Personal finance: Keep your guard up, learn the sneaky ways scammers work

With the rise of artificial intelligence, scammers have more creative ways than ever to lure people into fraudulently giving them money. With data pointing to rising numbers in scams of all shapes and sizes, Americans are losing billions of dollars in alarming rates year over year.

Most people are familiar with robo-calls, emails and text messages by now, however with AI now entering the picture there are specific scams to look out for in 2024.

Well, they seem legit

The most popular is an impersonator or imposter scam. These are typically individuals pretending to be from an organization like the IRS, Social Security, or a health insurance company. With the help of technology, it may even come across your phone screen as the particular organization they are pretending to be a part of.

They will begin by building trust and letting you know of a routine problem but swiftly begin to create urgency to let you know if you do not do what they say, you will lose whatever benefit this organization can provide. The most important thing to note in these situations is that the IRS will not call you. They most commonly reach taxpayers by mail through USPS, not UPS or FedEx.

In these scenarios, we encourage individuals to ask for a return phone number or to just hang up. Usually, if it is a scam, they will not provide a return phone number and will hang up first.

You won!

The second scam that is rising in numbers is the lottery scam. These typically are presented as phone calls notifying an individual that they have won something like a Publishers Clearing House prize, even though they never signed up. The call begins with the announcement that they won and when they second guess the news, the scammer lets them know they signed up so long ago they likely do not remember.

To receive their winnings however, they must pay an amount to cover taxes or processing fees, and then they ask you not tell anyone so that you can surprise your friends and loved ones. This can be tricky, as it happens mostly to older people.

The most important thing to do in order to prevent this from happening is to remain vigilant, pay attention to the red flags like creating urgency and asking to keep the news a secret.

"Grandpa, I'm in trouble"

Also growing in popularity with the rise of AI is the “Grandparent Scam.” A bad actor will use artificial intelligence technology to mimic the voice of a loved one. Usually, it is a person calling a grandparent and making them worry over a grandchild, giving them a terrible scenario that they would need money to get out of.

One tip that we have provided our clients is to have a verbal family “password”. In this scenario, you would ask the scam artist to provide you the password, and when they inevitably do not know it, you would know that this person is not your loved one and hang up.

Hackers love social media

Social media continues to be a breeding ground for hackers. From social media websites to dating sites, there are a variety of ways individuals have reported being scammed. The most dollars lost were due to fake shopping websites, investment related scams through the social media channel and romance scams.

It is wise to always make sure you check the website you have visited outside of the social media app. This is one way to determine if a website is legitimate and if there are any reports of it being a scam through a quick Google search. Social media can be great for a lot of things, but investments are not one of them. We would urge anyone to avoid any monetary investment transaction through a social media platform and to ask your financial adviser if you are unsure.

While there are plenty of good people out there in the world, it is always smart to stay attuned to the ways in which people are being victimized by scams. There are common “red flags” in which we would always urge our clients to second guess something.

1. You win a contest you did not enter
2. You are told there is a problem with your account (taxes, social security)
3. You are directed to act immediately and pressured to do so
4. You are not to tell anyone
5. You are given oddly specific information for payment

The next most important thing to note is that if this has happened to you, or you fall victim to a scam, there are things you can do to still protect yourself.

1. Know you are not alone; this is happening at alarming rates to people around the world
2. Contact your bank or credit card company should you have offered financial information
3. Notify the police
4. Notify your family members and/or friends
5. Alert the credit bureaus

This has become an unfortunate reality during a time where technology is at the tips of our fingers each and every day. The best way to avoid them happening to you or a loved one is to stay vigilant, educate your family and friends on scams and ways to prevent it, and to always practice safe technological activity.

At CapWealth, we don’t take the trust our clients have instilled in us lightly. We are always working to keep our clients educated on topics that could affect the nest eggs they have accumulated and the well-being of their families for generations to come.

Hillary Stalker, CFP, is an executive vice president and financial adviser at CapWealth. For more information, visit capwealthgroup.com.