Avoiding Scams in a Modern World
Recently, my brother called to say that his checking account had been hacked. Scammers gained access to over $34,000, and it all started with a plausible scenario.
Like many people, he uses PayPal. One day, he received a call from a PayPal representative stating they owed him a $53 refund on a purchase. That was true — my brother knew about the transaction. PayPal said they needed his permission to issue the refund to his account. As many people would when they’re owed money, he provided his checking account and routing numbers so he could receive his refund.
Of course, it wasn’t PayPal on the phone. Without his knowledge, the people who called were able to take a $34,000 cash advance against his credit card. Next, they put $563 in his account (not $53) and called him back to say they’d made an error. They wanted him to issue a refund back to them via money order. They told him he shouldn’t explain the reason for the money order at the bank, which is when my brother realized something was wrong. He hung up and immediately called his bank.
My brother recovered all of his money in the end. But he paid plenty with his time. It took him over a week to cancel all of his credit cards, close his checking account, cancel all direct deposits and payments, and reestablish everything from scratch. He still isn’t sure
how the scammer knew he had that specific PayPal transaction and was owed a refund. But somehow, they got the information.
A little while after this, I helped my mother with some banking transactions. I wasn’t in my office and didn’t have the paperwork, so I called her and said, “Mom, I need your Social Security number.” Now, I’m her son — she knows my phone number, my voice, and why I needed the information. Still, she told me she didn’t like giving her information over a wireless device.
I hesitated for a minute, thinking it was a bit silly. But then I called Mom three times to get her Social Security number in three sets of digits. It was a mild inconvenience, but she wanted to be extra cautious so no one could steal her identity.
Not every person who contacts you is looking to take advantage. But the one time you do put your faith in the wrong person, it can cost you thousands of dollars and dozens of hours. A few years ago, we had a client who called us to say she’d won some money. She felt sure the person who called her was being honest, even after her daughter and I both told her it wasn’t true. I suggested she call the FBI, who began arrangements to trace the perpetrators.
But even the FBI telling her it was a scam and they’d seen the same scenario before wasn’t enough. After several more calls with the scammer, she eventually gave them $500. Of course, she never received a dime. Her belief in winning was more compelling than the facts. We all want to be the one who wins the lotto or some other windfall. But generally, things that sound too good to be true are.
The moral of these stories is to never give information (like your account numbers, date of birth, or Social Security number) to someone who calls you. My brother should have pointed out that PayPal already had his checking account on file. But the thought of getting back
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money that was rightfully his had compelled him to behave otherwise, and he fell into their trap. Most scams will start with some fact to hang their deceit on because it motivates you to give away information you shouldn’t.
Recently, I received a call requesting some information. I told the caller that I would instead call the publicly listed 800 number and reach them via their extension. The caller said that was fine — they understood my hesitation. So, I called the standard number, confirmed the person who had called me worked there, and reached him via a secure avenue.
The caller was the IRS. Even then, I wouldn’t take any chances. Many people get flustered around authority and think they need to fall in line for the IRS. Well, what if it’s not really the IRS?
You might think all these safety measures make doing business too cumbersome. But in an electronic world, you have to be your first line of defense. We should all be more like my mother, willing to take a few extra minutes to save ourselves weeks or more worth of time, effort, and loss. Because even if you’re made whole in the end, your time is as valuable as your money.
–Gary Mattson