By: Laura Walton AFC®
The Nigerian prince email is old news. The latest generation of scams come in the form of fake websites and fake ads on social media and they’ve been surprisingly successful.
The Better Business Bureau, FINRA (the Financial Industry Regulatory Authority) and the Stanford Center on Longevity interviewed consumers who had filed a fraud tip or report and found:
• 91% engaged with a fake ad on social media and 53% lost money
• 81% engaged with a fake website and 50% lost money
• 42% engaged with a scam email and 13% lost money
• 39% engaged with a fake phone call or voice mail and 11% lost money
Even more surprising is that the 20-29 age group reported substantially more instances of loss from fraud than all other age groups:
What to look for:
• Websites can be very sophisticated. It can appear to be a long-established business with many locations, reviews and references. Just such a Craigslist listing fooled a well-educated consumer resulting in a $16,400 loss.
• Tip-offs to less sophisticated websites might be a suspect domain name, sloppy English, poor website design, shady contact information and an unclear refund policy
• Do a search for the company or product using the words “review,” “complaint” or “scam.”
• Use only secure, traceable transactions. Credit cards have fraud protection while wired money and prepaid money cards don’t. Note that the above $16,400 loss was wired to the scammer. According to the study, 20% of the time bank and wire service employees tried to stop the scam by warning the consumer. In half the instances, loss was avoided.
• Does the discount seem too good to be true? One security expert noted that “people are sometimes willing to suspend disbelief because they want the discounts they’re seeing to be real.”
That last caution – too good to be true – is a common theme in financial fraud. Remember that a little greed mixed with hubris – thinking we’ve found the deal that others missed – plays right into bad guys’ hands.