Perspective Matters
SAFEGUARDING YOUR FINANCES: RECOGNIZING AND PREVENTING FINACIAL SCAMS AND EXPLOITATION
Financial exploitation is a hot topic these days. In today's digital age, financial scams and exploitation have become increasingly sophisticated, targeting people of all ages and backgrounds. As middle-class consumers, it's crucial to stay informed and vigilant to protect our hard-earned money and assets. Most of us have dozens of online accounts – not all financial – that require user IDs and passwords. It’s easy to cut corners and make ourselves more vulnerable. My goal with this month’s post is to help you understand what financial scams and exploitation look like and provide practical steps to shield yourself from both strangers and those close to you who might take advantage.
UNDERSTANDING FINANCIAL SCAMS AND EXPLOITATION
Financial scams and exploitation refer to any deceptive or manipulative practices designed to deprive you of your money or assets. These can come from:
Strangers: Con artists, fraudulent telemarketers, or online scammers
Bots: Automated systems designed to trick you into revealing sensitive information
People you know: Family members, caregivers, or those with Power of Attorney
COMMON TYPES OF FINANCIAL SCAMS
Phishing: Emails or messages that appear to be from legitimate sources, asking for personal information
Investment fraud: Promises of high returns with little or no risk
Romance scams: Fake online relationships used to manipulate victims into sending money
Tech support scams: Unsolicited calls claiming your computer has a virus and needs immediate, costly "fixing"
Government impersonation: Scammers posing as IRS agents or other officials demanding payment
SIGNS OF FINANCIAL EXPLOITATION BY THOSE CLOSE TO YOU
Financial exploitation by those close to you can be particularly devastating, as it often involves a breach of trust from someone you rely on. It's crucial to be aware of the following signs:
Unexplained withdrawals or transfers:
Large or frequent withdrawals from your accounts that you don't remember making
Transfers to unfamiliar accounts or to accounts of family members without your knowledge
Sudden inability to pay bills or buy necessities despite having sufficient funds
Changes in financial documents:
Abrupt changes to wills, trusts, or power of attorney documents
Your signature appearing on checks or documents when you don't remember signing them
Addition of new names to your accounts or credit cards without your permission
Missing valuables or documents:
Disappearance of cash, jewelry, or other valuable items from your home
Important financial or legal documents that you can't locate
Statements from banks or credit card companies stop arriving at your home
Sudden changes in financial situation:
Unexpected changes in your living conditions, such as utilities being shut off
Lack of amenities or personal care items that you should be able to afford
Accumulation of unpaid bills, eviction notices, or legal proceedings against you
Pressure and control tactics:
Someone pressuring you to sign documents you don't fully understand
A caregiver or family member controlling your finances and giving you an "allowance"
Someone discouraging you from discussing your finances with others or seeking advice
Isolation and behavioral changes:
A caregiver or family member isolating you from friends and other family
Noticeable changes in your behavior or demeanor when certain people are present
Reluctance or fear when discussing financial matters
Suspicious financial activity:
Unusual or unnecessary purchases made on your behalf
New joint accounts opened with family members or caregivers
Sudden changes in spending patterns or investment strategies that don't align with your goals
Misuse of Power of Attorney:
The person with Power of Attorney making decisions that benefit themselves
Refusal to provide you with information about your own finances
Using your money or assets for purposes other than your care and well-being
Unexplained changes in professionals:
Sudden changes in long-standing professional relationships (e.g., lawyers, accountants)
New "advisors" appearing and making significant financial decisions
Digital red flags:
Unexplained changes to your online banking passwords or security questions
New online accounts or subscriptions you don't remember creating
Unfamiliar email addresses linked to your financial accounts
Remember, while a single incident might have an innocent explanation, a pattern of these signs could indicate financial exploitation. It's important to trust your instincts. If something feels wrong, it's worth investigating further or seeking help from a trusted source.
PROTECTING YOURSELF: STEPS TO TAKE
Taking proactive steps to protect your finances is crucial in today's world. Here's an expanded list of measures you can implement to safeguard your assets and personal information:
Digital Safety
Use strong, unique passwords for all accounts:
Create passwords with a mix of uppercase and lowercase letters, numbers, and symbols
Use a password manager to generate and securely store complex passwords
Avoid using easily guessable information like birthdays or family names
Enable two-factor authentication (2FA) whenever possible:
Use authenticator apps rather than SMS for 2FA when available
Consider using hardware security keys for critical accounts
Be cautious about sharing personal information online:
Avoid oversharing on social media platforms
Be wary of quizzes or games that ask for personal details
Don't respond to unsolicited emails or messages asking for sensitive information
Keep your software and antivirus programs up-to-date:
Set up automatic updates for your operating system and applications
Regularly scan your devices for malware and viruses
Use reputable antivirus software and keep it current
Secure your home network:
Use a strong password for your Wi-Fi network
Enable WPA3 encryption if available on your router
Consider using a VPN for additional security, especially on public Wi-Fi
Be cautious with public Wi-Fi:
Avoid accessing sensitive accounts or making financial transactions on public Wi-Fi
Use a VPN if you must access important information while on public networks
Financial Vigilance
Regularly review your bank and credit card statements:
Set up alerts for large transactions or unusual activity
Reconcile your statements with your receipts monthly
Report any suspicious activity immediately to your bank or credit card company
Check your credit report annually:
Utilize free annual credit reports from all three major credit bureaus
Look for accounts you don't recognize or inquiries you didn't authorize
Consider freezing your credit to prevent unauthorized accounts from being opened
Be wary of unsolicited investment opportunities:
Research any investment opportunity thoroughly before committing
Be skeptical of promises of high returns with little or no risk
Verify the credentials of any financial advisor or company
Never give out personal information over the phone unless you initiated the call:
If you receive a call claiming to be from your bank or a government agency, hang up and call the official number to verify
Don't feel pressured to make immediate decisions over the phone
Monitor your accounts regularly:
Use online banking to check your accounts frequently
Set up account alerts for low balances or large transactions
Keep track of when your bills are due to spot any irregularities
Secure your mail:
Use a locked mailbox or P.O. box
Shred or securely dispose of documents containing personal information
Choose paperless statements when possible to reduce the risk of mail theft
Legal Precautions
Choose a Power of Attorney carefully:
Select someone you trust implicitly
Consider appointing co-agents to provide checks and balances
Clearly define the scope of authority in the Power of Attorney document
Set up a revocable living trust:
Work with an estate planning attorney to create a trust that protects your assets
Regularly review and update your trust as your circumstances change
Consider appointing a corporate trustee for impartial management
Create an advance healthcare directive:
Appoint a healthcare proxy you trust to make medical decisions if you're incapacitated
Clearly outline your wishes for medical treatment and end-of-life care
Review and update this document regularly
Establish a financial plan:
Work with a CERTIFIED FINANCIAL PLANNER® to create a comprehensive financial strategy
Regularly review and adjust your plan as your circumstances change
Ensure your plan includes provisions for unexpected events or incapacity
Educate and Communicate
Stay informed about the latest scams:
Follow reputable financial news sources and consumer protection agencies
Attend community workshops or webinars on financial safety
Sign up for scam alerts from the FTC or your state's consumer protection office
Discuss finances openly with trusted family members or friends:
Have regular family meetings to discuss financial matters
Consider involving adult children or trusted friends in financial discussions
Create a system of checks and balances within your trusted circle
If you suspect exploitation, speak up and seek help:
Contact your local Adult Protective Services if you suspect elder financial abuse
Report suspected scams to the FTC and your state's Attorney General's office
Seek support from local senior centers or elder abuse prevention organizations
Educate others in your community:
Share what you've learned about financial safety with friends and family
Consider volunteering for organizations that educate seniors about financial fraud
Support local initiatives that promote financial literacy and scam awareness
Remember, staying informed and vigilant is your best defense against financial scams and exploitation. By taking proactive steps to protect yourself and your loved ones, you can significantly reduce the risk of falling victim to these harmful practices. Don't hesitate to seek help if you suspect you've been targeted – your financial well-being is worth protecting.
Neither Prism Planning and Solutions Group nor Insight Advisors provide tax advice, and nothing in this communication should be treated as such. This communication should not be interpreted as a recommendation for a specific investment or tax-
planning strategy. We are providing this material for informational purposes only. We have made every attempt to verify that information contained in this communication is accurate as of the date published but make no warranties. Before making any decisions related to your own tax and/or investment situation you should consult the appropriate professionals.
Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
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