The Rise of Online Financial Scams
Are you a slave to your email? Do you have more Facebook friends than neighbors? Very few of us these days are completely off the grid, even if we would like to be. With the omnipresent Internet and constant communication byemail, financial scams have moved beyond in-person or telephone calls and are cleverly disguising themselves in a variety of ways online. While many of us are now aware of the classic scams such as the improbable Nigerian windfall and the basic phishing email asking for your bank account information, there are more sophisticated scams to which even the most astute person could easily fall prey. We’ve outlined a few scams below and how to avoid them when you are online.
The Free Trial: The modern ability to buy or sell anything online has certainly created convenience. But the adage “buyer beware” takes on new meaning in the internet age. One recent example making its way around Facebook is the Shark Tank face cream scam that has affected women all over the world. Ads promote a “free trial” of miracle face cream (as seen on a real TV show) and all you pay for is the shipping. You will receive the face cream but later you will also receive a charge on your credit card for much more than the shipping cost. In the very fine print when you signed up for that free trial, it stated that if you do not cancel your order after a short 14 days, you will be subscribed to a monthly shipment of the cream. No woman I know goes through that much face cream in a month! This resulting recurring credit card charge is almost impossible to stop, as banks will say that you voluntarily subscribed and voluntarily gave the company your credit card information (for the shipping) and you are receiving the product.
If you are going to order a product online, here are a few tips to avoid a scam:
1. Visit the Company Website. Does it use encryption? The web address should begin with an https// (not just http//). There should also be a tiny padlock in your web browser.
2. Research the Company. Any negative reviews? Chances are if someone was duped, they will complain about it online.
3. Research the Product. Read that fine print. What is the return/exchange policy? Is there an opt-out period?
4. Monitor your Accounts. Consider using only one credit card for all online purchases and check the detailed account statement monthly.
The Bait & Switch: A second type of scam on the rise is the “bait and switch.” Assume you are trying to find a local locksmith to come change the locks on your house. You search online for locksmiths near you. The locksmiths that pop up high on the search list may have a local phone number but your inquiry actually routes to a call center in another city. After quoting a reasonable price on the website, the locksmith will come to your home or car and will then demand payment for travel time that is three to four times more than the original estimate. This particular scam has evolved to other services such as carpet cleaning, moving, home security and garage door repair.
To avoid these scams, here are some things you can do:
1. Read the fine print. Look out for words like “limited time offer” or “not at all locations.”
2. Resist the “upsell.” Understand all of the service offerings before you sign a contract.
3. Don’t agree to vague or to-be-determined pricing. Make sure you know the final price before any work begins.
4. When researching a service online, beware of missing contact information.
The Bogus Money Order: Scams don’t just occur when you are buying something. Tempted to sell something online? You should still be wary. False buyers have figured out how to pay for your item with a fake money order or stolen check. A buyer may even offer to pay more for your item saying they want it shipped overseas. After you receive what appears to be a real money order for more than the sales price and shipping cost, the buyer politely asks you to send them the difference in cash when you ship the item. You then cash that money order at your bank. All good, right? Unfortunately, the money order will either be fake or stolen. The bank will eventually reject the money order and you are now held responsible for the cash they gave you earlier.
Here are a few safety tips for selling online:
1. Try to deal with local buyers only. Scammers tend to say they are too far away to transact in person.
2. Ask the buyer for a phone number— and call it. Scammers prefer the anonymity of email.
3. Accept only cash if selling in person. If accepting payment online, use a reputable third party processor, such as PayPal or Venmo.
4. If using an online auction or marketplace to sell, check any reviews of the buyer.
Scams Related to the IRS, Taxes, or Investments: These ruses can be devastating as it often involves your sensitive personal and financial information. Online hackers are always looking for personal information that has been included in an email. Once they get your social security number, your bank and investment account numbers, it is easy enough to gather additional personal data from other sources to impersonate someone you know and trust; steal your identity; or transfer your money to an account outside of your control.
Want to know more?
We will be posting additional scams and tips for protection over the next month on our Twitter feed:
@FitFinanceAt40.
Disclosure
North American Management Corporation (NAM) is an SEC registered investment adviser located in Boston, MA and St. Louis, MO. The information presented above reflects the opinions of NAM as of July 19, 2017, and is subject to change at any time based upon legislation change, market or other conditions. These views do not constitute individual investment advice and there is no representation that any of the statements or predictions will materialize. The data in this report is taken from sources that NAM believes to be reliable. Notwithstanding, NAM does not guarantee the accuracy of the data. Any specific investment or investment strategy can result in a loss. Asset allocation and diversification do not ensure a profit or guarantee against a loss. Past performance is no guarantee of future results
Are you a slave to your email? Do you have more Facebook friends than neighbors? Very few of us these days are completely off the grid, even if we would like to be. With the omnipresent Internet and constant communication byemail, financial scams have moved beyond in-person or telephone calls and are cleverly disguising themselves in a variety of ways online. While many of us are now aware of the classic scams such as the improbable Nigerian windfall and the basic phishing email asking for your bank account information, there are more sophisticated scams to which even the most astute person could easily fall prey. We’ve outlined a few scams below and how to avoid them when you are online.
The Free Trial: The modern ability to buy or sell anything online has certainly created convenience. But the adage “buyer beware” takes on new meaning in the internet age. One recent example making its way around Facebook is the Shark Tank face cream scam that has affected women all over the world. Ads promote a “free trial” of miracle face cream (as seen on a real TV show) and all you pay for is the shipping. You will receive the face cream but later you will also receive a charge on your credit card for much more than the shipping cost. In the very fine print when you signed up for that free trial, it stated that if you do not cancel your order after a short 14 days, you will be subscribed to a monthly shipment of the cream. No woman I know goes through that much face cream in a month! This resulting recurring credit card charge is almost impossible to stop, as banks will say that you voluntarily subscribed and voluntarily gave the company your credit card information (for the shipping) and you are receiving the product.
If you are going to order a product online, here are a few tips to avoid a scam:
1. Visit the Company Website. Does it use encryption? The web address should begin with an https// (not just http//). There should also be a tiny padlock in your web browser.
2. Research the Company. Any negative reviews? Chances are if someone was duped, they will complain about it online.
3. Research the Product. Read that fine print. What is the return/exchange policy? Is there an opt-out period?
4. Monitor your Accounts. Consider using only one credit card for all online purchases and check the detailed account statement monthly.
The Bait & Switch: A second type of scam on the rise is the “bait and switch.” Assume you are trying to find a local locksmith to come change the locks on your house. You search online for locksmiths near you. The locksmiths that pop up high on the search list may have a local phone number but your inquiry actually routes to a call center in another city. After quoting a reasonable price on the website, the locksmith will come to your home or car and will then demand payment for travel time that is three to four times more than the original estimate. This particular scam has evolved to other services such as carpet cleaning, moving, home security and garage door repair.
To avoid these scams, here are some things you can do:
1. Read the fine print. Look out for words like “limited time offer” or “not at all locations.”
2. Resist the “upsell.” Understand all of the service offerings before you sign a contract.
3. Don’t agree to vague or to-be-determined pricing. Make sure you know the final price before any work begins.
4. When researching a service online, beware of missing contact information.
The Bogus Money Order: Scams don’t just occur when you are buying something. Tempted to sell something online? You should still be wary. False buyers have figured out how to pay for your item with a fake money order or stolen check. A buyer may even offer to pay more for your item saying they want it shipped overseas. After you receive what appears to be a real money order for more than the sales price and shipping cost, the buyer politely asks you to send them the difference in cash when you ship the item. You then cash that money order at your bank. All good, right? Unfortunately, the money order will either be fake or stolen. The bank will eventually reject the money order and you are now held responsible for the cash they gave you earlier.
Here are a few safety tips for selling online:
1. Try to deal with local buyers only. Scammers tend to say they are too far away to transact in person.
2. Ask the buyer for a phone number— and call it. Scammers prefer the anonymity of email.
3. Accept only cash if selling in person. If accepting payment online, use a reputable third party processor, such as PayPal or Venmo.
4. If using an online auction or marketplace to sell, check any reviews of the buyer.
Scams Related to the IRS, Taxes, or Investments: These ruses can be devastating as it often involves your sensitive personal and financial information. Online hackers are always looking for personal information that has been included in an email. Once they get your social security number, your bank and investment account numbers, it is easy enough to gather additional personal data from other sources to impersonate someone you know and trust; steal your identity; or transfer your money to an account outside of your control.
Want to know more?
We will be posting additional scams and tips for protection over the next month on our Twitter feed:
@FitFinanceAt40.
Disclosure
North American Management Corporation (NAM) is an SEC registered investment adviser located in Boston, MA and St. Louis, MO. The information presented above reflects the opinions of NAM as of July 19, 2017, and is subject to change at any time based upon legislation change, market or other conditions. These views do not constitute individual investment advice and there is no representation that any of the statements or predictions will materialize. The data in this report is taken from sources that NAM believes to be reliable. Notwithstanding, NAM does not guarantee the accuracy of the data. Any specific investment or investment strategy can result in a loss. Asset allocation and diversification do not ensure a profit or guarantee against a loss. Past performance is no guarantee of future results
