Phishing and Other Financial Fraud — It’s More of Problem than You Might Think

By Dylan Donley, Student Intern Fall 2013

As discussed in my previous blog posts, a new wave of phishing scams has emerged – phishers are impersonating employees of legitimate brokerage firms and cold-calling individuals, including actual investors, seeking personal financial information under the guise of offering high yielding Certificates of Deposit.

While this is certainly a new take on investment scams that have been reported, the occurrence of financial fraud in the United States has steadily increased over the last decade.  Organized crime frequently uses phishing as a method to commit fraud, and there is a black market for stolen credit card and Social Security numbers.

According to the Federal Trade Commission (the “FTC”), Americans in 2012 submitted more than 2 million complaints about financial and other fraud – up 63 percent since 2008.FTC phishing data

Source:  FTC (2012)

An estimated 10.8 percent of U.S. adults – 25.6 million people – were victims of one or more types of fraud surveyed by the FTC.  Financial losses per capita have also increased:  the median loss per victim rose from $218 in 2002 to $535 in 2012.

This is an issue that is becoming increasingly prevalent in the United States, and can happen to anyone.

You Could Be (and Probably Are) a Target for Phishing Investment Scams

Long past are the days in which the only targets for phishing scams, as well as other financial fraud, were the “isolated, frail and gullible.”  FINRA has conducted studies which have “shattered the stereotype of investment fraud victims” and has found that anyone who meets the following description fits the profile of an investment fraudster’s prime target:

  1. Self-reliant when it comes to making decisions;
  2. Optimistic;
  3. Above-average financial knowledge;
  4. Above-average income;
  5. College-educated;
  6. Experienced a recent health or financial setback; and
  7. Open to listening to new ideas or a sales pitch.

If you meet any of these criteria (like so many people out there), you too are at risk of being targeted for financial fraud schemes, including the newest surge of scams — cold-call phishing.  However, understanding and being aware of the fact that you may be a target is one of the first steps to avoiding actually becoming a victim of financial fraud.

See my next blog post for further precautions to help could-be victims avoid becoming actual victims.