Staying Safe from Financial Scams
Scams and fraud are everywhere today, and the problem keeps getting worse. Fraudsters continually invent new techniques to steal your money, but they also keep using old ones. I still get emails from the “Nigerian prince” looking for help moving his fortune—an obvious scam that has been around for decades. Unfortunately, many modern scams are far more sophisticated and much harder to detect. In this article, I will share real scams that happened to people I know (with identities and some details changed). I will then offer tips to help you stay safe.
The Problem is Very Human
You might assume the internet and artificial intelligence created this problem, but that couldn’t be further from the truth. Fraud and scams have been around for as long as humans have. In fact, the first documented case of fraud dates to 300 BC, when two Greek merchants took out an insurance policy on their vessel and then sank it to collect the payout.
Fraudsters prey on human emotions—primarily greed and fear. They work to gain our trust or convince us something terrible will happen if we don’t act quickly. The internet simply makes it easier for scammers around the world to reach victims. The underlying manipulation, however, is completely human.
Here are some scams that happened to people I know. I have hidden actual identities and changed a few of the details.
The Romance Scam
A highly intelligent man I’ll call George was unhappy in his marriage. Although he had lived in the U.S. for many years, he was more comfortable with people from his homeland and native language. A woman—let’s call her Lucy—befriended him on social media. Over months, she gained his trust and began telling him about the money she was making from a new Bitcoin trading scheme.
She persuaded George to invest a small amount. His “account” showed impressive gains. She then encouraged him to invest more, and ultimately George liquidated his retirement accounts and moved nearly all his savings overseas into this scheme. His account showed that he had supposedly turned $1 million into $15 million.
When he asked to withdraw some of the funds to cover the tax bill from liquidating his retirement accounts, the scammers promised to send the money within a week. Nothing arrived. Lucy disappeared.
George lost his entire life savings.
Romance scams are increasingly common. Victims are often lonely—sometimes seniors, sometimes not. What they have in common is a desire for connection and trust, which scammers are skilled at exploiting.
The Family in Trouble Scam
A woman I know—we’ll call her Sarah—had a daughter whose husband had long-standing visa challenges. After years of waiting, he finally secured his green card and moved to the U.S.
Shortly afterward, Sarah received a call from someone claiming to be an immigration attorney. The caller knew details about her son-in-law’s situation, which made him sound legitimate. He said her son-in-law was in serious trouble and needed to pay an immigration fee immediately or face deportation. Sarah knew that her daughter and son-in-law had some cash flow issues and wanted to resolve the situation herself. Because the fee had to be paid quickly, the caller instructed Sarah to buy gift cards and read the numbers over the phone.
Panicking and wanting to help her daughter, Sarah did what he asked.
The Account Compromised Scam
Alice was returning home from a long trip. After landing from a red-eye flight, she turned on her phone and saw text messages appearing to be from her bank. They warned that her account was compromised and instructed her to call customer service immediately.
Exhausted and concerned, she called the number in the text. The man on the phone read off several fraudulent-looking transactions and told her scammers had access to her account. He said she needed to open a new account and transfer her money immediately. Alice, tired and overwhelmed, provided all her banking information.
The original text messages were the scam. Her accounts were secure until she unknowingly handed her information to the fraudster.
What did these People do Wrong?
These individuals were not unintelligent or careless; they were manipulated into trusting the scammers.
- George was lonely, and the scammer spent months earning his trust while appealing to his desire for financial gain.
- Sarah wanted to help her daughter and believed the caller’s detailed knowledge proved he was legitimate.
- Alice, exhausted from travel, acted quickly instead of verifying the number on her bank’s official website.
Scammers look for moments of vulnerability or try to create them. It can happen to anyone.
Tips on Staying Safe
Here are some tips that will help you stay safe from scams:
1. Never click links or call numbers from unsolicited emails or texts.
Always use your own saved bookmark or search for the company’s official website or phone number.
2. Beware of unexpected messages—even from people you know.
If someone sends you a file, video, or link you weren’t expecting, assume it may be fraudulent. Contact them by phone to confirm. Recently, many people have received fake DocuSign files that appear legitimate.
3. Be cautious when a message triggers fear or greed.
Strong emotions cloud judgment. Scammers rely on urgency to override rational thinking. Slow down, think, and ignore high-pressure deadlines.
4. Hang up on unsolicited callers asking personal questions or seeking to befriend you.
You are not obligated to be polite. Charitable organizations can also be impersonated. While automated messages from doctors or pharmacies may be legitimate, you should hang up on most unsolicited calls.
5. Establish a family “secret password.”
If a relative is supposedly in trouble, they must give the agreed-upon password. Without it, the call is not legitimate. This is particularly useful for elderly relatives or families living far apart.
6. Freeze your credit with all three major credit bureaus.
Once your credit is frozen, no one can open new accounts in your name. If you need credit, you can temporarily unfreeze it and freeze it again afterward.
7. Know that government agencies will not call you demanding immediate action.
The IRS, Social Security, Medicare, and other federal agencies contact people through mailed letters or secure online portals—not phone calls demanding payment.
8. Don’t trust someone you’ve never met in real life (IRL).
Social media and messaging apps can create a false sense of intimacy. You cannot verify who someone really is unless you meet them in person. “Catfishing,” often used in romance scams, is extremely common.
9. Understand how much personal information about you is publicly available.
Scammers may know your birthday, employer, family members, and even where you bank. They use this information to appear legitimate. Just because someone knows details about you does not mean they are trustworthy.
10. Use unique passwords for every service and consider a password manager.
Password managers make it easier to maintain strong, unique passwords. I happen to like Dashlane because I think it’s a bit more secure, but there are others. Here is an article on choosing one: https://ssd.eff.org/module/choosing-the-password-manager-that-s-right-for-you
11. Enable multi-factor authentication (MFA) wherever possible.
Text-message codes are better than nothing, but authenticator apps offer stronger protection. Here is a great article on using multi-factor authentication: https://ssd.eff.org/module/how-enable-two-factor-authentication.
12. Before sending money to someone you’ve never met, talk to a trusted friend or family member.
Explaining the situation out loud often helps you recognize red flags. Others may immediately spot the scam.
People who use a Certified Financial Planner™ have a natural advantage. You can explain the situation to your planner and ask for their opinion. At Cereus Financial Advisors, we are always available to our clients and we see and read about all the scams out there. We might be able to detect the scam where you can’t.
This article contains my views and opinions, which are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not consider any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such.