How to outsmart financial fraudsters

By Thomas M. Dowling

Contributor

Financial fraudsters are more active and successful than ever, targeting affluent individuals with increasing sophistication. While you may be savvy with money, you’re not immune to these schemes. Recognizing their tactics and implementing strategies to protect yourself is essential.

Understanding the Threat

Research highlights that affluent individuals are 43% more likely to experience identity theft. Criminals often use tactics like phishing, ransomware, wire transfer fraud and account takeovers to access your wealth. For instance, phishing involves sending emails or texts disguised as legitimate communications, prompting victims to share sensitive information. Similarly, ransomware locks your files until you pay to unlock them.

Even public figures like “Shark Tank” judge Barbara Corcoran have been victims, losing nearly $400,000 to wire transfer fraud. Account takeovers are another significant threat, where scammers steal credentials using fake Wi-Fi networks or other methods.

Steps to Stay Safe

Armed with an understanding of these threats, you can take proactive measures to safeguard your assets. Here are some actionable steps:

1. Secure the Basics

Protect your home network by using strong, unique passwords, enabling multifactor authentication and installing reliable anti-malware software. These foundational measures create a solid defense.

2. Slow Down and Verify

Scammers often create urgency to pressure victims into acting impulsively. Resist this tactic by taking time to evaluate requests carefully. Communicate this approach to your financial advisors and insist on double-checking urgent transaction requests.

3. Independently Verify Requests

If you receive an unexpected message from a financial institution or service provider, don’t use provided links or numbers. Instead, contact the organization directly to confirm its legitimacy.

4. Monitor Your Online Presence

Fraudsters frequently create fake social media accounts to gather information. Stay vigilant, report impostors, and be cautious about accepting friend requests or engaging with strangers online.

5. Separate Business and Personal Communications

Entrepreneurs should use distinct email addresses for personal and business purposes. This separation reduces the risk of a breach in one area impacting the other.

6. Regularly Check Financial Statements

Review your bank and credit card statements, credit reports and other financial documents for unauthorized activity. Early detection can help you mitigate the damage.

7. Seek Help When Needed

Don’t let fear of embarrassment prevent you from asking for help. If you suspect fraud, consult trusted advisors or authorities to evaluate the situation and determine the next steps.

8. Hire Experts

Professional fraud prevention services can offer tailored strategies, monitor your social media for scams and provide additional layers of security.

Empowering Yourself Against Scams

While technology plays a crucial role in fraud prevention, your personal behavior and vigilance are equally important. Taking time to verify, monitor your finances, and lean on experts when needed can make a substantial difference in securing your wealth. You can outsmart even the most persistent fraudsters by combining practical habits with modern tools.

Thomas M. Dowling, CFA, CFP®, CIMA® is the Head of Wealth Management at Alliance Global Partners of the Lowcountry on Hilton Head. He can be reached at infohh@allianceg.com or (843) 420-1993.