Common types of financial fraud

Author

Siena Wealth Advisory Group

For more information about the author, click to view their website: Siena Wealth Advisory

Posted on

Jul 22, 2023

Book/Edition

Florida - Southwest

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In this article:

  • Recruitment fraud
  • Advance fee fraud
  • Romance scams
  • Debit card fraud
  • Advisor imposter fraud
  • Investment fraud
  • Phishing scams: Email, text and phone fraud
  • How to report fraud

Recruitment fraud

The objective of this kind of financial fraud is to obtain money and/or personal, financial or account information from people who believe they are applying for a real job. The fraudster uses fake company job websites, career websites, social media posts and/or emails to lure applicants into providing money or personally identifiable information. 

Common types of fraudRed flags to watch forHow to protect against it

Job postings on legitimate career websites

 

Social media

 

Fake employer website

 

Recruitment emails

Fraudsters request bank account information to pay for training materials, interview travel or direct deposit for paychecks

 

They set up fake links for applicants to enter banking or other personal information

 

They provide an applicant with a fake cashier’s check (paper or digital) to purchase office equipment

 

They promise a job without interviews

Never provide money

 

Contact Ameriprise Financial at Ameriprise.recruiting@ampf.com if concerned about the legitimacy of any correspondence/interaction with Ameriprise

Advance fee fraud

This kind of fraud typically involves promising the victim a large sum of money in return for an up-front payment, which the fraudster requires in order to provide the large sum. If a victim makes the payment the fraudster either invents a series of new fees the victim must pay or simply disappears.

Common types of fraud

Red flags to watch forHow to protect against it

Lottery

 

IRS

 

Inheritance

 

Vacation rentals

 

Work from home/career opportunity

 

Check overpayment

 

Loan

The offer seems too good to be true

 

Grammatical errors and typos

 

Sense of urgency  –scammers will pressure you and say the situation is very urgent to get you to act before you think

 

Extreme confidentiality –the scammer doesn’t want you to tell friends or family

 

Up-front payment – asking for money is a major red flag

 

Winning a lottery that you did not enter

Stop communication and block the sender

 

Never share your account information, Social Security number, bank information or other sensitive financial information

 

Do not respond to offers that sound too good to be true

 

Be wary of a website or correspondence claiming to be from a U.S. government agency whose e-mail address does not end in “.gov”, “.mil”, or “fed.us.”

 

Be aware of secondary scams that may include someone promising to find your scammer and get your money back

Romance scams

Romance scams typically involve feigned romantic intention toward a victim, gaining their affection, and then using that goodwill to commit fraud.

Common types of fraudRed flags to watch forHow to protect against it

Online dating

 

Social media

Someone has claimed to have fallen in love with you quickly, often within 24-48 hours

 

The person wants to immediately leave the online site to use instant messaging or email

 

Their online profile seems to disappear as soon as you start talking to them

 

They request to keep the relationship a secret

 

They ask for money

 

They claim to be in the military or work overseas and need money for flights home

 

They plan to visit you, but an event prevents them from doing so, or they ask for money for travel costs

 

They tell you they need money for medical issues (such as a sudden surgery), for themselves or a family member

Never share your account information, Social Security number, bank information or other sensitive financial information with anyone

 

Avoid posting details such as your full name, date of birth, or home and work addresses on online profiles

 

Never respond to any requests to send money, or have money transferred into your account by someone you don't know and trust

 

Trust your instincts  –  if you think something feels wrong, it probably is

 

Debit card fraud

Debit card fraud involves the unauthorized use of funds through debit card transactions.

Common types of fraudRed flags to watch forHow to protect against it

Lost/stolen card

 

Compromised/counterfeit card

 

Pre-paid debit card scams

 

Multiple card entries for high-dollar orders

 

Unauthorized purchases

 

Multiple purchases of the same item

 

International shipping

 

An unsolicited phone authorization for a cash advance

Enroll in email and text alerts (Note: For Ameriprise accounts, register or log in and go to My Profile to enroll)

 

Check account statements frequently

 

Never share your PIN number with anyone

 

Keep your card and PIN stored in a safe place

 

Do not allow non-account holders access to your card or PIN

 

 

Advisor imposter fraud

The objective of advisor imposter fraud is to obtain money and/or personal, financial or account information from individuals who believe they are investing money. The fraudster uses fake company job websites, social media posts and/or emails to lure applicants into providing money or personally identifiable information. 

Common types of fraudRed flags to watch forHow to protect against it

Fake advisor website using the registered representative name as the domain for the website

 

Picture purporting to be the registered representative

 

Information about the registered representative’s employment history, CRD numbers and/or exam history

 

Request for contact form asking name names, email addresses and phone numbers

Sites may contain poor grammar, misspellings, odd phrases, or misuse of financial services terminology

 

Emails with fake links for individuals to enter banking or other personal information

 

Requests to send cryptocurrency or gift cards 

 

Requests to send money payable to anyone other than Ameriprise

 

Promises of guaranteed high investment returns

Search for an Ameriprise Advisor using the tool “Find an Ameriprise financial Advisor” on www.ameripriseadvisors.com  

 

Once you locate a financial advisor using the tool, you are provided a valid website, email address using ampf.com as the domain, and a phone number

 

Reach out to the financial advisor using the information provided on our website to discuss investment opportunities

Investment fraud 

Investing scams targeted at retirees are becoming increasingly common because they are more likely to have large amounts of money saved, and “get rich quick” schemes can be appealing to those on a fixed income. The first step to protecting yourself — or a parent — is knowing what types of investment scams to watch for. 

Kind of investment fraud

What is it 

Red flags to watch for

 

Ponzi scheme (also known as pyramid scheme)

 

A Ponzi scheme involves using money from new investors to provide a return — often much higher than typical market gains — to existing investors rather than using legitimate investment returns. Ponzi schemes fall apart when the money owed to the initial investors becomes greater than the amount that can be raised from new investors. Pyramid scheme operators may reach out via phone, email or word of mouth

 

 

If investment returns seem too good to be true, they probably are. If in doubt, request documentation such as a fund prospectus or the most recent annual report. These may help provide more context for investors — or raise suspicions if they aren’t readily available for review

 

Pump and dump

This involves a group of people buying a stock then recommending it to thousands of investors. The result? A rapid spike in stock price followed by an equally fast downfall. The perpetrators who bought the stock sell off their shares at a huge profit when the price peaks. Pump and dump schemes often circulate on internet investing blogs via promotional emails

 

Fraudsters are more likely to use smaller, lesser-known companies for this scheme because it’s easier to manipulate a stock when there’s little or no information available about the company

 

Off-shore investing

The internet has eroded barriers that once made it difficult for overseas fraudsters to prey on U.S. residents. Conflicting time zones, the cost of international telephone calls and differing currencies are no longer obstacles — and international wire transfers can occur instantaneously. Phone calls are a common method of communication for the perpetrators, enabling real-time wire transfers to be made before victims have time to do any research

 

Investment opportunities originating in a country that is outside the jurisdiction of local U.S. law enforcement agencies. Ask for legal documentation stating where the funds are registered

Prime bank

Used in an official capacity, this term describes the top 50 or so banks in the world. Real prime banks often trade high-quality, low-risk investments such as bonds. Fraudsters often claim investors’ funds will be used to purchase “prime bank” investments that they claim will generate significant gains

 

The term “prime bank” is often used by perpetrators looking to lend legitimacy to their scheme, whereas real prime banks don’t often use the term as they can rely on name recognition alone 

 

Bulletin boards and newsletter

Investment boards have gone the way of online blogs, where nearly anyone can offer an opinion no matter how qualified they are — or aren’t. While there may be some valid posts by financial experts, perpetrators often use boards to plant fake “insider” tips meant to drive stock prices up or down. Know that company employees can also use blogs to spread promotional information, and it’s not illegal for companies to use employees to write online newsletters to promote their stock

Federal laws require that disclosures with legally required details about their offerings are located at the bottom of documents on company-generated information. Fraudulent newsletters are unlikely to provide such language

Phishing: Email, text or phone fraud

Phishing scams are when a scammer sends a fraudulent message designed to trick you into giving them sensitive or financial information. Phishing scams can come in several different forms: email, text or phone calls. 

Kind of investment fraud

What is it 

Red flags to watch for

 

Email fraud

 

Emails that are sent from unusual or look-alike email addresses or domains
Suspicious links
Spelling or grammatical errors
A sense of urgency to act immediately

 

 

If you think an email might be fraudulent, delete it and contact the company directly
Roll over links with your mouse to display the URL. If the URL looks suspicious, do not click on it
Visit the company website to check for suspicious account activity

 

Text message phishing

Urgent or threatening messages
Suspicious links that do not appear to come from the company sending the text

If in doubt, do not respond
Do not click on suspicious links
Visit the company website directly to check for unauthorized or unusual account activity

 

Phone phishing

Requests for personal information
Remote access requests

Let calls from unfamiliar numbers go to voicemail
Block phone numbers on your mobile device if they call repeatedly for a fake business reason
Be cautious of links sent to you even if the caller seems like they are from a well-known company. Visit the company website directly

 

Reporting fraud

How to report email fraud

If you suspect you’ve received a fraudulent email, please:

  • Forward it to us immediately at: anti.fraud@ampf.com.
  • Do not remove the original subject line or change the email in any way when forwarding.
  • Watch for an auto-generated reply to let you know we’ve received your email. If we confirm the email is fraudulent, we will take appropriate action immediately.

How to report other types of fraud

If you suspect unauthorized activity on your account, call us immediately.

  • Call 800.862.7919 and request to speak to a representative.
  • Mon-Fri 7:00 a.m. CT - 9:00 p.m. CT
  • Sat-Sun 7:00 a.m. CT - 7:00 p.m. CT 

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