A key message that Personal Financial Managers must impart to service members is that everyone is responsible for securing their own personal identification information to reduce the risk of fraud. By the time law enforcement or government agencies get involved, data and/or money have already been stolen.
Below are seven strategies to reduce the risk of fraud:
- Realize Your Vulnerability– Everyone is at risk for fraud, not just frail older adults. Fraudsters are experts in identifying their target’s vulnerabilities and using a variety of persuasive tactics to solicit information or cash. Nobody should ever think that they are “too smart” to fall for a scam.
- Recognize Red Flags– Common practices that fraudsters use include: promising guaranteed, risk-free returns, pretending to be with reputable firms, telling false stories about others who purchased their fraudulent product or service, linking pitches to current events, creating a false sense of urgency (e.g., limited time offer), and instructions not to tell others about their “special deal.”
- Ask Questions– Don’t let dubious pitches for investments or any other products or services go unquestioned. Turn the tables on people contacting you and ask them about their business addresses, licenses, and other credentials. Many fraudsters, when challenged, will simply back off and go away.
- Head-Off Frauds– Personal decision rules reduce the probability of being contacted by fraudsters. For example, if a phone call comes from a number that is not in someone’s address book, let it go to voice mail and screen it. Similarly, do not respond to unsolicited e-mails or click on links from unknown senders.
- Develop Response Scripts– “Go-to” phrases are helpful when faced with questionable offers. A common one is “I never make decisions without first checking with my spouse, financial planner, lawyer, etc.” An even simpler one is “Please don’t call me again. I’m not interested.”
- Talk to Others– Describe a potential “opportunity” (e.g., investment) with trusted friends, family, and/or financial professionals before taking action, especially if it is an unfamiliar purchase. Local law enforcement or consumer protection agencies are another good sounding board. External advice can head off a big loss.
- Be Careful With Personal Data– More decision rules are to never disclose bank account data, passwords or PINs, or Social Security numbers over the phone or online in response to unsolicited inquiries. Service members should also be careful who they grant Power of Attorney and who they have as a co-signer on accounts.
In summary, the phrase “if something sounds too good to be true, it probably is” continues to stand the test of time. Fraudulent deals are “too good” and the tips listed above can help avoid them.