That Nice Man on the Phone

Risk is everywhere. It's all around us every day. I'm not simply referring to market risk, but also risks to our identity and finances due to the convenience tradeoffs associated with just about everything being web-enabled these days.

But with all the cyber-related risks out there, it's interesting and scary to remind ourselves that most financial fraud is still person-to-person, not simply the result of crooks hacking into a large company's database. It's the person on the phone, on your doorstep, or even in a fancy office somewhere.

During my career I've fielded calls from fraudsters impersonating clients, seen forged wire requests come through, and have even dealt with extended family members trying to gain access to client accounts for a variety of nefarious reasons. Low-tech methods still seem to be the tool of choice.

Financial fraud is often directed at seniors who, according to the FBI, typically have assets, good to great credit, and were raised to be polite. These criteria were likely present during a recent string of fraudulent telephone calls made to investors by crooks purporting to be from the Securities and Exchange Commission (SEC).

Apparently, somehow swindlers got hold of some basic information about people's investment accounts, maybe such as which firms they do business with, and then called the investors on the phone pretending to help them complete a transaction. A few weeks ago, the SEC released an alert about this activity and, interestingly, attached audio files of one of the calls. Continue reading below for more information. 

In the audio file, a fraudster calls saying he's a senior compliance officer from the SEC and is verifying and confirming a recent order. The call is said to be for compliance purposes and is being recorded. The caller then prattles on about the transaction to be confirmed. The exchange seems boring to listen to, but that's the point. The caller uses lots of jargon and tries to sound like a worker bee in an office somewhere, not like a slick and pushy salesperson. Much of the jargon is meaningless to an industry insider but it sounds good and would be enough for some investors to let their guard down. This ends up resulting in the investor giving their personal information and payment details to the caller and the damage is done.

People can be so trusting and when that's mixed with a desire to make money and the complexity of the investment realm, the environment is a fraudster's dream come true.

Again, with all the news about hacking and cybercrimes lately these "SEC" calls were very low tech and, in a sense, more invasive of one's privacy. Instead of being caught up in a massive data breach at Equifax, for example, in phone calls like this you're actually speaking with the person who's ripping you off.

This being the case, here are some things to remember:

Ridgeview Financial Planning purposefully handles all your transactions inhouse, so no third parties are used to place orders, move money for you, etc. So, should any third party ever call you in any way resembling the SEC alert previously mentioned, simply hang up the phone and let us know about it.

The SEC will never call you for anything like this. In fact, the SEC doesn't play a role in processing investment transactions anyway. But who in the public knows that?

No reputable brokerage firm will ever call you asking for payment over the phone to complete a transaction.

If you should ever receive a phone call (or email solicitation) from anyone asking for your personal or financial information, hang up the phone (or delete the email). It's much better to risk being rude and apologize later than get involved in a conversation with a scammer.

If you are ever solicited by anyone regarding investments (at the bank, church, or certainly via phone) check them out at www.investor.gov. This site checks the registrations of any person or firm that has anything to do with investments. Tell the person you're checking and ask them to spell their name.

But don't stop there. Do a web search for the person and see what you find. Also remember there's no guarantee the person on the phone is who they say they are anyway, so do your homework.

No matter what anyone says, there should never be a rush to complete an investment transaction. In the SEC's audio file, the investor gives some pushback about timing but quickly folds after a few responses from the scammer. As soon as someone tries to cajole you into doing something now, it has to be today, the deal won't be available tomorrow, etc, that's when your antennae should go up and the receiver should go down.

Here's a link to the SEC alert if you're interested in reading more:
https://www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-alert-sec-impersonators-pretend-help

Have questions? Ask me. I can help.