Phising, Smishing, and your New Year’s Financial Review

BILL CARTER

With digital banking becoming increasingly the preferred “banking” choice of consumers, we need to make sure that your accounts are always protected. If you have older family members that use the internet living with you, or children with access to an internet account, you need to make them aware of these types of scams as soon as possible.

I once had a wonderful employee years ago and I distinctly remember her coming into my office crying to advise that her grandmother, who was in her 80s, had donated over $100,000 over a one-year period to a tele-evangelist who came on TV every day. It was her entire retirement savings. 

Now this is NOT an example of phishing, but it does show how vulnerable certain age groups are to requests for money and other offers. And with everyone in such a hurry these days, we often don’t examine emails in our own in-box before we open them.

Criminals are constantly trying to steal consumers’ personal data using fake emails, websites, phone calls, and even text messages. They use a variety of ways to try to trick people into providing Social Security numbers, bank account numbers and other valuable information. In most cases, their goal is to steal money from you. In this article I will share some terms used for different online scams and how they work, so you better can protect your hard-earned money.

How Do Scammers Contact Their Victims?

Phishing is a term for scams commonly used when a criminal uses email to ask you to provide personal financial information. The sender pretends to be from a bank, a retail store, or government agency and makes the email appear legitimate. Criminals often try to threaten, even frighten people by stating “you’re a victim of fraud” or some other urgent-sounding message to trick you into providing information without thinking. Don’t do it.

Smishing is like phishing, but instead of using email, the criminal uses text messaging to reach you. Same idea, they pretend they are from an organization you might know and trust (such as a bank or the IRS) and try to get your personal information.

Vishing, like phishing and smishing, is when scammers use phone services such as a live phone call, a “robocall,” or a voicemail to try to trick you into providing personal information by sounding like a legitimate business or government official.

What Are the Different Types of Scams?

Government Impostor Scams are when fraudsters pretend to be an employee of the FDIC, IRS or other government agency, sometimes even using the names of real people. 

Remember, the FDIC and the IRS do not send unsolicited correspondence asking for money or sensitive personal information, and they will never threaten you. Also, no government agency will ever demand that you pay by gift card, wiring money or digital currency. These agencies would never contact you asking for personal details, such as bank account information, credit and debit card numbers, social security numbers or passwords.

Lotteries and Sudden Riches Scams are when you are told that you won a lottery, perhaps in a foreign country, or that you are entitled to receive an inheritance. You are told that to “claim” the lottery winnings or inheritance, you must pay “taxes and fees.” A fake cashier’s check might be sent to you, which the scammer asks you to cash and then wire back the funds to cover the taxes and fees. They disappear with your funds and you get nothing but taken advantage of by the criminal when the check is found to be fraudulent, and your bank holds you responsible for the loss.

Online Auctions, Classified Listing Sites and Overpayment Scams involve an online auction or classified listing site. The scammer offers to buy an item for sale, pay for a service in advance, or rent an apartment. The clue that it is a scam is that they send you a cashier’s check for an amount that is higher than your asking price. When you bring this to their attention, they will apologize for the oversight and ask you to quickly return the extra funds. The scammer’s motive is to get you to cash or deposit the check and send back legitimate money before you or your bank realize that the check you deposited is fake.

Grandparent Scams happen when a fraudster hacks into someone’s email account and sends out fake emails to friends and relatives, perhaps claiming that the real account owner is stranded abroad and might need your credit card information to return home. If you receive such an email, make sure you contact the sender through other means before sending any money or personal information.

Secret or Mystery Shopper Employment Scams involve fake advertisements for job opportunities that claim to be “hiring” people to work from home. As the potential new “employee,” you might receive an official check as a starting bonus and are asked to cover the cost of “account activation.” The scammer hopes to receive these funds before the official check clears and you realize you have been scammed. Another scenario involves an offer to work from home as a secret shopper to “assess the quality” of local money transfer businesses. You are sent a cashier’s check and instructed to deposit it into your bank account and withdraw the amount in cash. You are then instructed to use a local money transfer business to send the funds back to the “employer” and “evaluate” the service provided by the money transfer business.

Be sure to read the FDIC Consumer News on check fraud to learn more about scams involving checks. FDIC Consumer News: Beware of Fake Checks.

How Can I Avoid Scams?

Be suspicious if someone contacts you unexpectedly online and asks for your personal information. It doesn’t matter how legitimate the email or website may look. Only open emails, respond to text messages, voice mails, or callers that are from people or organizations you know, and even then, be cautious if they look questionable.

If you think an email, text message, or pop-up box might be legitimate, you should still verify it before providing personal information. If you want to check something out, independently contact the supposed source (perhaps a bank or organization) by using an email address or telephone number that you know is valid, such as from their website or a bank statement.

Be especially wary of emails or websites that have typos or other obvious mistakes. If it looks fraudulent, it probably IS fraudulent.

Begin the New Year with a Review of your Finances 

With the travel industry lifting restrictions, and businesses and schools beginning to open again, it creates a feeling of starting fresh and encourages us to set new goals. Setting new financial goals should be on the top of our lists. As you reflect on the past year, focus on your experiences – build on what worked and what didn’t – to shape this year’s money habits. Here are some ideas to consider as you set your financial goals.

New Savings Account

Think about what you want to save for the coming year and commit to opening a savings account to reach that goal, whether it’s creating an emergency fund or setting money aside for your kids’ future college tuition. There are many types of savings accounts available to save for both short-term and long-term goals.

Small Step: Decide on the type of savings account that will meet your goal and commit to depositing a set amount on a regular basis to get into the habit of saving. For example, if you open a basic savings account, deposit $25 every month and sign up for direct deposit or automatic withdrawals from your checking account or paycheck to ensure that amount is saved. Once you’re comfortable with saving a small amount consistently, you can increase it.

Pay Down That Old Debt

Confronting your debt and thinking about how to pay it off can be scary and overwhelming. Make a list of your debts, noting the monthly payment, current balance, and interest rate, and plan to start paying down the debts. Many experts recommend focusing on either debt with the highest interest rates or debts with the lowest balances to pay off. While you will likely save more money paying off debts with the highest interest rates, it may be faster to pay off the smallest balances first. Seeing and feeling this progress may help keep you motivated.

Most of us are more concerned with monthly payments on our accounts and want to increase our personal monthly cash-flow. To do this choose your account with the largest payment and smallest balance. Once that account is paid in full you can then apply THAT former monthly payment to your next debt to pay off.

Small Step: Whichever method you choose for paying down debt, start by adding a small amount to one of your current payments. For instance, if you are focusing on paying off a credit card with a minimum monthly payment of $100, add $25 to that amount to start (for a total monthly payment of $125). Once you are comfortable with that new amount, add more when you’re able and stay focused on the goal.

Get Organized

Keeping your finances organized will help you control your money and achieve your financial goals. Some basic tasks to help you get organized include making a budget, tracking your spending, and putting a system in place to ensure you pay your bills on time every month. Be sure to monitor your credit card and bank statements for any unexpected fees or unusual activity too. The sooner you find mistakes or unauthorized transactions, the easier it is to correct those issues.

Small Step: Like dealing with debt, organizing your finances can be daunting, so start small by picking one organizational task and focus on that task for one month before adding another. For example, you might start by setting up automatic bill pay from your bank account to make sure your bills are paid on time. Give yourself one month to learn about it, set it up, and get comfortable using it. Next month, focus on creating a budget, which gives you several weeks to learn about budgeting and work on it.

Protect Your Money

With so many financial transactions occurring electronically, it’s important to proactively protect your personal information, including your credit card and bank account numbers. Take charge of protecting your money. Never provide your personal information in response to an unsolicited request, whether it is over the phone or over the Internet. Always track your bank and credit card statements and your credit reports for unusual activity. Catching abnormal transactions early will allow you to take steps to prevent more harm if your information has been stolen. Finally, change your account passwords often to reduce the risk of someone hacking into your accounts and stealing confidential information.

Now get busy on your 2022 budget!

Bill Carter is Director of Fire/EMS Business Development for Civic Federal Credit Union in Raleigh. He has been in the financial services industry for 42 years and serves on the Advisory Board of the North Carolina Fallen Firefighters Foundation. You can send your questions to him at: bill.carter@civicfcu.org.

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