How to protect yourself from financial fraud

November 29, 2024

Knoxville real estate attorney Lisa Gammeltoft is on a mission to raise awareness about financial fraud. The holidays are a high season for scams.

I recently attended one of their presentations: “From Catfishing to Pig Slaughtering: Scammers Are Preying on Your Customers.”

“People never think that they will be the one to fall for a scam. We tell ourselves, ‘I’m too smart to fall for something like that’ or ‘Something like that would never happen to me.’ But the truth is that many smart, competent people of all ages fall for scams,” Gammeltoft said.

As she explained, scammers are dedicated professionals. Cheating is their full time job and they are very good at it. Scammers primarily target people who are grieving, lonely or have limited abilities.

Sophisticated scams manipulate neurotransmitters and hormones like dopamine, which help us feel pleasure. oxytocin, which helps build relationships with long downsides based on misplaced trust in the cheater; and adrenaline, which triggers the body’s fight-or-flight response to “urgent” pretend scenarios.

For example, in “pig slaughter” scams, scammers gain the trust of victims and trick them into investing in fake cryptocurrency projects.

“Catfishing” is when a person uses false information and images to create a fake identity online with the intent of defrauding another person. Americans reported losing nearly $740 million to romance scammers in 2022.

The Social Security Administration or IRS do not call or email taxpayers. Neither agency will cancel your Social Security number, stop your Social Security payments, or issue a warrant for your arrest if you don’t call back or do what these people say. The real IRS does not accept payments via wire transfer, prepaid debit cards, or iTunes gift cards.

In the “grandparent scam,” scammers pose as relatives and claim they are in trouble and need money. Voice cloning and artificial intelligence bring a new dimension: criminals can use a TikTok, Instagram or YouTube clip of a loved one’s voice to impersonate them.

New scams are constantly popping up. Here are some defensive measures you can take to protect yourself:

∎ Keep the operating systems on your devices up to date to protect against Internet vulnerabilities.

∎ Never sit at your computer and let someone give you typing commands.

∎ Never share personal financial information with anyone you have not met personally.

∎ Be careful in situations where you have met someone online who then gives you unsolicited financial advice.

∎ Be wary of random messages you receive from unknown numbers via text or messaging apps.

If you ever have doubts about whether an offer, price, or emergency is genuine, reach out to a trusted family member, advisor, or even the manager at your local bank for a second opinion before sending money. There are times when two heads are better than one. “If someone says you’re being cheated, believe them,” Gammeltoft said.

Paul Fain is a certified financial planner and chairman emeritus of Asset Planning Corp., a financial planning and investment management firm based in Knoxville. He welcomes comments and column ideas, but cannot offer specific personal financial advice. Write to him at [email protected].

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