Episode: 10-25-2022 | Signs You Are Being Scammed

Hosted by Kevin J. Zywna, CFP® and Allison K. Dubreuil, CFP®

How To Avoid Getting Scammed

Allison Dubreuil, Wealthway Financial Advisors:  Tonight, we want to talk about scams – something that is becoming more and more prevalent and is touching more and more people’s lives. I think all of us have had a scam attempted on us. I think we’re hit with it nonstop these days with text messages and emails.

Kevin Zywna, Wealthway Financial Advisors: Yes, it runs the gamut anyway, that a scammer can get in touch with you. We are being bombarded with it by spam calls. Spam calls are technically scams.

Allison Dubreuil, Wealthway Financial Advisors: Well, it could turn into the spam call. Yes, right. I constantly get this message about dealer processing. Like what is that? They want you to call them back and then I’m sure there’s a like I didn’t buy a new car. Yes, I don’t know what it’s about because I obviously don’t call but I could call on and see what they’re trying to accomplish. We’re here to trap, right. But they’re getting more and more sophisticated, really. And I’ve been in a couple of talks from security experts about this, that they are becoming so much more sophisticated. And so, it’s more prevalent and you’re more at risk for falling into one of these traps.

Kevin Zywna, Wealthway Financial Advisors: Yes, so, a threat to your personal finance is being scammed out of it. And while most of these are minor, as Allison said, they’re getting more and more sophisticated, which means the dollar amounts that they are going after or able to trick people out of the numbers are getting larger. So, we have a few reminders here. Some tips, some techniques on what to watch out for, and hopefully prevent you from being scammed out of your hard earned money.

3 Signs It Is A Scam

#1 Sign It Is A Scam – Told To Act Immediately

Allison Dubreuil, Wealthway Financial Advisors: Yes, we’ll go through some different types of scams that you might run into or that you should be on the lookout for. But first, let’s just start with three big signs that this might be a scam, or that you might be being scammed, scammed, so that you are on high alert, the very first sign, that’s a big red flag is if you’re told to act immediately. So, when these scammers make contact, they often want you to act very quickly before you have time to even think about what they might truly be doing. And they’ll pretend that there’s a need for you to act very urgently so that you follow through with that before you have time to reason.

Kevin Zywna, Wealthway Financial Advisors: Yes, whatever the routine, whatever angle they’re using, speed is usually a part of it. Because the longer that you delay, the more likely you are to think through the implications of the scammer, or maybe mentioned to your spouse that you got this call or this email. Two heads are better than one and somebody says, well, that doesn’t seem quite right. So, the longer a scam goes on, the less likely it is to be perpetrated. So that’s why their angle is to get you to move fast. Anyone who’s pressuring you to do something with your money quickly, beware.

#2 Sign It Is A Scam – Asked For Personal Information

Allison Dubreuil, Wealthway Financial Advisors: The second basic red flag is when someone asks for your personal information or your codes. I think this is usually done as a way of verifying your information. They may say, “I need to verify your information,” and then inadvertently you give them your personal information. You want to be very cautious. You really should never be sharing codes or personal information when you’re contacted unexpectedly by phone, text, email, Computer alert, or even social media. If you didn’t initiate the contact, you should not be sharing a code.

Kevin Zywna, Wealthway Financial Advisors: Right. No legitimate bank, no legitimate brokerage company is going to ask for your login and your password to your online account. They will verify your personal information, but nothing to gain access, no information that can gain access to your account from the outside that the bank doesn’t already have. Like I said, the obvious ones are login and password. And you don’t want to voluntarily give out any personal identifying information from an inbound call, like a bank, or a brokerage company or the Social Security Administration contacting you.

Allison Dubreuil, Wealthway Financial Advisors: They don’t call anyone FYI.

Kevin Zywna, Wealthway Financial Advisors: If you call them and you know it’s a legitimate number, then yes, then you will be asked to identify yourself so that they can then talk about your personal information. But if it’s unsolicited, inbound to you, that’s a red flag.

Allison Dubreuil, Wealthway Financial Advisors: If that happens to you, and you are unsure, the best course of action would be to, to pause. Find out what they what they say they’re trying to accomplish. Disconnect from that communication. And then you go directly to that organization. If they say they’re calling from Social Security Administration, which again, they don’t call people, you can barely get a hold of them. Right and the IRS does not call people. Right, exactly. Then you would want to discontinue conversation or correspondence with that person that contacted you and go directly to this company.

Kevin Zywna, Wealthway Financial Advisors: Whatever institution they say they’re calling from, you then turn around and call their legitimate number inbound or outbound to them. So that if you think it has the least bit of credibility, but again, that’s highly unusual and almost never happens. That an inbound bound call to you from a bank, or any financial company, would ask you for personally identifying information. It’s only when you call them, right.

#3 Sign It Is A Scam – Asked To Pay, Especially In An Unusual Way

Allison Dubreuil, Wealthway Financial Advisors: And the third big red flag to watch out for is if you’re asked to pay anything, especially pay in an unusual way. If you’re asked to do a wire transfer, or buy a bunch of gift cards, or maybe use a payment app, or I saw this purchase Bitcoin, something that’s very out of the ordinary, that is a big red flag that there’s some sort of scam or they’re trying to trick you out of money.

Kevin Zywna, Wealthway Financial Advisors: Or ask for cold, hard cash. Sometimes they do that, go to the bank, get cash and we’ll have somebody come by and pick it up from you for whatever purpose. So yes, a wire is one of the easiest way for people to be defrauded, because once a wire goes out, it is virtually irretrievable. There’s no pulling it back. For most people, there are only a few times in their life that I can think of where they would want to actually wire funds. That would be at a closing for their house- real estate. Maybe if you had friends or relatives overseas, in some hard to reach places I’m stretching on now.

Allison Dubreuil, Wealthway Financial Advisors: You better know the person on the other end, right? And the company that you’re wiring.

Kevin Zywna, Wealthway Financial Advisors: Right, exactly. You should be the one initiating it to somebody, you know, well.

Allison Dubreuil, Wealthway Financial Advisors: Otherwise, there really shouldn’t be any wiring of money.

Kevin Zywna, Wealthway Financial Advisors: There’s almost no need to wire funds currently with all the other types of payment forms. For most people, if you look, if you’re a corporation, that’s different if you’re ultra-wealthy, you have your hands in a lot of different businesses in different countries, that’s different. But for 97.3% of the population, you’re probably only making less than five wires over your lifetime for legitimate purposes. I’ve ever made a wire that might be used for I well, I know we did for bank closings, like I said, for purchasing the house or refinance or something like that.

Allison Dubreuil, Wealthway Financial Advisors: Even then I don’t I think we did electronic. But yes, just be cautious about wires because, like Kevin was saying, that is virtually impossible to undo. And it’s not traceable. If you do fall victim to a scam, sometimes you can be made whole, but not as often these days. If it’s someone getting you to send them money, you’re probably not going to be made whole like you would if someone was just using your credit card, they can make you whole for that.

Kevin Zywna, Wealthway Financial Advisors: Right. And a credit card has a lot of protections built into it. For a long time, people were fearful of giving out their credit card number or giving over the phone or putting into a website. Well, you have a lot of protections built into your credit card that are much better than other forms. For instance, debit cards have direct access to your bank.

The Need For Life Insurance In Your Financial Plan

Kevin Zywna, Wealthway Financial Advisors: Right now, we’re going up to Williamsburg and talking with Bill. Good evening Bill, you’re on Dollars & Common Sense.

Caller: A question on life insurance. I don’t think you guys do a lot of lectures, because I think you said you send it to others, you have a referral type thing. But you said that life insurance is pretty much Funny Commercials. And you said something else. I’m not sure what it was. But I thought you downplayed it a little bit.

Because when I was younger, and I was selling life insurance, my dad was an engineer, and he wouldn’t go for anything like that. But when he realized that I told him, Hey, he said, You mean if I take this policy today and make one payment, I’m covered for $25,000 right away in case something happens to me. And when he realized that that’s one of the things that got him to go ahead and do it. And when my when my dad passed away, my mother got a lot more than $25,000, because she had Prudential and she had dividends that came back with the life insurance, which you can also borrow on if you had a low interest rate at that time.

I just wanted to point out there when you said they’re funny commercials, and the other thing you said about life insurance companies – kind of downplayed. I thought maybe you’re not into that branch of the insurance. But there is a place for life insurance. And whole life insurance. I know if you take that out when you’re younger, it stays with you your whole life. Whereas term insurance when you get to be about 60 or retire, you don’t have any insurance left, because it goes away at your employer, and you don’t have any. The term loan is out. And then you wish you had a whole life insurance. So, a lot of times back then they were saying, Oh, you got a whole life so expensive, and it’s not worth it. You know, well, when you get older and then you don’t have insurance. You wish you had whole life that whole time. You know?

Kevin Zywna, Wealthway Financial Advisors: Yes. Okay, so I think you’re conflating a couple ideas there. Bill, you have the jokes about the insurance companies being really good about collecting your insurance premium and doing funny commercials, being sort of the best things they do that usually I was relating that towards, like, property and casualty homeowners’ stuff, every dollar they pay out for an insurance claim is an expense. So, you have a contract between you and the insurance company regarding those protections, and they are necessary, we definitely do think that insurance plays a role in a good solid financial plan, but we don’t want our clients or our listeners to be over insured. Because once you send your money to the insurance company, they hold on to it. And sometimes it’s difficult to get it back. And then, to piggyback on the idea about life insurance, absolutely – life insurance is a key fundamental building block to a good financial plan for the right circumstances. And not everyone needs life insurance. People who do are typically married typically have kids, other people depend on their income stream for their quality of life. So that’s where life insurance comes into play. We definitely think that it is a significant part of a good financial plan.

But we do prefer that for most people, for our clients anyway. And if you do your financial planning properly, term insurance, we think is the most efficient insurance vehicle for them. In most cases, there are no absolutes in financial planning. So please don’t misconstrue that. But in most cases, term insurance is the right vehicle and term insurance can be long, it can be 30 years. So, you know but whole life has niche sort of applications.

Allison Dubreuil, Wealthway Financial Advisors: I think now, with current laws, there’s not as much of an estate tax problem. I think life insurance used to be used a lot to pay for estate taxes. But I saw this statistic last week only 2000 people paid estate tax in 2020 because of the current estate tax laws. So, I think that has largely reduce the need for permanent whole life insurance.

Kevin Zywna, Wealthway Financial Advisors: All right, Bill. Well, thanks for expanding the discussion there about life insurance from a couple of weeks ago. We’re happy to take those calls and delve into the matter a little bit further.

Allison Dubreuil, Wealthway Financial Advisors: All right, tonight we are talking about scams. How to avoid being scammed. How to spot the red flags of a scam so you don’t fall victim. We talked about being cautious if you are unexpectedly contacted. This could be by phone, email, text message, pop up request, any requests for personal information that you did not initiate should put you on guard. You want to be careful about clicking links. They’re just getting better and better about these. I know we get text messages all the time with links about packages – unable to deliver a package and let me tell you, we get packages delivered every day at my house. So, it really looks believable. But you don’t want to click on any links that you get that are unsolicited.

If you are pressured to act immediately, before you can even think it through that is a red flag. You should never have to act immediately or quickly or irrationally when it comes to moving money, certainly.

And then if someone is asking you to move money in an unusual way, like a wire or buying a bunch of gift cards or like I mentioned Bitcoin, digital currencies, even some of these money transfer services like Zell Venmo. We had that issue personally. Recently, we were selling some old furniture on Facebook marketplace, and we got tons of responses right away from people asking us if they could send us the money via Zell. So there’s definitely scams around Zell where they make you think they want to send you money for something but it is not legitimate.

Types of Scams

Imposter Scams

So those are general red flags, but we can talk about maybe some more specific scams that are happening that probably a lot of you have experienced. One is the imposter scam, where someone is posing as a business or even a person that you know. Oh, so we talked about early on in the show, people might call saying they’re with the Social Security Administration or the IRS, those are common. But I have heard stories of people posing as family members, like, Grandpa, I got in a car accident, and I’m in trouble. And I need money. And if this is unexpected and urgent and serious, you could quickly fall victim to a scam like that.

Kevin Zywna, Wealthway Financial Advisors: Keep an eye on your elderly loved ones, because they are typically the target for most of these scams. as we age, our cognitive abilities naturally, slow down a little bit. And so that makes those people a little bit more vulnerable to the scams that the rest of us would probably see through very quickly. So, you always want to keep an eye on your elderly relatives, check on them routinely. Ask them if they’ve had any unusual money request from time to time. Just be aware of their situation if they live alone, and they don’t have somebody already doing that. Because that’s the target to most of these imposter scams where people are being conned out of money by a business or a person who they know.

Online Sale Scams

Allison Dubreuil, Wealthway Financial Advisors: Yes. And then there are online sales scams, where you think maybe you’re purchasing tickets to an event, adopting an animal. I have definitely heard of this one where you think that little kitten is going to be yours and six weeks once it’s old enough to leave its mom, you put your down payment, and then poof, gone. Okay, no kitten. I think it was a dog that I had heard about that whole scam.

Allison Dubreuil, Wealthway Financial Advisors: So, there are definitely impostor online sales scams. So, you want to make sure you’re researching the seller or the products independently. It’s a good idea to compare prices with other websites. Look at refund policies, information on privacy terms and conditions. My husband is a big reviews person. I’m not so much but he says well, what are the reviews saying. If you’ve got a lot of one star reviews, something may not be right. So just be very careful, especially if you’re asked to pay in untraceable means like we talked about – wires, money transfers, gift cards, there’s no way to get the money back from that. So, verify the websites you’re looking at. Look at the URL. They’re really good at disguising URLs, it could look like I’m just making this up Bank of america.com. But they literally change one letter, and your brain just automatically skips over. They’ve done tons of research on that. So, we’re all susceptible to that. So be very cautious there.

Real Estate Scams

Real Estate scams, so maybe you’re looking for a vacation rental property or you’re purchasing or refinancing a home you would think this would be really hard to do. But it is not impossible. A scammer can take over a rental property or a real estate listing. They just slightly change an email address or contact information and then, all of a sudden, they’re listing it on another site. And you think you’re dealing with the actual listing agent, but you are not. And then you wire money to someone that doesn’t actually own the property.

Kevin Zywna, Wealthway Financial Advisors: I think if you go through Airbnb and VRBO for rental properties, and vacation rentals, there’s vetting behind that. I think you can feel comfortable that in most cases you would not be scammed through those websites. Now there can be lookalike websites, or there can be individual properties, not on those websites. That’s where the potential for abuse comes in. If you’re just seeing my house for rent.com type of thing then you don’t know for sure that the website is the owner of the rental property and be wary before you send any funds.

Allison Dubreuil, Wealthway Financial Advisors: I do know someone that was trying to buy a property once and the person who was selling it did not actually own the property. So luckily nothing went very far but it could happen. So just be aware. Be very vigilant and know who you are working with if it’s property you’re buying or if you’re trying to just book a vacation rental.

Kevin Zywna, Wealthway Financial Advisors: Tonight we are trying to prevent people from getting scammed. What else we got?

Investment Scams

Allison Dubreuil, Wealthway Financial Advisors: Yes, so far, we’ve talked about impersonators and online sales scams, real estate scams, but as investment advisors, we would be remiss if we didn’t talk about investment scams. So sadly, it is a reality that these things do happen. There can be people touting investments that have amazing, guaranteed returns, or no risk or double your money very, very quick. And I think in basic terms, if it sounds too good to be true, it likely is too good to be true.

Kevin Zywna, Wealthway Financial Advisors: There’s no free lunch. Good financial planning takes time. It takes effort and it takes knowledge. We say it at the top of every show. Any type of investment activity that touts itself as being able to give you returns that are well above normal, such as a well above 10%. Or they are able to return large amounts of money in a short order. You be very careful about that because that’s very atypical in the investment world.

Allison Dubreuil, Wealthway Financial Advisors: Also, you know, we get the question a lot from people that are looking for an advisor, “how do I know you’re not going to be a Bernie Madoff?” Well, what you want to look out for is someone that is not just the investment advisor, but someone that is also custodian so they’re also actually taking receipt of your funds and advising on your funds and reporting on your funds. If the same person is advising, custody, seeing and reporting. That’s where you open yourself up to risks

Kevin Zywna, Wealthway Financial Advisors: That’s what Bernie Madoff was doing. He was pretending to be the bank, the advisor, and the third party administrator who produced the forms. So he was manipulating all of that. A good investment advisory firm has an arm’s length agreement with a custodian, we call them and in our world. But they’re also retail brokerage firms. So, like Schwab or TD Ameritrade or Fidelity, or Vanguard, or some other outside source. They’re the company that actually holds or custodies your money. Your Investment Advisor goes alongside you, and is able to manage your funds on your behalf according to your instructions but at that other company.

Allison Dubreuil, Wealthway Financial Advisors: Right, so we give advice and can implement investment advice on behalf of our clients, but we never take any money. There’s never any checks made payable to Wealthy Advisors. The money goes to the custodian. The custodian reports, so you get a report every month or quarter from your custodian: Schwab, TDA, Fidelity. And we also report so you have a check and balance. You can always verify one with the other.

Kevin Zywna, Wealthway Financial Advisors: Yes, so just be careful of investment scams, anything too good to be true, anything promising a really quick turnaround quick pay day, doubling your money really fast, or also causing you to act make a decision fast, you should not be pressured into making an investment decision. That should be on your terms in your time.

Allison Dubreuil, Wealthway Financial Advisors: Yes, just a word about guarantees. The reason investors are rewarded with good rates of return over time is because they’re willing to take on a certain amount of risk. In reality, there’s very little reward that comes without some sort of risk. So if someone is selling you something with no risk, just be very skeptical about the reward or what the investment is.

Kevin Zywna, Wealthway Financial Advisors: Alright, I’m going to pause right here. We have a caller on the line. Going to go out to Virginia Beach and speak with Donald. Good evening, Donald, you’re on Dollars & Common Sense. Thanks for the call.

What Steps Should You Take If You’ve Been Scammed

Caller: Yes. What’s the next step if you inadvertently give your account number to the caller from Social Security Administration?

Kevin Zywna, Wealthway Financial Advisors: Yes. Okay. Good question, Donald.

Allison Dubreuil, Wealthway Financial Advisors: Great question. So, if you have given your personal information away, then you will need to be on high alert and be very vigilant, monitoring all activity on that account and everything else. Basic first steps would be to change all of your passwords that you have set up and then probably notify the credit reporting agencies that there may have been a breach in security.

Kevin Zywna, Wealthway Financial Advisors: Yes, contacting each credit bureau, there’s three main ones and they can be accessed through a legitimate website, all three of them, called www.annualcreditreport.com. You can notify those credit bureaus – put a notification on your credit report, telling any creditors or anyone seeking your credit report that beware, your personal information may have been compromised. Then no one can then take your personal information and try to open up a credit card account or a bank account or a loan for a car or something like that. Because any time somebody pulls your credit report, they’d see that notice, and then that would be a big red flag and they would investigate further. So you know that those are some of the main things you can do, Donald.

Allison Dubreuil, Wealthway Financial Advisors: You can put a freeze on your credit. I know, it used to be for a very nominal fee. But I think that’s gone away. I think you can actually do it for free now. Put a freeze so that there’d be no way to access your credit or to use credit to open any other new accounts. Then if you actually wanted to do something, you’d have to go through the elevated the secure steps to unfreeze your credit in order to buy the car or take out the new credit card or anything like that.

Kevin Zywna, Wealthway Financial Advisors: And a lot of credit card companies are getting a lot more efficient about that as well. So, if you think your credit card has been compromised, you can very relatively quickly and easily put a freeze on that one specific aspect of your financial life. Freeze my credit card for until I tell you to unfreeze it.

Allison Dubreuil, Wealthway Financial Advisors: They don’t make you get a whole new one?

Kevin Zywna, Wealthway Financial Advisors: No. I know. They’ve really advanced Yes, in the old days, if there was the slightest bit of suspected compromise they were like, Okay, we’ve canceled your card, you’re going to have to wait two weeks to get a new one. And then you’re going to have to change all the places that you had your credit card set up to automatically bill, you’re going to have to redo that. They’ve gotten better about helping people deal with frauds and scams.

Allison Dubreuil, Wealthway Financial Advisors: But back to the point about the credit reports, it’s just good practice for everyone to check their own credit report. And with www.annualcreditreport.com, you get one free credit report from each of the three reporting agencies per year. So, you can spread that out. Every four months, you pull one of those credit reports. And then there you go, you’ve checked your credit report three times throughout the year with each agency. You would be pretty on top of it if somehow there was some activity on your record that you didn’t know about.

Romance Scams

The other scam we didn’t get to tonight, I think we’re like, pretty much out of time was romance scam.

Kevin Zywna, Wealthway Financial Advisors: We should have started with that.

Allison Dubreuil, Wealthway Financial Advisors: I have never experienced a romance scam. I’ve never done any online dating. But it does happen. Isn’t it called catfishing?

Kevin Zywna, Wealthway Financial Advisors: When someone pretends to be somebody they’re not to attract another person, unsuspecting victim, and then take advantage of that. And yes, it’s becoming much more commonplace nowadays. Because that’s how people are legitimately meeting up with potential dates.

Allison Dubreuil, Wealthway Financial Advisors: You build a rapport, build a little connection, and then down the road, they’re asking for money.

Kevin Zywna, Wealthway Financial Advisors: Because their grandmother is in the hospital and needs $1,000 or something for her medical bill, but you’ve never even met this person in real life. So you know, come on. Let’s be careful now.

Allison Dubreuil, Wealthway Financial Advisors: All right. Well, unfortunately, we don’t have time to talk more about romance scam.