Beware: With the rise of financial scams, identity theft, and the increasing need to protect your data, now is the time to take bold preventative action.
My company works with thousands of California families to prepare for amazing retirements. In the course of our work, we have uncovered an alarming situation. Through AI and other digital means those who prey on your finances are becoming increasingly brazen.
Every year thousands and thousands of people lose more than $100,000 to scammers.
This is a cautionary tale so you do not become another tragic victim. Heed the alarm bells before it is too late.
Have you ever heard an alarm bell go off in a hotel? What did you do? You might have ignored it and assumed that in a matter of minutes the alarm would go off, the manager would apologize over the loudspeaker, and life would go on.
I know of a CEO of a well-known California company that did just that on a cold evening in London. He ignored the irritating alarm bell and continued to watch a British television comedy in his room.
What finally got his attention was a security guard banging on his door and insisting he evacuate. Not having time to dress warmly, he was ushered to an open park near the hotel as it started to rain. He remained in the park for over an hour, cold and wet, as a bomb scare was checked out.
On his flight home to California, he reflected how stupid it was to ignore the initial alarm bell. He quickly realized that alarms have a purpose—especially if we choose to heed them and get educated to take action.
Education is a core value of my financial advisory firm. Our mission is to help the families we serve through a disciplined approach rooted in education, integrity, and earned trust. Now we are dedicating resources toward sounding the alarm about the new breed of sophisticated scammers.
Our advisory firm works with all kinds of families and individuals, from those with modest means to others with high net worth. Our objective is to help each of them create a retirement strategy that fits their unique lifestyle. But all that can be lost in an instant when someone falls victim.
Because the world’s financial scene is changing, we feel we must be educated as advisors in order to educate the people we serve. Currently we are teaming with an FBI intelligence analyst to warn our clients about the new breed of scammers.
Why do some people ignore the alarms that are going off from the Federal Bureau of Investigation (FBI), Federal Trade Commission (FTC), Internal Revenue Service (IRS) and Federal Deposit Insurance Corporation (FDIC)? Many feel they are too intelligent to fall for something as obvious as a “Nigerian Prince” scam or “Phising for Data” email.
That misguided confidence can be a serious miscalculation with dreadful consequences. The scammers are getting smarter and have sophisticated software on their side.
One of our clients was scammed by someone who pretended to be part of the FTC, a version of “The Imposter” scam. The scammer called her say her identity had been stolen but not to tell anyone because they needed to eliminate possible suspects.
The scammers had her send cash in FedEx envelopes but had a courier pick them up. They claimed that she was allowing the FTC to help get her identity back but again. They made her promise not to inform her financial advisor (me), her son or anyone in her life as they may be the ones who stole her identity.
She ended up draining nearly $400,000 out of her retirement accounts and was on the verge of suspending an annuity and pulling $300,000 more when I begged her to come in and talk to me.
“I’ve been lying to you,” she admitted. “The money is not for home projects or anything like that. My identity has been stolen but the feds are helping me get it back.”
Sadly, I had to inform her she was scammed. She was sobbing as her son came to pick her up and we called the police. The police tried to do a sting operation to catch the courier working with the scammer, but he never showed up.
Not only did she lose the $400,000 from her retirement account, she was on the hook with the IRS for the taxes on that income.
This was absolutely heartbreaking. Unfortunately, we see many similar scams popping up.
According to a New York Times article, a 76-year-old retired lawyer named Barry Heitin lost approximately $740,000 to scammers who manipulated him into believing he was assisting a government investigation, essentially stealing his retirement savings over a period of several months.
The scammers impersonated government officials and bank personnel, convincing Heitin to transfer large sums of money, believing he was aiding an investigation.
This case highlights the vulnerability of individuals to sophisticated scams, even those with a high level of professional experience.
According to advice from the FDIC: “When cybersecurity is inadequate, it can lead to stolen identity and financial loss. Most scams and scammers have two main goals–to steal your money and your identity. You should know what to look for, how they work, and what to do, so you can protect yourself and your finances.”
Credits: iStock Do not think this cannot happen to you. Personally, thieves somehow hijacked my W-2 forms and filed fake tax returns in my name, attempting to get the refund transferred to their bank account. Fortunately, they made a mistake and the refund check was mailed to me. That could have been a huge disaster.
According to the FBI’s 2023 “Elder Fraud Report,” people older than 60 lost more money in scams in 2023 than the previous year — an 11% increase totaling more $3.4 billion overall. There was also a 14% increase in complaints filed with the FBI by elderly victims. Nearly 6,000 lost more than $100,000.
If the money stolen came from their tax deferred 401(k) or IRA account, they also owed taxes to the IRS on the money stolen.
According to the FTC, here are four ways to spot a scam:
Scammers pretend to be from an organization you know . Scammers often pretend to be contacting you on behalf of the government. They might use a real name, like the FTC, Social Security Administration, IRS, or Medicare. Some pretend to be from a business you know. They use technology to change the phone number that appears on your caller ID.
Scammers say there’s a problem or a prize . They might say you’re in trouble with the government. Or you owe money. Or someone in your family had an emergency. Or that there’s a virus on your computer.
Scammers pressure you to act immediately . Scammers want you to act before you have time to think. If you’re on the phone, they might tell you not to hang up so you can’t check out their story.
Scammers tell you to pay in a specific way. They often insist that you can only pay by using cryptocurrency, wiring money through a company like MoneyGram or Western Union, using a payment app, or putting money on a gift card and then giving them the numbers on the back of the card. Some will send you a check (that will later turn out to be fake), then tell you to deposit it and send them money.
Here are some trending scams from the FDIC to be on the lookout for:
Money Mules . Scammers use people as “money mules” to receive or move money obtained from victims of fraudulent activities. Scammers proactively recruit people to be part of fraudulent activity without their knowing it. If a stranger asks you to open a bank account, don’t do it.
Online Dating . Romance scammers, as they are often called, create fake profiles and try to develop relationships with their targeted victims through online dating apps or social networking websites. Once the relationship develops and they have earned your trust, the scammer makes up a story and asks for your money.
Impostors . Impostor scams are when a scammer pretends to be someone you know or trust to convince you to send them money. They may even claim they are with the FDIC, FTC, FBI, IRS or another government agency.
Mortgage And Foreclosure Scams . Watch out for scammers who falsely claim to be lenders, loan servicers, financial counselors, or representatives of government agencies who can help with your mortgage. These criminals prey on vulnerable homeowners.
Bottomline: Take decisive action to protect yourself from financial scams, identity theft, and data theft before it is too late.
Reid Abedeen is managing partner and investment advisor of Safeguard Investment Advisory Group LLC , with offices in: Corona, Roseville, San Diego, Escondido, Santa Barbara and Oxnard. For an invitation to a no-cost webinar on protection from scammers, call 877-213-7233.
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