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4 Ways Fraudsters Make Financial Scams Sound Legitimate

Man with phone taking notes

Smart consumers aren't the only ones who stay alert to financial scams. Criminals also keep their eyes open to fraud alerts published by watchdog websites, like Fraud.org. They use this information to tweak their schemes, making them sound more realistic to unsuspecting victims. Fortunately, you can still avoid most scams by focusing on the common tactics criminals use to get you to believe their lies.

Here are four ways scammers make financial scams sound legitimate.

1. Scammers follow news headlines.

A global pandemic, severe weather event, or national tragedy can signal an opportunity for many scammers. Natural reactions of fear, confusion, and uncertainty can make people vulnerable when they normally would be wary of suspicious offers. Scammers will try to associate themselves with legitimate state and federal agencies listed in the media. They may even encourage you to keep the conversation secret or risk your eligibility for a special offer, benefit, or financial settlement. 

Thieves will also fraudulently represent themselves as insurance providers or financial advisors who claim to quickly provide the financial relief you need. 

Credit Union of Colorado members have recently experienced schemes involving fraudulent state unemployment claims and government relief loans. Often, the scammer will first have those funds sent to the member's account and then have the member send them on to the scammer through anonymous financial channels. This process helps to mask the perpetrators' true identity. When law enforcement pursues the matter, they first assume the funds were stolen by the person owning the account, where funds were sent initially.  

2. Scammers know that you're less likely to talk to strangers, so they'll use people you already know.

Fraudsters may attempt to use the private messaging scam to get you to send money or share personal financial data by posing as an old friend. They'll hack the social media profile of one of your contacts and pretend to be in desperate need of financial help. 

Another way a thief might encourage you to open your wallet is to claim that a relative is in jail and needs bail money. They may pretend to contact you from an attorney's office or even pose as your relative. When questioned why their voice sounds different, they'll claim they've been crying or are sick. 

3. Scammers know consumers have been warned to only trust well-known sources for financial assistance. 

Fraudsters use official-sounding titles, phrases, and terms that would cause few people to question their legitimacy.  To gain your trust, they may use names like: 

  • "State Department of Claims and Refunds"
  • "electronic federal tax payment system"
  • "American Financial Relief Corporation"

Some will direct you to a fake website where you must enter your bank account information to receive the promised funds. If you question their legitimacy, they may offer to transfer you to their manager to verify everything you've been told. You'll be asked to stay on hold while they transfer you to a senior level employee who can discuss your concerns. 

In reality, your call is sent to another scammer in the same call center who is well-prepared for such requests. It's common for them to provide a fake name and employee badge number and even tell you that the call is being recorded before using empathy to close the deal. 

4. Scammers may skip asking you for personal information. 

Criminals don't need your banking account number, credit card, or social security number to successfully pull off a scam. Since asking for personal information is one of the most common red flags, thieves have figured out another way to get victims to open their wallets. To appear like they have your best interest in mind, they will specifically caution you from providing such details to anyone over the phone. Instead, they will claim it's much safer to wire money or buy gift cards and send it to them. These options are only safer for the scammer since both are difficult to trace.

Credit Union of Colorado members have experienced scammers requesting their debit card and personal identification number (PIN) over social media, in exchange for a few hundred dollars.  When the member’s debit card is provided to the scammer, they use it to make fraudulent ATM deposits, cash withdraws, and fraudulent debit card purchases. Many of these cases have resulted in significant member losses.

Did you know that Credit Union of Colorado debit and credit cards are automatically enrolled in a free fraud monitoring service? We employ a 24/7 monitoring system designed to score and analyze your card usage so we can alert you of suspicious card activity. Together we can help stop fraud in its tracks. 

Learn more about what we do to keep our member's account safe by visiting our Fraud Monitoring page. If you think you’ve been the victim of fraud on your Credit Union of Colorado account, please don’t hesitate to call us at 800-444-4816.

Article by: Tracy Scott