Jen met Rick, a charismatic stockbroker, on a popular online dating service and enjoyed his company for a few dates. However, after she invited him to a dinner party at her home, he began pressuring everyone at the table to invest large sums of money in a stock that was a "sure thing," and continued his pushy sales pitch even after she asked him to stop. After he left, she decided not to return his calls anymore.
A few days later, Jen realized her most recent bank statement and credit card bill weren't on her desk, where she always left them. She assumed she had simply misplaced them, and forgot about them. However, the next month, she noticed odd charges on her new statements. She called the bank and credit card company to report those charges and found that more purchases had been made on her credit card and a large, unauthorized amount had been deducted from her checking account. Suspicious, she tried to contact Rick, but he was nowhere to be found. When his high-pressure investment sales tactics didn't work, Rick had stolen Jen's statements and used her accounts as his own.
Although Jen's story is hypothetical, many women like Jen have been victims of increasing financial fraud. A recent study confirmed that a lack of financial literacy still persists among women.1
This may be especially true for Baby Boomers (born between 1946 and 1964) and the Silent Generation (born between 1925 and 1945), who came of age during periods when traditional gender roles placed less emphasis on women's financial education and acumen, and members of Generation Y, who are less experienced in financial matters.
According to the Federal Trade Commission's most recent Consumer Sentinel Network (CSN) report, nearly 1.2 million fraud complaints were filed in 2013, up by 12% over the previous year.2 With fraudulent activity on the rise, it's critical that you understand the different methods of fraud, as well as how you can protect yourself from scam artists who are working hard to get their hands on your hard-earned money.
Fraudsters are a creative group, always looking for new ways to use your money, assets, credit access, and identity for their own benefit. Financial fraud targeting women spans a variety of categories. Schemes may include promises to transfer inheritances or sweepstakes winnings in exchange for a bank account number or high-pressure tactics to get you to invest in bogus get-rich-quick opportunities.
Identity theft: When someone uses your personal information without permission to gain access to credit or other financial benefits, you've been the victim of identity theft. In these cases, scammers may use your name, Social Security number, bank account information, or other personal data to establish credit, obtain a loan, open a mobile phone account, make unauthorized purchases or debits to existing accounts, or find ways to exploit your identity for personal gain.3
Online dating fraud: Millions of Americans use online dating sites to find love and companionship. Unfortunately, they're also a good place to find "sweetheart scams," too. Unscrupulous people target women who use dating sites, engaging them in online and, sometimes, in-person relationships, and then asking for financial help with a bogus "crisis" or money for an investment opportunity. If they have in-person access, they may also swipe financial statements or other personal information to steal money or other assets.4
Telephone and Internet scams: At some point, you've likely received an unsolicited email telling you that you've won a sweepstakes. Even more compelling, you may have gotten a very convincing email request from your financial institution asking you to click on a link and enter your account number and password. You may have received a suspicious telephone call asking you for personal information or even a mass mailing promising you a significant cash prize in exchange for an upfront fee or donation. These solicitation scams, which all depend on getting you to give up personal information, may come by phone, email, mail, or other forms of direct communication.5
Mortgage and lending fraud: Mortgage modification or other home loan scams promise to modify your loan and drop monthly payments by hundreds of dollars or even save your home from foreclosure. Often, the fraudster will collect a fee and then disappear. And while reverse mortgages can be valuable tools, scammers misrepresent them, and could actually put your home at risk of foreclosure if you sign their fraudulent documents. Various credit and loan scams promise quick-turnaround loans for an upfront fee, but don't deliver the money promised, leaving you worse off than when you contacted them.6
Securities and investment fraud: High-pressure tactics and promises of great returns are often hallmarks of securities and investment fraud schemers. These scam artists promise you higher-than-average returns. Some might use scare tactics to pressure you to invest in gold coins, letters of credit, extremely high-yield bonds, or other vehicles that have little or no actual worth. Investment fraudsters may require you to sign a nondisclosure agreement or may pressure you for the names and contact information of other family members and friends who are in a position to invest. Both of those actions are signs that something isn't right.7
Tax fraud: Organizations or individuals promising to eliminate your tax debt or obligations may be making fraudulent claims. The Internal Revenue Service (IRS) warns that participating in illegal schemes to avoid paying taxes and filing returns could result in fines, penalties, or prosecution. It is possible to have a certified public accountant or IRS enrolled agent, who has been specially trained in tax matters, represent you and help you negotiate a payment plan or abatement with the IRS, but beware of people who say they can eliminate your obligation to pay taxes.8
Charity fraud: Scams involving fake charities tug on your heartstrings, enticing you to donate. However, instead of helping a worthy cause, your money lines the pockets of a scammer. This type of fraud might involve a fake charity or an individual lying about his or her affiliation with a legitimate charity.9
Job scams and work-at-home scams: Job scams and work-at-home scams: If you've been looking for work, those work-from-home ads might look attractive. In some cases, you might be asked to pay for lists of jobs or firms that are hiring. Although legitimate paid job listing services exist, there are also plenty of fraudsters who take your money and fail to deliver any information or leads that you can use to earn money. Be sure to check out the company promising an easier road to a paycheck before you type in your credit card number.10
You might feel like scams only happen to other people, but the most sophisticated fraudsters count even very savvy financial professionals among their victims. While financial fraud comes in many different forms, the methods of protecting yourself are often similar. Avoid putting your money, credit profile, and good name at risk by following a few simple guidelines.
Educate yourselfThe first and best defense against most types of fraud is to learn more about the opportunity, offer, organization or request being made. If you're being asked to invest in a company, search online and find out more. Call the company headquarters and request brochures or other information about the investment opportunity offered or the charity to which you're being asked to donate. If someone is trying to convince you to refinance your home, contact the Better Business Bureau and the agency that oversees banking in your state to find out if the broker or financial institution is reputable. Ask many questions, especially if something doesn't seem quite right about the request or offer.
Protect your personal information
Your Social Security number, account numbers, usernames, and passwords should be kept somewhere safe and out of sight to prevent unauthorized access to your accounts. Of course, never carry your Social Security card in your wallet. While credit and debit cards can be cancelled, once a scammer has your Social Security number, identity theft becomes much easier.
Prevent a paper trail
Bank statements and credit card offers that have sensitive financial information or that a scammer could use to apply for an account in your name should be shredded before you discard them. Since it's relatively easy for an identity thief to swipe your mail if you don't pick it up in a timely manner, consider using a Post Office box if you work outside the home so no one has access to your mail but you. Alternatively, opt for online statements to prevent paper statement theft.
When someone is asking you for money or personal information or pressuring you with scare tactics or the need to act immediately, walk away or hang up the phone. If an organization is contacting you and something doesn't seem right, ask for a number to return the call. Work with financial advisors from reputable institutions, but you can also see if the individual has had Securities and Exchange Commission (SEC) disciplinary action taken against him or her by visiting http://www.adviserinfo.sec.gov . If the offer or "opportunity" seems too good to be true, it probably is.
Check up on yourself
Open bank and credit card statements immediately and examine them for discrepancies. This will allow you to catch any misuse or fraudulent charges quickly. At least once each year, order a copy of your credit report — a free copy is available from AnnualCreditReport.com — to ensure that no fraudulent accounts have been opened in your name.11 You should also check your report immediately if you suddenly find an unexpected change in your credit lines or if you begin receiving statements for credit accounts you did not open. Finally, review your investment statements at least once each quarter to ensure that your contributions are being added properly to your account and that no unauthorized fees are being deducted.
Beware of requests for money
When someone you recently met or befriended asks for money — especially when the request is made as the result of an "emergency" or heart-wrenching story — consider it a red flag. Remember that scam artists usually seem like very nice, charming people so they can win your trust before taking your money. If you're being pressured into giving someone money, you can say "no," even though that can be difficult. If you're feeling pressure to give someone money and you're not comfortable denying the request outright, use delaying tactics to give yourself some time to ask friends and family members for advice. For example, you might tell the person you're not sure how much money you have available, so you'll need to check before you commit to anything.
If you do find that you have been a victim of fraud, contact the financial institutions involved immediately and make them aware of the situation. Illegal activity should be reported to the police, so a report can be filed, creating a record that you have been victimized.
You may also request that a fraud alert be placed on your credit file to alert potential creditors that you may be a victim of identity theft or financial fraud. Simply contact one of the three primary consumer credit reporting agencies and that agency must alert the other two.12
|Consumer Credit Reporting Agencies|
The federal government also publishes extensive information about spotting, avoiding and dealing with various types of fraud. A few excellent online resources include:
Protecting yourself from fraud requires diligence, but can also prevent significant financial loss. Taking care with personal information, adopting a healthy measure of skepticism, and avoiding high-pressure tactics to get you to act quickly with your money, are all good practices to protect yourself and the assets you have worked so hard to build.
1 Annamaria Lusardi and Olivia S. Mitchell, The Economic Importance of Financial Literacy: Theory and Evidence, Journal of Economic Literature 2014, 52(1), 1–40
2 Federal Trade Commission (FTC) Consumer Sentinel Network Data Book for January - December 2013, February, 2014. http://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-january-december-2013/sentinel-cy2013.pdf
8 http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Tax-Scams---How-to-Report-Them-- and http://www.stopfraud.gov/protect-tax.htm and http://www.irs.gov/uac/Newsroom/IRS-Releases-the-%E2%80%9CDirty-Dozen%E2%80%9D-Tax-Scams-for-2014;-Identity-Theft,-Phone-Scams-Lead-List
11 Please note that we do not endorse nor are affiliated with this website but are providing it as an example of a resource from which you can obtain a credit report.
Please note that TIAA-CREF does not provide legal advice. We recommend that you consult your own attorneys for such advice.
The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate.
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