How to Protect Yourself From Financial Scams (+ New Resources)
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This show is a proud member of the Retirement Podcast Network. Last year, a retired couple reached out to my firm to learn about our services. There was a potential fit, so we scheduled a second phone call several weeks later to continue the conversation.

Between the first phone call and the second, they had been scammed out of nearly $2 million, almost their entire nest egg. It was a Bernie Madoff style investment scam in which a fraudulent investment company that looks legitimate lures you into investing a small amount of money in its quote unquote can't lose strategy.

You typically send them a small amount like $5,000 to start. A few weeks later, they present you with a fraudulent account statement showing that their recent trades were successful and that your initial $5,000 investment had increased significantly. With these positive yet fake results, they then invite you to invest more, maybe $10,000 or $50,000.

The cycle repeats. They once again present you with a fraudulent but real-looking account statement showing that your investments have increased in value and suggesting that you deposit more money. Now, some victims are tipped off early. They recognize it's a scam and they walk away relatively unscathed, maybe losing a few thousand dollars. Some don't realize it until it's too late and lose hundreds of thousands or even millions of dollars.

While keeping their personal information confidential, I shared what had happened to this couple with my wife that between our first and second phone call, they had been scammed out of millions of dollars. Her initial response was probably similar to what many of you are thinking right now. How would anyone fall for that? Well, I explained that the people behind these scams, they're professionals. They're extremely savvy and convincing. In many cases, the process feels so normal that the victim doesn't even think twice while it's happening.

A few minutes later, my wife turns to me and she says, you know, this has me thinking. I just wired $5,000 to that vacation rental company that we're renting a house through for our upcoming Mexico trip.

She explains that she booked the house through what appeared to be their primary rental company that handles all the reservations for this specific development down in Mexico. It wasn't through Airbnb or VRBO. She had never heard of the company before, but just somewhat kind of blindly accepted it was legitimate after researching and finding the house that she wanted to rent online.

Her wheels are turning as she retraces her steps and she begins to question this $5,000 wire that she just sent. She recalls that the wire was sent to a different company with a different name than the name of the vacation rental company and that they were located in a city in New York that we had never heard of before. So we both quickly pull out our phones and we start digging deeper and doing research and looking at our records.

We eventually confirmed that it was all legitimate. There was no issue here. But I say to her, see, that's how easily it can happen. Good scams often don't feel like scams in the moment.

Welcome to Stay Wealthy Podcast. I'm your host, Taylor Schulte, and today I'm providing my annual update on financial scams, what to look out for, and how to stay safe in 2024 and beyond. I'm also sharing three new tools and resources that I've recently learned about that can help you protect your sensitive information. To grab the links and resources referenced in today's episode, just head over to youstaywealthy.com forward slash 216.

In 2023, Americans lost $10 billion to financial scams. That's $1 billion more than 2022, and it's the highest ever reported annual loss in FTC history. More specifically, one in four people fell victim to scams last year. And while the median loss across all fraud categories was only around $500 per person, the highest median loss category was investment-related frauds, hovering around $8,000 per incident.

As you might suspect, email was the number one contact method for scammers last year, making up 24% of all fraud reports in 2023. And while younger people aged 20 to 29 had the largest number of reported fraud cases, when people aged 70 plus had a loss, it was almost four times the amount.

And perhaps the most important data point that I came across in my research is that well-educated people or those with good jobs are just as vulnerable to scams as everyone else. And I can attest to this. In a prior episode, I shared the story of my grandfather falling victim to the popular grandparent scheme where he dropped an envelope full of cash off at the post office because I was allegedly in a bad accident and in trouble and needed help.

My grandfather was one of the smartest people I knew. I'm convinced if he can fall for a scam, anyone can. In fact, earlier this year, Charlotte Cowles, a longtime personal finance columnist for the New York Times, published her vulnerable story about the day that she put $50,000 cash in a shoebox and handed it to a stranger through the window of their car in front of her house with her husband and child casually watching from a distance.

She writes, quote, I interview money experts all the time and take their advice seriously. I'm married and talk to my friends, family and colleagues every day. And while this is harder to quantify, I'm not someone who loses her head. My mother-in-law has described me as even keeled. My own mom has called me maddeningly rational.

I'm listed as an emergency contact for several friends and their kids. I vote, floss, cook, and exercise. In other words, I'm not a person who panics under pressure and falls for a conspiracy involving drug smuggling, money laundering, and CIA officers at my door. Until suddenly, I was.

As the most recent FTC fraud report highlights, the most common scams are known as imposter scams, and that's exactly what Charlotte fell victim to. Ironically, the imposter in her situation was pretending to be an investigator with, of all places, the FTC, the Federal Trade Commission, the government agency whose job it is to protect the public from deceptive business practices, fraud, and scams.

The imposter was calling from the FTC's published phone number. He had a badge number. He rattled off her social security number, home address, and date of birth. He knew she was married and had a child. Good scams don't feel like scams in the moment. The fraudsters know exactly what to say, how to say it, and what will cause the victim to slip and get emotional. For my grandfather, it was me. For Charlotte, it was her son.

I'll share Charlotte's story in today's show notes if you want to read it. If you do, you'll probably have the same response that my wife did. How could someone fall for this? As a public figure who writes about money and finance for a living, I really appreciated her vulnerability and willingness to put herself out there and remind us that everyone is at risk and everyone needs to proactively take steps to protect themselves and mitigate the chances of a catastrophic loss.

I've published a handful of episodes on financial scams over the years on this show. Most recently in episode 198, which can be found by going to youstaywealthy.com forward slash 198. In that episode, I shared actionable steps that you can take to protect yourself from investment scams.

Specifically, I shared three important things that everyone can and should do before hiring a financial advisor and or investing money with someone or some service. I also shared details about some newer, more sophisticated scams to keep an eye out for. In episode 151, an episode that I published two years ago, I share the basics for staying protected, for protecting your sensitive data from freezing your credit and using a VPN to optimizing your passwords and tools for protecting your browser.

I'll link to both episodes in today's show notes if you want to revisit them, as well as a list of some of my favorite resources that I've shared with listeners over the years. In today's episode, my primary goal was to resurface this important topic, provide an annual update on the state of financial scams, and remind our listeners to take action, stay alert, and stay informed.

But for those who have already taken my prior advice and nailed down the basics like credit freezes and virtual private networks, I also wanted to share some additional tips and resources that I've recently come across that you might consider implementing. Specifically, I'm sharing three of my new favorites with you today.

Number one, as noted in the most recent FTC fraud report, which I'll include in today's show notes, the category with the highest volume of reports in 2023 was identity theft with just over 1 million cases reported. And the most common identity theft type was credit card theft, making up almost half of the cases for that category last year. In response to these staggering numbers, one action to consider taking is to use a virtual credit card instead of a physical one. A

A virtual credit card is more or less a stand-in for your actual physical credit card that you can use to pay for things online.

One of the biggest benefits of using a virtual credit card is that you can make online purchases without sharing your actual credit card number with the stores. You can quickly and easily generate unique card numbers for every retailer that are just aliases of your actual physical card number. So if there's a data breach at one of the online stores, you've used your virtual credit card at, you will have avoided someone getting their hands on your actual card number and making fraudulent purchases.

You'll also avoid having to go through that painful process of canceling your card, ordering a new one, waiting for the new one, and then updating all of your auto payments. If your virtual card number is ever exposed and stolen, you can jump online, quickly cancel it and receive a new number all without any disruption to your physical card.

If you want to learn more about the pros and cons of virtual credit cards and how to choose one, I'll share some resources in today's show notes, which can again be found by going to ustatewealthy.com/216. Okay, number two, the second resource to share with you. As Charlotte highlighted in her vulnerable story about getting scammed, your personal data is on the internet. Your phone number, home address, date of birth, family member names, and in many cases, even your social security number.

There are hundreds of data brokers that collect your information. And while you do have the right to access and remove the data that they have, it's not always easy to do.

Thankfully, there are some new services out there to help. One that regularly comes up in my research is called Delete Me or joindeleteme.com. In addition to searching for and removing your personal information immediately, they also scan and remove new data that shows up online all year long as part of their $129 annual fee.

And if you don't want to pay the fee, believe it or not, they have a free resource on their site listing just about every data broker out there and a step-by-step guide showing you how to manually remove your data on your own at no cost. And while we're talking about personal information online, a friend also recently shared with me that you can reach out to Google or Bing or Apple to blur out the pictures of your home on their map.

I'll see if I can find the resource and directions for doing this. And if so, I will include it in the show notes. In the meantime, you might ask, why would you want to do this? Why would you want to blur out pictures of your home? Well, again, your home address is likely floating around out there somewhere on the internet. And with your home address, someone can go to Google Maps, see your house, see the cars you drive, and take note of different entryways, location of bedrooms, etc.,

While on Zoom, my friend quickly looked up my home and said, I bet those are your kids' rooms right there. Pretty creepy. And while not everyone will care about what someone can and can't see on Google Maps, it's just another good reminder of what's out there and what the wrong person might or could do with this free, easily accessible information.

Okay, lastly, number three, I've talked a lot about passwords and password managers here on the show before. In short, a password manager not only helps you safely store all of your login credentials in a virtual encrypted vault, but it also helps you generate sophisticated passwords. And while a sophisticated password is important and highly recommended, it becomes useless if it's part of a security breach.

So to check if your login credentials have ever been compromised, you can consider checking out the website haveibeenpwned.com. That's haveibeenpwned.com. In case you're wondering, the word pwned is internet hacker slang and it's derived from the word owned due to the proximity of the letter O and letter P on the keyboard, which can easily cause typos.

In the nerdy internet hacker world, this term is typically used to imply that someone has been controlled or compromised. So haveibeenpwned.com. This site will help you check your email accounts and login credentials to see if they've been exposed and also provide free ongoing monitoring.

Why does this website exist? Who's behind it? What actions do you take if you find out that your credentials have been exposed? What is this site doing with your data when you use it? Is it safe to use and why is it free? I asked all these same questions and I'm still doing my due diligence. Thankfully, the site has a great FAQ section, which I'll link to in today's show notes so you can learn more and determine if it's a good solution for you.

Speaking of good solutions, if you've adopted something to improve your security and help keep you and your loved ones protected, I'd love to hear about it. Send me an email at podcast at you stay wealthy.com. Some of the best tools and resources that I've come across over the years have been introduced to me directly from podcast listeners. So keep them coming. And once again, to grab the tools and resources and links that I've referenced today, just head over to you stay wealthy.com forward slash two one six. Thank

Thank you as always for listening, and I'll see you back here next week.