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  • Christian Bishop CFP®, EA

Congrats! You've Been Scammed!



The phone rings and you answer it. The caller says in a happy voice, “You’ve won the sweepstakes”! You quickly hang up as you know it’s a scam. Unfortunately, lots of people don’t hang up, including seniors. While anyone can be a victim of a scam like this, some seniors are especially at risk due to diminished capacity. While we all like to think that our parents, grandparents, or other family members wouldn’t fall for a scam like this, the sad truth is that many do.


Different Tactics

There are many different types of phone scams but they generally start the same. Scammers will use automated computer dialers and or illegal call centers to get someone on the line who doesn’t hang up. After the initial contact is made it moves to the next step, which includes assigning an account manager or main contact person who will “work” the victim. These scams can get quite elaborate. While tactics vary there are similarities in how they do it. They figure out a target audience and have learned what strategies people tend to fall for. With the sweepstakes or lottery scams they start with the excitement of winning big prizes but later can devolve using fear and shame to get even more from the victim.


Isolation

The goal of the scammers is to isolate the victim. They don’t want the family or friends of the victim to find out and stop them, so they might convince the victim that they cannot tell anyone about the prize until it’s delivered. If they do, they will forfeit their winnings. The scammers may even suggest that they change their phone number or get a separate prepaid cell phone because, “Once the prize is public, lots of people will want to ask for money.”


Grooming

To get vulnerable seniors caught in this horrible situation, the scammers use a process called grooming. It starts with the initial hook of the big secret prize and that they forfeit if anyone else finds out, but slowly turns into more. They develop a relationship of sorts with the victim in order to gain their trust. This way, even if the family gets involved and tries to shut it down, the victim may still try to contact the scammer because they have their trust. The scammers may have even told them ahead of time, “If someone finds out, they may not believe us and try to stop it. If that happens you can still get the prize if you call my other number and follow my instructions from there.” And the cycle continues.


How They Get the Money

After establishing trust, the scam hits the next phase. Time to ask for money. The scammers know that they cannot simply ask for money directly. It has to be done in a convincing manner. In the sweepstake scam, it’s common to have a car as part of the prize that will be awarded. They will set up a date later in the week when the prize will be delivered. The day before or the morning of the delivery they l call with a problem. The scammer might say that the town or city will not allow delivery of the car without the excise or sales tax being paid and it’s holding everything up. The victim will need to rush down to their bank and take cash out or get a bank check and bring it to another big national bank to deposit into an account of an “escrow agent”. That “escrow agent” is likely a victim too and an unwitting accomplice. From there, the money is wired out of the country. Poof, the money is gone. The scammers may alternatively get the victim to purchase prepaid gift cards and give the numbers and pins off of the card and poof, the money is gone again. When the scammers don’t show up with the camera’s, car, and big check, they tell the victim that they couldn’t get the fees paid in time, but they’ll set up another date to come back. As that date approaches, they call and say that the IRS has to have a portion paid of the taxes upfront or a bond securing the prize has to be purchased. This time, they may ask that a bank or personal check be sent overnight to some address in another state. Again, they are told that this is an escrow agent or prize administrator. Of course, it actually is just another unwitting victim. That victim is being told they are part of a real estate deal or some other business venture and they get to keep 10% of every deal that comes in. All they have to do is wire out the money the same day it arrives. The wires generally go out of the country and cannot be reversed in most cases. Poof, the money is gone once again. This process continues on and on until there is no money left. The scammers will not stop until the money stops. They have an unlimited amount of excuses why the prize is delayed and have very creative ways to continue getting money.


What to Do

Educate and communicate often with your senior loved ones before they become a victim. Tell them about how these scams work and to be wary of anyone offering something for nothing. There is a ton of literature available you can give them, but nothing is as good as talking about it. If you find out that your loved one has been a victim, it is likely too late to get the money back. Of course you should report it to the police, but oftentimes the police cannot do much because the scammers may not even be in the country, let alone the state or town. The Federal Trade Commission or FTC has a website, www.reportfraud.ftc.gov, that scams may be reported to, but don’t expect them to come to the rescue and get your family members money back. However, reporting the fraud may stop some of the scammers and reduce future losses to others. If the postal service was used to mail overnight envelopes or in some other way, report it to the postal inspectors online at www.uspis.gov as soon as possible. In addition to reporting the fraud to the various government agencies, change the phone number of the victim to stop the scammers from calling. It is also prudent to freeze their credit with the 3 major credit bureaus* and change bank account and credit card numbers as they may also become a victim of identity theft. Scammers often try to use the banking and credit card information they received during the first stage of the scam to get even more money.


Going Forward

Scams have been around for a very long time. In the old days, a “confidence man” might convince someone to give him money for a broken down old car, then skip town after the deal was done. Today it’s much more sophisticated. A scammer might be in a foreign country with as little as a cell phone and computer and steal your grandmother’s life savings. But it isn’t just the seniors who are susceptible to these unscrupulous characters, everyone is potentially at risk. Even if you think you know better, it’s always better to be safe than sorry and extra cautious whenever handing away your money.



*Three major credit bureaus: Equifax, Experian, and TransUnion