FROM THE BLOG
Risk Factors and Scams
Posted by Prospera Financial on July 11, 2023
According to the Federal Trade Commission, consumers lost nearly $8.8 billion to scams in 2022, representing a 30% increase over the previous year. More than 40% of that total – $3.8 billion – can be attributed to investment scams, more than any other category. Other experts posit that the number is much greater but is underreported as people are reluctant to come forward about falling victim to fraud.
A recent study published by FINRA examined the factors related to responding to and losing money to such frauds and provided some insights into how you can avoid becoming a victim. The findings were based on survey data provided by the Better Business Bureau’s Scam Tracker website, which you can find here. The Tracker provides a convenient way to search for possible scams that have been reported by victims and can be helpful if you are looking for a quick way to assess potential fraud.
The FINRA study’s authors found the three most common risk factors in losing money were 1) a lack of prior knowledge about the scam 2) loneliness and 3) believing the fraudster or organization seemed “official”. The bad news is, the authors found no “one-size-fits-all” victim profile – we are all potential victims.
So how can you avoid becoming a statistic for 2023, the numbers of which are sure to be higher than 2022’s totals? Here are some takeaways that you may not be aware of:
Knowledge is Power
One of the most common risk factors was a lack of prior knowledge of the scam. Your favorite news outlet will often profile fraud cases to increase awareness – stay informed on the latest ways criminals can influence you to give them Personal Identifiable Information (PII), passwords, or to transfer money.
The Value of Social Connections
A second risk factor was loneliness and feelings of isolation. If you are presented with a limited opportunity by someone unfamiliar to you, discuss the matter with someone you trust – that could be a friend, family member, or a member of a religious organization.
Another tool to combat fraud was mentioned in my previous blog – establish a trusted contact that can help your financial services firm determine if you are being exposed to fraud or other forms of financial exploitation.
Lastly, consider serving in this capacity for the people in your life. If you know someone that has limited social contact, reach out to them on a regular basis. You may help someone avoid a costly mistake.
Google It!
Oftentimes, a quick Google search will reveal news articles or victims’ experiences related to the situation you are facing. Other valuable resources include the Better Business Bureau’s Scam Tracker (linked above) or the Federal Trade Commission’s website, www.identitytheft.gov.
Your financial advisor is a valuable partner in avoiding fraud. If you suspect you may be a victim of a scam, contact your financial advisor, bank, credit card companies and the credit bureaus as soon as possible.
Take care,
Robert Coulter
Chief Compliance Officer
