Don’t Become a Victim to Phishing Investment Scams: Tips for Avoiding Phishing

By Dylan Donley, Student Intern Fall 2013

fishing hook 2 clip art microsoft

The following is a list of general guidelines to consider if you ever receive an unsolicited phone-call:

(1)  Be suspicious of any phone call or email with urgent requests for personal financial information.

  • Phishers typically include upsetting or exciting (but false) statements in their emails or phone calls to get people to react immediately.
  • For example, “Is this Mr. Smith?  I am calling from XYC Bank.  Do you have a VISA card?  I need to verify your account number because it appears that someone may be fraudulently charging purchases to your account.  Can you read me the account number and expiration date on the front?  Now, the last four digits on the back…”
  • Similarly, some phishers will leave automated recordings on recipients’ voice mails to alert them that their accounts have experienced unusual activity, requesting that the recipients call the same phone number shown in the spoofed caller ID with the same name as the financial company the phishers are pretending to represent.
  • Legitimate financial institutions and businesses will not ask for your personal information unsolicited over the phone.  Rather than provide any information, you should contact the financial institution or other business at the customer service number you normally use to verify the validity of the message.
  • They typically ask for information such as user names, passwords, credit card numbers, social security numbers, date of birth, account information, etc.  On virtually all banking institution websites, banks request that their customers do not release any personal information on the phone, in the mail, or over the internet unless the customer initiates the contact or the customer is certain he or she knows who he or she is dealing with.
  • Phisher contacts are typically not personalized, but they can be.  Valid messages from your bank or broker are generally personalized, but always call to check if you are unsure.

(2)  If you have any question about the authenticity of an unsolicited phone call, if you are not sure that the person on the other end of the line is a legitimate representative of your firm:

  • Quickly end the call and get in touch with your firm’s customer service center using the contact information on your account statements or the firm’s website.
  • For emails or other communications, always log onto the main website of your credit card, bank, or brokerage firm at its normal web address or call at the normal phone number to inquire about the legitimacy of any request for personal and/or financial information.
  • FINRA‘s BrokerCheck also provides the main office address and primary telephone number for any registered brokerage firm.

(3)  Never provide personal information or authorize any transfer of funds to any unknown person who calls you.  If you aren’t sure the caller is legitimate, take these steps before you hand over any money:

  • Call the customer service or compliance office of the brokerage firm the caller claims to work for using the number on the firm’s website or in a publicly available telephone directory.
  • Verify the caller’s identity and legitimacy of the recommended investment.
  • If you have an account at the firm, check caller ID (if you have it) for the firm’s name and telephone number.  Be wary of an “unavailable” or unfamiliar telephone number.
  • NOTE:  Sophisticated fraudsters can deliberately falsify a phone number for caller ID purposes (known as caller ID spoofing), making it all the more important to call the firm directly.

(4)  Before opening an account with a brokerage firm (even if it is a firm you have heard of previously), use FINRA BrokerCheck to make sure the brokerage firm and broker are properly registered and to verify phone and address information you receive from the firm or broker.

  • This step is particularly important in the wake of the increased presence of phone-call phishers posing as employees of legitimate brokerage firms.
  • Further, do your own research before entering into any investment with a brokerage firm.

(5)  Make a habit of checking your credit report every year in order to guard against identity theft.

  • This way, if you do enter into investments that later turn out to be fraudulent, you are able to catch it before your time to seek action elapses.
  • Similarly, review your account statements for unauthorized trades, cash withdrawals or any other unrecognized activity.

(6)  If you believe you have been defrauded or scammed, you must act quickly.

  • Specifically, if you are the victim of a brokerage firm identity theft scam, you may file a complaint with FINRA’s Complaint Center.
  • Contact your financial institution immediately to report a loss or theft of funds through an electronic funds transfer.
  • If you believe your identity has been stolen, the FTC’s Identity Theft website contains step-by-step directions of what should be done.

Armed with the information from these blog posts and similarly resources, you should be better prepared to avoid the pitfalls of phishing and other investment scams and should find yourself to be a more discerning customer.  For additional information, look to FINRA’s investor alert page.