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Gone are the days of the simple scam. When you would get an email from a Nigerian Prince informing you of a fortune you are about to collect, but only after you pay a required fee. Such emails were often littered with misspellings. Nevertheless, they were effective at the time because people weren’t ready for them…they didn’t have their guard up.
Taking A Proactive Approach
Last week I had a Mastermind Call with several advisors in The Behavioral Finance Network in which we discussed scams, and how we could protect our clients. It was very eye opening. I believe we all learned a lot from each other on this and came away with some great action items.
The best defense is a good offense. In other words, if we want to protect clients it is best to act proactively, before they are scammed, so they have their guard up. This is because scams activate and feed on our emotional systems. Whether that is fear, greed, urgency to act…whatever it is, our emotional brain (not our thinking brain) is what is used. And when emotions are high, our ability to think critically and use logic are greatly reduced. Physiologically, our prefrontal cortex is offline when emotions are strong.
This is why when people are in the middle of being scammed, and friends and loved ones are trying to set them straight, they don’t see it. It’s likely they don’t want to see it, but they are so emotionally tied in, they physiologically can’t see it. If we want to help our clients (or another) become scamproof, we need to be proactive. This is especially true as AI advances and scammers will take advantage of that.
Some Tips & Tricks
- Recognize that all of us can become a victim. Intelligence and wealth do not protect someone from being scammed. A bit of humility can go along way.
- Advisors may want to ask clients how confident they are that they would be able to detect a scam and not get fooled. The more people are aware of their weaknesses (and guile of the fraudsters), the more inclined they may be to take protective measures.
- Don’t answer incoming calls from unknown people. If you do, wait for the other person to speak before you say anything. It only takes a few words for scammers to mimic our voice.
- Don’t click on links that you did not request nor were expecting, whether they come from a known contact or not. Verify the authenticity first. This is because emails get hacked and phone numbers spoofed, so it can appear to come from a known contact and have originated from a scammer.
- If someone offers you something great, or you need to help a family member in trouble quickly, and they tell you not to tell anyone…TELL SOMEONE immediately. Secrecy is one of the scammers greatest tools, because if you tell someone else, they will likely spot the scam immediately. This is not about intelligence, it’s that the victim’s brain is in emotional mode while the friend is able to use the thinking brain at that moment.
- If someone is calling from a company you do business with and has a strange or unexpected request, hang up and call the company back on their publicly listed number. Odds are the scammer spoofed the number and was about to steal your information and money. If it is legitimate, whoever picks up the phone will have the same message for you.
- Consider placing a credit freeze at each of the three credit bureaus. It is easy and instantaneous to “thaw” your credit should you need to have it run. This greatly reduces the chance someone steals your identity and opens accounts in your name.
- Make sure you have someone you can trust, whether that is a family member, close friend, or professional advisor, who you can call if anything out of the ordinary happens.
Surprise is Not Always Good
Whenever we are in unfamiliar territory, when we don’t know what to expect, the odds of not making wise decisions increase.
While we cannot anticipate everything that may happen to us, we can anticipate many of the things, think through them, and create an action plan should they happen to us. Helping your clients stay aware of the advances in scamming, and things they can do to protect themselves will greatly improve the odds they don’t become a victim.
And this is important! What does it matter if someone’s retirement earned 3% per year or 10% per year if they end up losing it all in a scam.
Related: A Behavioral Finance Handbook for Financial Advisors