Editor’s Note: We’ve recently been alerted to a sophisticated scam targeting investors with certain brokerages, particularly Schwab. Fortunately, none of our readers have reported being affected yet, but I wanted to highlight this situation so you can protect yourself.
I’m also including some valuable insights from our Chief Income Strategist, Marc Lichtenfeld, on how to spot and steer clear of scams. I hope you find them useful.
– James Ogletree, Managing Editor
A few years back, someone in my family fell ill, and it was more than just her physical health that took a hit. Her mental sharpness also declined significantly. While I was naturally concerned about her well-being, I was equally worried about her susceptibility to fraud, especially with caregivers frequenting her home.
Unfortunately, even healthy seniors aren’t immune to financial abuse and scams.
There’s actually a scientific explanation for this vulnerability. According to research from UCLA, older individuals exhibit reduced activity in the brain area associated with “gut feelings.” That gut instinct often alerts us when something or someone seems off.
As we age, these brain changes can make us more trusting and inclined to dwell on positive thoughts and memories. While this trait can foster goodwill, it can also render us more susceptible to deception.
Adding to the challenge is the increasing sophistication of scams through artificial intelligence.
Scammers are now leveraging AI to craft convincing emails that appear to come from legitimate banks or government agencies. Software capable of mimicking voices and videos of loved ones can make a compelling case that they’re in trouble and need cash. They might even capture your voice to trick your bank.
Here are some strategies to guard against scams in this AI-driven environment:
Stay cautious of anyone claiming to be from your broker. Schwab customers have been targeted with calls, emails, and texts from fraudsters posing as Schwab representatives, sometimes even from the fraud department. These scammers may already have some of your personal information, such as your account number.
Never confirm or share any information with someone contacting you and claiming to be from your brokerage. Steer clear of clicking any links. Instead, if contacted, visit your broker’s official site directly and connect with a representative through the site. You can engage in an online chat or secure a phone number from the website. Any legitimate representative can address real concerns.
Avoid Googling Schwab as well, as fraudsters have optimized search engines to show fake websites and contact numbers.
Refrain from sending gift cards or cryptocurrencies. No legitimate business or investment will request gift cards. While buying one for a friend or family member is fine, any request to purchase and send gift cards is a red flag. In the case of cryptocurrencies, the majority of unsolicited requests to send crypto should also be seen as warnings. Although there might be exceptions within the crypto industry, cryptocurrencies are favored by criminals for their untraceability. Never convert cash into crypto at someone’s request.
Establish family “code words.” AI voice scams are becoming increasingly convincing. With minimal audio of a loved one, scammers could soon manufacture an entire conversation pretending to be someone you know. Discuss with family a unique code word or an event only your inner circle would know. This could be used to verify the authenticity of such calls.
For example:
Caller: Grandma, I’ve been arrested. Please don’t tell Dad, but I need $1,000.
You: Bobby, what’s the code word?
Or:
You: Bobby, where did we celebrate your fourth birthday?
Ensure this event or code is something no criminal could discover online or through social media.
Avoid saying “yes” or “I agree.” If you’re unsure who’s on the line, avoid uttering words like “yes,” “I agree,” or “I confirm.” Scammers might record your voice to make phony requests to financial institutions, using your recorded consent.
Don’t answer calls from unknown numbers. I always let calls go to voicemail if I don’t recognize the number. If the call is important, they’ll leave a message. This habit not only shields me from potential scams but also saves time and spares me the hassle of cold calls, surveys, and other unnecessary interruptions.
Be aware that government agencies won’t email you about dire issues. Should there be an actual problem with entities like the IRS or Social Security Administration, communication will occur via postal mail. They will never request secrecy in an email asking you to click links or send money. Legitimate agencies often advise seeking professional assistance, such as from a lawyer or accountant.
Remember, AI systems might have extensive data on you, making fraudulent emails seem credible. If ever in doubt, consult the official government website or call the number listed there—never use contact information provided in suspicious emails.
Lastly, do not send money to online romantic interests you haven’t met. It may seem like you’re chatting with someone in Minneapolis, but in reality, you could be conversing with someone from halfway around the world. AI gives scammers insights into what might emotionally move you.
Never, under any circumstances, send money to someone you’ve only interacted with online. Even phone conversations can be AI-fabricated.
Stay Sharp
Our bodies, including our brains, evolve with age. Being aware of these natural changes and the burgeoning capabilities of AI can empower you to remain vigilant, questioning opportunities that appear too good to be true.
Scammers grow more advanced by the day. Keep your defenses strong.
