initiate the transfer. The best way to prevent that is to safeguard your information whenever possible. Do not use unsecured public Wi-Fi for banking or payment transactions. Be wary of phishing attacks, when a fraudster is posing as a familiar or reputable company to trick you into handing over personal information. Always use strong passwords and turn on two-factor authentication if your account has this feature. Monitor your bank accounts for unexplained activity. Consider setting up alerts from your bank when certain suspicious transactions take place.4

Work with financial professionals and banks who take clear steps to lower the possibility of fraudulent transactions. Our firm only accepts trade instructions in person or over the phone. In addition, before discussing personally identifiable information with clients over the phone, we ask clients to verify the last four digits of their social security number at the start of each call. Our partner, LPL Financial, has a Senior Investor Protection group that helps protect senior investors from financial exploitation. This specialized team provides guidance to our advisors and support staff should one of our clients need assistance handling a breach in their financial safety due to scams.

We’re here to be a resource for you when it comes to keeping your financial information safe. The good news is that the more you know about potential scams, the easier they are to detect, and the quicker you’ll be able to react. If you have questions about the steps we take to keep your financial information secure, please give us a call or discuss it with your advisor at your next meeting!


1- consumer.ftc.gov/blog/2018/06/winners-are-losers-lottery-sweepstakes-scams [6/5/18]

2- aarp.org/money/scams-fraud/info-08-2013/protect-your-parents-from-scams.html [8/30/18]

3- money.cnn.com/2018/04/09/news/economy/medicare-card-scam/index.html [4/9/18]

4- cnbc.com/2017/05/12/this-growing-fraud-will-drain-your-bank-account.html [5/12/17]

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