Learn about common fraud schemes

Stephanie Loscalzo:

Good afternoon, everyone. Thanks for joining us today for EastRise Credit Union’s fraud overview with a specialist from our fraud department. If anyone has any questions today during our session, please look at the bottom of the screen where there’s a Q&A, and you can put your question there and we’ll happily answer it. Either throughout this presentation, but definitely we’ll have time at the end to answer. I’m so grateful our speaker is here today. Our speaker is someone who brings experience in this space, so can answer questions that you might have. And this is really your first step towards fighting fraud, is to be educated. So I’m glad that folks are joining us and I’m going to hand the mic over to our speaker. Thanks so much for being here.

EastRise Fraud Expert:

Good afternoon, everybody. I’m here delivering a message on behalf of the fraud department at EastRise Credit Union. So the gist of today, we’re going to go over a handful of things, talk about what fraud might look like, why you should care about it, what you should do if you think that you’ve come across it, that kind of thing. Just sort of lay the framework, lay the foundation for being able to keep an eye out for yourself and for your family, friends, neighbors, that kind of thing. So the three key questions for today, what is fraud? Why should I care about it? And then what can I do to keep myself safe, keep my money safe, and keep the people I care about safe?

So what is fraud? I think it’s a word that gets tossed around a lot. It’s one that I think a lot of people are obviously familiar with to some degree. You wouldn’t have signed up to watch something like this if you weren’t at least peripherally aware that fraud is a thing. But I think that the actual definition can get a little bit lost in the weeds for some folks. So at the end of the day, when you boil it down to its simplest definition, fraud is misrepresentation for financial gain. It’s that simple. If you distill it down, that is the one thing in common with every single thing that we apply the word fraud to.

And that can range, there’s all different kinds of ways that that can look. I mean the classic example, I think that a lot of people would have it come to mind when they think about fraud or might use as a prompt, is Bernie Madoff. Enormous Ponzi scheme. This massive, massive operation in which he’s taking in all of this money from investors, and then not actually generating a profit or a return on it, and only paying out just enough to have people think, “Oh wow, this is really something. This is really an incredible investment opportunity. I need to give this guy my money.” And meanwhile, he’s blowing all of it on this extravagant lifestyle and it’s all a sham. He’s misrepresented this investment opportunity for his own financial gain.

It could also be, rather than misrepresenting what you’re doing, it could be misrepresenting who you are. Anna Delvey/Sorokin, if you’ve watched the Netflix documentary, Inventing Anna. This is somebody who pretended to be someone who she was not, who was far more wealthy, and connected, and impressive than she actually was. And was able to use this character that she had created for her own financial gain, being able to take out loans or get people to give her money. And she just sort of posed as this well-off socialite for a long enough time that she was able to extract a lot of money from folks. So lying about who you are, or the purpose of funds, or the source of funds, all of these things can be different ways that somebody commits fraud.

Speaking of the purpose or the source of funds, Elizabeth Holmes, Theranos, this golden egg in Silicon Valley in the venture capitalist world, where this woman said, “I have this incredible product and it’s going to do all of these amazing things. And we’ll be able to tell so much about you, and your health, and your health history, and your health future from this very simple blood sample.” And ultimately, she was completely making the whole thing up but was able to get a ton of money from folks in pursuit of this alleged idea. Could also be a lot more simple than that, it could be things like check fraud, just lying about altering a check, forging a signature. It could be things that are happening at a much smaller scale than these massive headline grabbing schemes. And in the case of somebody like Frank Abagnale, a lot of the fraud that he committed was for informational gain that can later be used for financial gain.

Understanding enough about the way that a system worked, understanding enough about the ins and outs of an industry, or business, or something like that. And then being able to apply that information later in order to realize that financial gain instead of just the informational gain. So we’ve gone over some broad concepts of what fraud schemes might look like or what the broader definition of fraud is, but there’s a lot of silos that these can get categorized into that are some of the schemes that we see more often and that you might be threatened with more often. And so I’m curious to see what different schemes people are particularly familiar with, considering that there is a pretty broad range that are out there.

So we’ll go through the slides. Obviously, this will be an opportunity for you to kind of see if you go, “Oh, I’m familiar with one of these.” But once I start actually describing it in detail, how close was your initial estimate in terms of what we’re actually talking about here? So first things first, we’ve got phishing, vishing, smishing. These are different variants of the same concept. Phishing is one that people are, generally speaking, pretty familiar with. Phishing is some kind of attempt to get the recipient of the phishing attempt to click a link or to take some kind of action. Phishing is usually used to refer to doing this through email.

Getting some kind of spam email that’s trying to get you to open an attachment or click on a link. It might be tempting you with some kind of lottery prize or any number of things. But the whole crux of the thing is to try to get you to click a link, take an action, download an attachment, whatever it might be that then gives the fraudster some kind of access to something. So it could be things like you get an email from “Microsoft” and it’s like, “Oh, your Microsoft account is compromised and we need you to click this link, and go to this website, and verify your password.” And so you click that link, and it takes you to a website, and you type in your password.

And that link, of course, did not take you to Microsoft’s website. Microsoft doesn’t actually really know what your password is. And so what you’ve done is you’ve gone to the fraudster’s website, you’ve typed in your password, and they go, “Great, that’s the password for this email or for the Microsoft account associated with this email. I can now log into that account and use it for nefarious means.” Whatever those might be. So phishing is a really common one, but it doesn’t necessarily have to be limited to email, it could be any number of things, smishing, SMS or text. You get a spam text that is trying to get you to go to some kind of link, maybe it’s something that’s pretending to be USPS and it’s, “Your package couldn’t be delivered. Please click this link to verify your contact information.” It could be that you are going to be the recipient of some kind of incredible prize if you click on this link, and go to this website, and enter your credit card info.

It could be any number of things, but it still has that core component of trying to get you to click on something, or to download something, or to engage with this in some way that gives the fraudsters access. Vishing, same concept, we’re just talking about it now within the context of a phone call, where the fraudster might be on the other end of the line telling you to do something on your computer, like for example, Microsoft tech support calling you to try to get you to do some stuff on your computer or download a program that gives them access. Or the phone call telling you that you’ve won a prize and please visit this website and enter your information. You get the idea. It’s just slightly different terminology to refer to different mediums through which this can happen. But the one key thing remaining the same across all of them is getting you to do something by tempting you, or threatening you, or whatever it might be.

The one thing I do want to add to this is there is such a thing as spear phishing, which is when one of these things, the fraudster goes about it in a much more targeted manner. So that’s something like we often see this with an executive or some kind of public figure. Somebody that there’s a little bit more information available out on the web, someone that a fraudster could kind of piece together something that seems like a little bit more legitimate than just your random, poorly spelled, semi-nonsense phishing attempt that you sometimes get. Instead, it might be somebody pitching themselves as some kind of potential investor in whatever project this public figure is involved in, or could be disguising as some kind of invoice and they want you to download the invoice, so that the malware embedded in the attachment can take hold of your computer.

Doesn’t necessarily have to be somebody that’s famous or well-known, it’s just spear phishing is, instead of sending this blast email out to tens of thousands of people, it’s narrowing it down to a single individual to try to make it seem more legitimate. It’s a little more effort on the part of the fraudster, but maybe there’s more chance of a payoff. Next one is identity theft. I think if there’s anything that folks are going to be aware of in terms of a fraud scheme that they’ve probably heard of before, it’s probably identity theft. It’s somewhat self-explanatory in terms of, it is when a fraudster steals someone else’s identity.

Now, while that is relatively self-explanatory in terms of what the actual phrase means, what does that actually gain you as a fraudster? What does this actually do if I am… If I’m stealing somebody’s identity, what am I actually intending to do with that? And what we usually see is with a stolen identity, with somebody’s name, social security number, date of birth, address, all that kind of stuff, well, think about in your own life, when do you use that kind of information? You might use it to apply for a loan, like a credit card, for example. You might use it to register for some kind of service. You might use it to apply for a car loan, a mortgage even.

Anytime that you would use that stuff, somebody that’s stolen your identity could use that stuff. And so usually, it is to apply for a loan, it’s to open up credit cards in your name, rack up colossal bills, and then, “Oh look, I don’t have to suffer the consequences of this because it’s not my identity. I just have this credit card in so-and-so’s name and I can use it to buy whatever I want, and never pay for it, and they’re the ones that suffer the consequences.” And so yeah, it’s posing as somebody else for financial gain because you don’t have to deal with any of the fallout in being wildly irresponsible and reckless with that identity. So next, and this can seem similar because imposter, we think about somebody posing as somebody else, pretending to be somebody else.

But this isn’t actually identity theft, this is its own separate category. And an imposter scam is when the fraudster poses as some kind of legitimate entity that you are probably pretty familiar with. That could be posing as the IRS, that could be posing as FEMA, for example. One of the things that we’ve seen for this kind of thing is in the wake of the flood that we’ve had here in Vermont this past summer and the summer before, or look to even more recent events down in North Carolina, down in Florida, that kind of thing. We’ve seen scam attempts where a fraudster poses as, say, FEMA and says, “Hey, we are willing to provide you financial relief because you’re in this affected area, and so please fill out all this information. We need to verify that you are who you say you are, so give us your social security number, give us your address, give us your date of birth, give us your bank account information, so that we can send you some funds that you can use to keep things going, keep your life on track in the wake of this disaster.”

And obviously, they then are able to take that information and maybe make fake checks with all of the right information, or steal your identity because you gave them your social security number, that kind of thing. Imposter scams are, generally speaking, revolving around, you’ve won a prize of some kind. That might be something like the FEMA example of like, “Hey, there’s funds available for you, please apply so that you can get them.” That might be something like a lottery like, “Congratulations, you’ve won some kind of sweepstakes and so please send us the taxes that you need to pay on this million dollar prize and then we’ll release the funds and send them to you.”

It can take any number of forms, but yeah, generally it’s posing as some kind of legitimate entity with some sort of great temptation, it’s usually having won a prize. There are instances of this as well that we see that are some kind of, rather than a prize it’s kind of the flip side of it and it’s like the threat of some kind of great consequence. I mentioned the IRS being something that we’ll see for imposter scams a lot of the time, and that is usually something along the lines of, “We’ve determined that you haven’t paid sufficient taxes in the last couple of years and we’re going to audit you super heavily unless you send us the $5,000 that you owe in back taxes.” Or something like that.

The ins and outs and the little details are less important than the either temptation of great prize or fear of great consequence being really common in imposter scams. Computer compromise, that’s another one that I think probably a lot of people are relatively familiar with. It’s just fraudsters gaining access to your computer. And when I say computer, I think it’s fair to say that I’m speaking more broadly to smart electronic devices. I’m including cell phones in this, iPhone, Android, your tablet, whatever it might be. The purpose and the concept is the same of, our whole life revolves around these little electronic bricks, whether it’s your phone, whether it’s your PC, doesn’t really matter. And you’ve probably got all kinds of passwords stored on there, and you’ve probably got digital banking that you can access through there. Or maybe you’ve got your credit card information stored in your smartphone, so that you can check out from your favorite websites more easily, things like that.

Fraudsters find all of that stuff extremely appealing, and so of course, they’re going to try to get into your computer somehow in order to gain access to all of the stuff that you’ve got waiting in there. And this can be accomplished in a number of different ways. This could be things like phishing, like we talked about earlier. It could be things like vishing or social engineering, where they call you and then they walk you through the steps to install some kind of program on your computer. Because they’ve convinced you that they’re a legitimate tech support and that you need their help to get rid of some nasty stuff on your computer or to fix whatever’s wrong with it. It could be things like a hacked website, where instead of putting your credit card information into Amazon.com, you’re putting it into Ammazon.com, but it’s spelled with two M’s and it’s actually a completely bogus storefront, and now the fraudster has your credit card information.

Or it could be that you’re trying to download a movie or something for free, and the website is super shady, and instead of downloading the movie, you download the movie and also some malware that now has given that fraudster access to your computer. One of the things that we see more commonly for this type of fraud is… Or I shouldn’t say more commonly, what I should say is one of the more common really devastating versions of this because when we do see it, it’s often really nasty, is ransomware. The idea with ransomware is that the fraudster, after gaining access to your computer with some kind of program, that program then encrypts your hard drive, it encrypts all of the data that you have stored on your device. And when that data is encrypted, it can only be accessed through the key, the decryption key, which of course you don’t have, the fraudster has.

And so they’re essentially holding your information hostage. They’re saying, “I have encrypted all your stuff and the only way that you’re going to be able to get all your information back, all your pictures, all your videos, all your programs, whatever, is if you send me $500 in gift cards from your local grocery store, you go in and buy all these Visa gift cards.” Or maybe they want you to send them some kind of cryptocurrency or whatever method of choice they prefer. But the fact of the matter is that, yeah, this is a huge problem, because yeah, a lot of the time encryption these days is really, really good and it’s not like a password that you can just guess, it’s like a 64 or 128 character long thing that’s complete gibberish. And yeah, the fraudster is the only one that’s got it and so a lot of people end up giving them the money, but then does the fraudster actually give them that information back? Maybe. Maybe not.

A lot of the time we see that they don’t. And so it’s a really nasty one because going through the recovery process to try to get that data can be really challenging, and a lot of the time the fraudster kind of strings along the victim and says, “You got to give me this money. You got to give me that money. That wasn’t enough. I actually want you to do this other thing instead.” And because they have this leverage over this person by having their information held hostage, they’re able to use the victim as a pawn or to try to extract even more money than they initially were asking for, that kind of thing. So ransomware is a really nasty one. Obviously, anything computer related can get pretty ugly. But yeah, we see it as a vehicle for other types of fraud, we see it as a version of fraud in and of itself. It covers all kinds of bases.

On the slightly less technological side of the spectrum, we have check scams. These have been around since the day the check was invented. They have been through all kinds of iterations in that time, especially with the advent of things like Photoshop and other editing software, they’ve taken on a whole new life. Mobile deposit has probably also helped with folks’ ability to try to facilitate check scams. So yeah, we still see these all the time. Checks are pretty easily altered. It’s physical media. I can go in there with a pen and some Wite-Out and do some pretty decent damage. And so we see these as a vehicle for fraud all the time, or we see them as fraud in their own right. Some of the more common things that we see are fraudsters paying for some kind of good or service with an altered check.

I alluded to this earlier when we talked about identity theft and a fraudster crafting a check based on the information that you’ve willingly given them because you thought they were somebody else, because now they can just cash these checks all over the place, take out the money, and that money is not something that they are going to be held liable for, it’s going to be whoever’s name and information is on the check. We also see a lot of instances in which fraudsters overpay for something. For example, it might be purchasing something off of Craigslist, for example, where the fraudster comes and they pay, let’s say you list a kayak for 400 bucks, and then the fraudster comes and they write you a check for 800. And then shortly thereafter they’re like, “Ah, you know what? Actually, we agreed on 400. I wrote you this $800 check. Can you just send me the $400 back please?”

And you not knowing any better go, “Yeah, sure, no problem.” And you send them the 400 bucks. And then fast-forward a couple of days and their $800 check bounces because checks take a couple of days to process when you talk about the fact that they’ve got to go through the Fed and we’ve got to communicate with the other financial institution. Without getting into the weeds of how checks work, it takes a few days for them to process, and that’s just enough time for a fraudster to pay for something, ask for some of the money back, so that you pay them, and then abscond with both the money and whatever thing it is that they bought with that check. So now you’re out 400 bucks and your kayak. So we see that one pretty often. Less so for something like Craigslist, we usually don’t see it with something in person, but we see this as something that happens online all the time.

One I dealt with recently, for example, was a member was contacted on Instagram, via Instagram DMs, direct messages, and somebody said, “Hey, I’m an artist and there’s this picture on your profile that I love and I want to paint it. Do I have your permission to do so? I will pay you a commission because I’m using this thing that is yours as the basis for my art.” And of course, the person who had initially posted this image, our member, was super flattered and they were like, “Yeah, absolutely. That’s fantastic.” Fraudster goes, “Great, here’s 2,500 bucks.” And it’s a check. And then they go and they do that thing I just talked about with the Craigslist scam of like, “Oh, I’m so sorry. Actually, the rate is supposed to be 2,000. Can you Venmo me back the 500 bucks that I overpaid?”

And this person not knowing any better went, “Yep, no problem.” Sent them the 500 bucks. And then fast-forward a couple of days, the check bounces, and this person is now out $500. And of course, there was no artist, there was no art, this was entirely just a ruse to get this person to send money. The artist and commission angle being one that will catch you super off guard and is really flattering, you feel good, of course you want to participate in this thing, it’s all very exciting. And so you don’t take the time to think about it and go, “Why would they have to pay me commission? They could just use this as inspiration, they don’t need to pay me commission. They could have totally gotten away with this and never told me about it. And why are they paying via check? And why am I getting this check that’s ostensibly from an artist, and it’s like some random landscaping company in another state or whatever?” Whoever’s check it is that they altered to be able to send this stuff.

And so that actually touches on something that is common in check scams, but is common in really any type of scam, and that is to create a sense of urgency. The whole premise is to set things up in such a way where the potential victim doesn’t have a huge amount of time to think about things, to take a step back and go, “What is happening? Does this actually make sense? Is this something real? Does everything actually add up here?” Because most of the time if you take that step back, and you think about what’s going on, and you actually ask those questions of yourself, you’ll find out that the story falls apart pretty fast. This doesn’t actually make a lot of sense. They’re telling me I won this lottery and that I need to pay the taxes on the amount that I won, so that they can release the funds.

Well, why wouldn’t the taxes just come out of the funds that I won? Why do they want me to send them money? Things like that. You start to ask some questions and realize that the story doesn’t actually make any sense, they’re just trying to get me to act quickly, so that I don’t have an opportunity to think about this stuff. Or to throw me off my game, so I don’t have an opportunity to think about this stuff. So whether it’s through some kind of great temptation or great threat, there’s a common thread of creating a sense of urgency. The next type that I think is worth talking about, some argue that this is kind of a subset of the imposter scams, where the fraudster’s pretending to be someone or something. In this case, they’re obviously pretending to be someone. But I think that it’s one that warrants its own separate set of discussion, which is the relationship scam.

It’s basically the fraudster posing as somebody that they are not and playing a character and playing a role. And ultimately, the intent is to get the potential victim to trust, and in the fraudsters best case scenario, fall in love with this character. The whole idea here is you build up this relationship, you earn trust, you get to a point where the victim trusts the fraudster. They think they know this person. They’re maybe in love with this person. They think that there’s this really deep connection that they have. And that’s when the fraudster starts to ask for money. That’s when the fraudster is like, “Oh, well I…” This usually happens online. It’s usually, you set up a profile on a dating website, or app, or whatever, and so this person is like, “Oh, well, I’m so far away, but I feel like you’re my soulmate. And yes, of course I want to come and see you and be with you, I just, there’s no way I can afford the plane ticket. Can you send me the money to do that?”

And so of course, this person wanting to meet the love of their life, or who they think the love of their life is, they send the money willingly. It could be that the fraudster is actually, “There’s this medical event and my mom is so sick and I don’t know how I’m going to be able to afford this.” And of course, you want to help this person that you have these strong feelings for, so you send the money. The way that they start to try to extract money from the victim can take practically infinite forms. There’s all kinds of different ways that this can take place, but the whole idea is that they build up trust with the victim to the point that they feel like, “Yeah, I can probably start extracting some value out of this person.” And then they just start asking for money again, and again, and again, and they just run this victim for all that they’re worth.

And so we have seen a lot of instances of this at the credit union, or you ask somebody from the fraud department at really any financial institution and they will agree this is really common. I think it got particularly common in the wake of the pandemic. There was a lot less face-to-face interaction. A lot of people were a lot more lonely than they had been before. I think also when you combine that with the fact that online dating, and dating apps, and that kind of thing. Online connections of this type have gotten a lot more common in the last five, 10, 15 years. The end result is that, yeah, this is a seriously common and seriously damaging type of fraud. We see it, I think, the most with the elderly. They are, I think, a little less familiar with what “catfishing” might look like. Catfishing being a term that a lot of millennials or Gen Z use to talk about an online profile that is entirely fake.

The photos are pulled from some random models Instagram, and all of the information is totally bogus, and it’s somebody completely different running this stuff from behind the scenes. And so this is catfishing to the nth degree, where you have somebody not only doing this and presenting themselves as someone that they’re not, who seems super interesting, and appealing, and attractive, and a great partner, but then they use that for pretty nefarious means and try to get a lot of money out of folks. While it’s technically, I suppose, just a kind of imposter scam, it’s growing rapidly enough and is devastating enough when it happens that it’s really worth highlighting on its own.

So the last example I want to talk about for some of the more common scam archetypes that we see is that of the cryptocurrency scam. This is another one that has proliferated like wildfire in the last couple of years because cryptocurrency has proliferated like wildfire in the past couple of years. Anytime some kind of new technology comes out, surprise, surprise, somebody’s going to try to use it to scam someone else. We’ve seen that with AI, we’ve seen that with dating apps, that kind of thing, like I mentioned on the last slide. And we’re seeing it here with cryptocurrency. I think this one preys primarily on the concept of FOMO, or fear of missing out. FOMO being the acronym. Anybody that’s watched the news or paid attention to cryptocurrency at all has seen that, yeah, there have been tremendous swings in value, and truly astounding potential for profit. There are coins and cryptocurrencies that have gone from 5 cents per unit to $40,000 per unit.

It’s unbelievable to see. And so there’s a lot of people that look at that, compared to your traditional investment vehicles of stocks and bonds, and they’re like, “Holy smokes, I’ve got to get involved in that. This is such an enormous opportunity and I want to be a part of it.” And so there’s a lot of scammers that know that there’s a lot of people that feel that way, and so they advertise these insane returns, insane profits. I had a case that’s been going on for the past couple of months in which somebody was pitched a cryptocurrency investment opportunity. And when I talked to this person about the investment, because they wanted to wire all these funds to this destination that didn’t really look like a legitimate investment opportunity, when I talked to them about it, they said, “Well, I got pitched this investment opportunity by somebody that I met online, and what they’ve told me is that this trading firm for cryptocurrency has found a way to shield me from any downturns in the market, so the value can only go up.”

And sure, that sounds great. Wouldn’t that be lovely if that were a way that the world worked, where your investment was going to grow like crazy and you were completely free of any and all risk? I can understand why this person was so tempted by that. Now, of course, if you start to actually think about it, you go, “Well, that doesn’t make any sense.” There’s no way to do that. If there was, everyone would do it. That’s just not how investment works. But with it being cryptocurrency, with it being this new, and confusing, and complicated thing that all anybody really knows about it, for the most part, unless you’re really kind of into the weeds on it, all anybody really knows is, yeah, it’s really volatile and there are some people making a ton of money off of it. And that’s all she knew and she went, “Well, this seems like a way to really keep myself safe while still reaping the benefits.”

And so she wanted to send all of this money to what was clearly a scam. And so yeah, it’s preying on that fear of missing out, on the massive returns that some people have been able to find in this market. And it preys on the fact that crypto is really confusing and it’s really complicated. The inner workings of how this stuff operates aren’t something that a lot of people are particularly versed in. And from the perspective of the scammer, it’s really hard to track/convict somebody for crypto fraud. Obviously, there have been some pretty high profile exceptions to this, like Sam Bankman-Fried and FTX. If you’ve seen any of the stories about that in the news, it’s a guy that ran a giant trading platform that, ultimately, has now been arrested for an unbelievable number of counts of fraud, and wire fraud, and conspiracy to commit fraud, and all sorts of nonsense.

But the whole nature of the platform of cryptocurrency is that it’s anonymized. Everybody’s got their little wallet, which is like your bank account, and you can see what activity happens with each wallet, but there’s no names affiliated with any of those. And so it’s really hard to tell who is associated with this wallet that’s conducting this scam. It could be somebody that’s international. It could be multiple people. It could be someone legitimate whose wallet was compromised by some kind of hacker. Because it’s not like the banking industry where like, okay, if there’s a bank account that’s involved in fraud, there’s a name associated with that account, we can start to dig in and figure out who is involved in this and what’s going on. You don’t get that same kind of insight with cryptocurrency, and so it’s really a really tempting vehicle for fraudsters when they’re trying to commit some kind of scam because it helps keep their identity safe and they’re able to perpetrate that much more fraud.

And so I think the takeaway that I talk to a lot of folks about when it comes to cryptocurrency fraud or crazy investment schemes and that kind of stuff, and this is true for all fraud, but it’s particularly true here. If it sounds too good to be true, it probably is. I think that’s the message that a lot of these folks are like, “This is unbelievable. How can they protect me from all of the downsides of the investment? It seems too good to be true.” Well, it’s because they can’t protect you from all the downsides of your investment and it is too good to be true.

So as a rule of thumb for really any kind of situation like this, but particularly cryptocurrency, yeah, if it sounds too good to be true, it probably is. So transitioning out of the spiel of, here’s all the different types of schemes, and scams, and fraud, and financial crime, and et cetera, we get to the next part which is, okay, that’s all well and good. I know what this stuff is now, but why should I care? I’ve never been scammed. I’m too clever for that. And most people have not fallen victim to some kind of scam. If most people were falling victim to some kind of scam, there’d be a lot more people at the credit union doing the kind of job that I do. And so yeah, fortunately, most people and their money are safe, but I think that it’s important to highlight a couple of things when it comes to the sales pitch of why this stuff matters and why it’s important.

First things first, fraud’s just getting a lot more common. I alluded to earlier, every time we see a new technology, somebody somewhere is going to try to use it to scam someone else, and there’s been a lot of those lately. There’s been cryptocurrency, like I just talked about. We also talked about that with dating apps and that sort of thing. I mentioned AI. We are seeing AI being used for scams now. Things like these deep fakes that you can do where AI is able to take a bunch of samples of somebody’s voice and then regurgitate what really, in a lot of cases, sounds shockingly similar to the person pretending that this AI is. We’ve seen that used on phone calls to try to get access to somebody’s account. We can see that with video deep fakes.

There’s any number of different things that are getting more and more common that make it more and more possible to perpetrate fraud. And in some cases, make it that much harder to actually detect and react to. I think this was worsened by the pandemic. I think that there’s a few reasons for that. I think in some cases, like the romance scams, people were more isolated, people were more lonely, they were more desperate for human connection, and a lot of fraudsters preyed on that. I also think that the world got a lot more online and a lot more people were exposed to scams, and schemes, and fraud that may not have encountered that in the past.

I think that there’s probably some degree of desperate times calling for desperate measures, where people lost their job, or the economy of entire nations was completely down the tubes and people resorted to trying to scam people online because it was the only way that they could think of or the only way that they had available to them to try to make ends meet. Now, of course, I’m not excusing the fact that they were committing crime and hurting other people to do that. But what I am saying is that it became a lot more common during that time, and I really have not seen much of a decrease even as the restrictions have loosened and things are back to “normal” whatever normal is these days. So it’s getting a lot more common and it’s something that everybody needs to be that much more aware of.

I also think that there’s a lot of folks that maybe feel like they don’t need to care because the only people that they know that get scammed by this stuff are older and they’re like, “Well, I’m young, and I’m with it, and I understand the internet, and I know how to see this stuff coming a mile away, and I don’t need to worry about it.” And the data really doesn’t back that up, unfortunately. Everybody is at risk, it just comes down to what in particular you are at risk for. This data is a couple years old at this point, but is essentially breaking down what percentage of people in various demographics have reported a loss from fraud and the amount of that loss by age. And this is, I am completely blanking on the name of the non-profit that provided this information. I wish I remembered it so I could tell you all about it because they’re a fantastic resource. Hopefully, that’ll come to me by the end of the presentation.

But in the meantime, just looking at the chart, there’s a couple of key takeaways. Number one, there’s a shockingly high percentage of folks reporting a loss in various demographics, and we actually see it be a little bit higher at younger ages than we do at older ages. Now, I personally am of the opinion that the reason it’s lower at older ages is because the reporting for this data was done online, and there’s some folks at those older ages that are maybe a little bit less inclined to report it or don’t know that that reporting option is available, which sort of deflates the number that actually report a loss. And so my guess is that the yellow golden line here is actually probably a lot closer to level at around that high 50s, low 60% mark than maybe the data would suggest. But the fact of the matter remains that, boy, that is a lot more people than you might think are actually falling victim to this stuff.

The other thing that’s worth highlighting is the amount lost by different demographics. In particular, I want to highlight the 20 to 29 age group being a bit of a spike and a bit of a higher amount. I think in my experience, and granted this is an anecdotal explanation for the data, but in my experience, this is right around the age that a lot of folks achieve some degree of financial independence or have a lack of parental oversight for the first time. And so they’ve got their money, they’re in the world, they don’t know how the world works quite as well as somebody that’s been in it for a couple more decades, and they’re a little more liable to make a pretty nasty mistake than some of the older age ranges might be.

Obviously, there’s not a quiz at the end, the numbers themselves aren’t super crucial here. I think the key takeaway though is that there’s a lot more people that are a lot more likely to be victims than we maybe think there might be because we all kind of fall victim to that like, “Oh, it’s only the elderly that fall for scams, and I’m young, and I’m smart, and I’m not going to be a victim.” The data doesn’t really back it up. And so the thing I want to talk about is blind spots that each age range starts to fall victim to.

Because that’s ultimately what it comes down to, is that you might, as a 30 something, go, “Well, yeah, of course I’m not going to fall for this cryptocurrency scam because I’m super into crypto and I know how it works. And so when I see these scam pitches for investment, I can spot them a mile away and I don’t need to worry about it.” Great, that’s not a blind spot for you, that might be a blind spot for somebody else. But there are other things that your demographic, your generation could potentially be falling victim to. And so the thing that we see for the younger generations that’s the biggest blind spot for them is checks. Because there’s a lot of folks these days in the 18, 25, early 30s, that kind of thing, that don’t use checks regularly.

I was talking to a friend about check scams and how to spot this kind of stuff, and they told me the only checks that they have ever interacted with were checks from extended family for a birthday, graduation, that kind of thing. And then the only checks that they’ve ever written were their monthly rent check to their landlord, and that’s it. They don’t use a check when they go to a store. They don’t use a check to pay their utility bill. They’re not familiar, they’re not exposed to a lot of checks. And so when a fraudster writes a bad check, that’s a lot less obvious to those folks than it might be to somebody that’s been using checks on a daily basis for decades.

There being a blind spot for everybody, but younger generations, I think the key one for them is checks, as well as social media scams, I think, are particularly common for younger generations as well. I mentioned the artist on Instagram, like royalty kind of scam earlier in the presentation. That person was in their late teens. This is, I think, one of those things where they are on these platforms a lot more than some older folks might be, generally speaking of course. And they aren’t as familiar with how the world works and maybe don’t know the ins and outs of how that kind of interaction like a royalty, or a commission, or whatever is supposed to go. And so yeah, social media scams, particularly Instagram for some reason, and checks, are the ones that we see for younger generations the most.

For middle-aged folks, maybe 30s, 40s, 50s, 60s, that kind of deal, the thing that we see the most for them, there’s cryptocurrency and then just broader investment or lottery scams. And the reason, I think, that we see these the most is that FOMO, that fear of missing out that I talked about earlier. Because they are, I think, a little more financially savvy, they’re a little more aware of how the world works, they’re not necessarily going to be as liable to fall for a tech scam, that kind of thing, but they are worried about falling behind. There’s a fear of being behind in terms of financial planning for retirement, for maybe college for the kids. Whatever way the fear manifests, I think that that’s a lot more common in this demographic. We see a lot of folks, maybe in their 40s or 50s, that are falling for some kind of cryptocurrency scam because they don’t want to admit that maybe they’re not super-duper up to speed with the latest and greatest in technology.

And so they’re not as aware of what a scam might look like in those circumstances, and they are willing to turn a little bit of a blind eye just out of a sense of maybe of pride. I could try to psychoanalyze this all day, and ultimately, that’s not what my degree is in, that’s not what my job is in. What my job is in is helping the folks that fall victim to this kind of thing. And I think, yeah, the fear of being behind in financial planning or fear of missing out on some kind of investment opportunity that will set them up for later in life, I think, weighs pretty heavily on middle-aged folks. And so that’s something that we see them being victims of a little more often than maybe other demographics might be.

And then for older generations, the things that we see are ones that I think a lot of people are probably kind of familiar with because it gets talked about more. And to those of us that aren’t part of that demographic, it seems like a very obvious scam, because again, it’s that blind spot thing. We see grandparent scams, which somebody calls the grandparent posing as the grandkid and they are traveling out of the country in maybe a place that has a little bit of corruption in the government and they’re like, “I’ve been arrested and they’ll let me go if I can post bail, but I don’t have the money here because I’m traveling. And please, please, please don’t tell my parents and I need your help.” And of course, they want to help their family. Of course they do. And the grandchildren in particular, of all the people, they’re so motivated to help and to do something here, and so they’re much more willing to send the funds and not talk about it with anybody because the grandkid doesn’t want to be embarrassed and that kind of thing.

We see grandparent scams of kids being in danger, needing bail, traveling. Maybe it’s a medical emergency overseas. It usually has something to do with traveling and has that same like, oh, it needs to be urgent, so that they don’t think about it, and they don’t talk to anybody, and they just send the money. The other one that we see pretty often with older folks I talked about earlier, it’s the romance scams. I think a lot of folks later in life when they don’t have coworkers, when they maybe don’t have the same social activities and network that younger generations might, they are more liable to fall victim to romance scams. And so that’s something that we see more commonly with older generations as well, which I know I’ve spoken about at previous slides.

So I know we’re getting close to our time limit here, so this last section, fortunately, is pretty straightforward. It’s, what can I do? All right, you’ve explained what the fraud looks like. You’ve explained why I need to care about it. I’m convinced. What can I do when stuff like this happens? And so you might be thinking about if you’ve ever been scammed or somebody that you know got scammed and what do you do when it’s you? What do you do when it’s someone that you are close with? And the first thing I want to say here is that we’re here for you. Your credit union is here for you. We have a whole team. There’s a fraud department whose job it is to help keep you and your money safe.

And if you find that you have fallen victim to some kind of scam, they are available as a resource. You call the call center, you go into your local branch, you tell them what’s going on, and in some cases that can just get handled by the contact center, and in other cases it gets escalated up to the fraud department. But there’s a reason they’re around and it’s to help you in times of crisis. There is not judgment, there is not punishment, there is just making sure that you are safe, your money is safe, and that everything is okay.

So first things first, stay educated. Stay up to date on what’s going on. Stay up to date on what fraud is, what it looks like, what to do about it. For example, this webinar, if you’re here, if you’re watching the recorded version of this, great, you have taken a step that the overwhelming majority of people haven’t. And I guarantee it’s going to be a net benefit for you in some way, whether that’s that you spot something that’s pitched to you and you go, “Wait a second, that’s a scam. I’m not even going to touch that with a 10-foot pole.” Great. That made the difference. Maybe it’s somebody that you know and you’re able to talk to them about it and go, “Actually, I learned about this the other day, and trust me, you don’t want to get involved in that.” So learning how to spot fraud for yourself, learning what it looks like, learning why people might fall for different things, what those different things are, all that kind of stuff.

That’s what’s going to keep you the safest because you’ll be able to avoid it before you get entangled with it. So it’s that whole, if it sounds too good to be true, it probably is. The whole creating a sense of urgency. All of these little things that you can keep in the back of your mind as you go about your day. Stay connected. Scammers want to isolate you. Whether that’s the grandparent call where they’re like, “Please don’t tell my parents I need your help and I need it fast.” Or it’s the, “We’re the IRS and we’re going to sue you into oblivion if you don’t send us the 5,000 you owe back taxes.” Or whatever form of fraud it is, the scammer wants you to act quickly, and they want you to send the money without thinking about it.

They want to keep you isolated because the second that you start to talk to somebody else about it that’s not involved in the scam, the second that you start to get to think about it critically, and take a moment, and slow down, and actually process it, you’re going to figure out that it’s nonsense. And so by staying connected, talking to your family, your friends, your neighbors, you can have these people that you can rely on to help you realize if you’ve been scammed. And you can also talk to them and help them realize if they’re in the same boat. Building that trust, building that community does a lot to make sure that when somebody feels like they’re in a crisis, they’re willing to share that with you and you can intervene and go, “That’s a scam. Don’t listen to them. Don’t send them that money. We’re going to get through this and we’re going to make sure that you’re okay.” So I think just keeping in communication does a huge amount to prevent this kind of thing from happening.

They want to keep you from doing the research. You need to slow down. Just staying connected is so critical for this kind of thing. And then the last thing is you need to let the right people know when something happens. Like I talked about before, talk to your financial institution. Every financial institution has some form of a fraud or financial crime department. They are there to help you and they’re a fantastic resource. Talk to the credit bureaus if it’s something that has affected your credit. If it’s something like identity theft, talk to other credit bureaus, put a freeze on your credit, so that when a fraudster tries to take out a credit card in your name, they can’t. And not only does that keep you safe, but that lets whatever institution is dealing with that loan application know that, “Hey, that person’s a fraudster.”

And if enough instances of this happen, you can start to get law enforcement involved and you can start to get to a point where maybe something can be done to actually bring the fraudster to justice. And speaking of law enforcement, law enforcement’s another crucial one. If you are worried about your safety, if you are worried about this fraudster being local, like a Craigslist scam like we talked about earlier, it’s absolutely worth involving law enforcement. They, just like the credit union or other financial institution, they’ve got a whole financial crime division, they’ve got training in this kind of stuff, they are a valuable resource in terms of preventing anything worse from happening, and fingers crossed, being able to do something to actually bring a fraudster to justice.

Not sure why that came up separately, but law enforcement, we’ve talked about it. And so I know I think I’ve gone a little bit over time here, and I apologize for that, but that’s the gist of it. That’s what we needed to cover. That is what you need to look for when it comes to fraud. That is what you need to be aware of. Why you should be aware of all this stuff in the first place, even if you haven’t been a victim or anything like that. And lastly, what you actually do about it if something happens or what you should do to make sure that it doesn’t happen in the first place. So if there’s any questions at this point, I am all ears.

Stephanie Loscalzo:

Thank you so much. This was great. We have no questions, so I hope everyone enjoys the rest of their day. There is a survey that will pop up once this ends. And there is also, this recording will be on our website in a similar spot where you found the ability to sign up for this webinar, there will be a recording in that space. So if you need to revisit any of this information, you can. Please share with your friends. And thank you all again for attending.

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