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Types of Financial Scams

Posted On: December 24, 2015

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Please be aware of the following types of financial scams.

This is not a complete list of scams as new scams appear everyday.

Power of Attorney Fraud

By obtaining a Limited or Special Power of Attorney this gives specified legal rights to manage the funds in the account.  Once the rights are given, the perpetrator uses the funds for personal gain.

Advance Fee Fraud or “419” Fraud

 Named after the relevant section of the Nigerian Criminal Code, this fraud involves a multitude of schemes and scams – mail, e-mail, fax and telephone promises that the victims will receive a percentage for their assistance in the scheme proposed in the correspondence.

Pigeon Drop

The victim puts up “good faith” money in the false hope of sharing the proceeds of an apparently large sum of cash or item(s) of worth which are “found” in the presence of the victim.

Financial Institution Examiner Fraud

The victim believes that he or she is assisting authorities to gain evidence leading to the apprehension of a financial institution employee or examiner that is committing a crime.  The victim is asked to provide cash to bait the crooked employee.  Cash is then seized as evidence by the “authorities” to be returned to the victim after the case, however there is no restitution as the scammer has moved on to the next victim.

Inheritance Scam

Victims receive mail from an “estate locator” or “research specialist” purporting unclaimed inheritance, refund or escheatment.  The victim is lured into sending a fee to receive information about how to obtain the purported asset.

Financial Institution Employee Fraud

The perpetrator calls the victim pretending to be the security officer from the victim’s financial institution.  The perpetrator advises the victim that there is a system problem or internal investigation being conducted.  The victim is asked to provide his or her Social Security number for “verification purposes: before the conversation continues.  The number is then used for identity theft or other illegal activity.

International Lottery Fraud

Scam operators, often based in Canada, use telephone and direct mail to notify victims that they have won a lottery.  To show good faith, the perpetrator may send the victim a check.  The victim is then instructed to deposit the check and immediately send (via wire) the money back to the lottery committee.  The perpetrator will create a “sense of urgency,” compelling the victim to send the money before the check, which is counterfeit, is returned.  The victim is typically instructed to pay taxes, attorney’s fees, and exchange rate differences in order to receive the rest of the prize.  The lottery solicitations violate US law, which prohibits cross-border sale or purchase of lottery tickets by phone or mail.

Fake Prizes

A perpetrator claims the victim has won a nonexistent prize and either asks the person to send a check to pay the taxes or obtain the credit card or checking account number to pay for shipping and handling charges.

Internet Sales or Online Auction Fraud

The perpetrator agrees to buy an item for sale over the Internet or in an online auction.  The seller is told that he or she will be sent an official check (e.g., cashier’s check) via overnight mail.  When the check arrives it is several hundred or thousand dollars more than the agreed-upon selling price.  The seller is instructed to deposit the check and refund the overpayment.  The official check is later returned as a counterfeit but the refund has already been sent.  The seller is left with a loss, potentially of both the merchandise and the refund.

Government Grant Scams

Victims are called with the claim that the government has chosen their family to receive a grant.  In order to receive the money, victims must provide their checking account number and/or other personal information.  The perpetrator may electronically debit the victim’s account for a processing fee, but the grant money is never received.

Spoofing

An unauthorized website mimics a legitimate website for the purpose of deceiving consumers.  Consumers are lured to the site and asked to log in, thereby providing the perpetrator with authentication information that the perpetrator can use at the victim’s legitimate financial institution’s website to perform unauthorized transactions.

Grandparent Scam

The fraudster calls a grandparent pretending to be a grandchild or the attorney for the grandchild in trouble; the fraudster may even know the grandchild’s name. The fraudster may be crying or muffle their voice making it hard to recognize the grandchild’s voice or name. The fraudster pleads for the grandparent to immediately send a Money Gram and not to tell family members for fear of upsetting the grandchild’s parent. The grandparent will immediately jump to the assistance of the grandchild and won’t ask questions until later. The fraudster also knows many older people will have experienced a hearing loss and won’t detect any difference in their grandchild’s voice, or they may attribute the differences they do here to the stress of the situation.

Phishing/Vishing/Smishing

Technology or social engineering is used to entice victims to supply personal information (i.e., account numbers, login IDs, passwords, and other verifiable information) that can them be exploited for fraudulent purposes, including identity theft.  These scams are most often perpetrated through mass e-mails, spoofed websites, phone calls or text messages.

Stop Foreclosures Scam

The perpetrator claims to be able to instantly stop foreclosure proceedings on the victim’s real property.  The scam often involves the victim deeding the property to the perpetrator who says that the victim will be allowed to rent the property until some predetermined future date when the victim’s credit will have been repaired, and the property will be deeded back to the victim without cost.

Alternatively, the perpetrator may offer the victim a loan to bridge his or her delinquent loan payments, perhaps even with cash back.  Once the paperwork is reviewed, the victim finds that his or her property was deeded to the perpetrator.  A new loan may have been taken out with an inflated property value with cash back to the perpetrator, who now owns the property.  The property very quickly falls back into foreclosure and the victim/tenant is evicted.

For further information regarding scams, please visit one of our branches.

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