PRIMER ON FRAUD PREVENTION – Lesson #4

Louis Pasteur is credited with saying, “Chance favors only the prepared mind”, or words to that effect. Whether he actually said it is for librarians and historians to confirm. Whether he intended it to mean what I take it to mean is highly questionable. After all, he was French, a chemist, and a microbiologist, all three of which would give him cause to look down his long nose at a lawyer’s loose application of what was undoubtedly a profound insight taken out of context.

But the statement applies to the prevention of fraud. The one least likely to succumb to the wiles of a crook is one who is most prepared to meet the crook. One of the most common, and most recent scams is a form of “phishing”.

Go Phish

The Phishing Scam relies on the ability of the clever charlatan to obtain sensitive information that opens the door to his financial future, all at the expense of an unsuspecting carp. It usually takes place quickly and easily in a telephone call. But richer scams can be incredibly elaborate, and are often baited with fear.

The scam is favored by crooks because it can be worked quickly, many times during the day, with little trail left behind, and little risk of being caught. And although the size of the purse is usually smaller, the frequency of its success is enough to keep crooks in the game. It works like this:

The Setup

The telephone rings. The caller is from the telephone company, or from the bank, or associated with a lending institution carrying your mortgage. It may even be someone claiming to be with the fraud department of your credit card issuer. There is a problem with your account that they need to discuss with you. The problem is usually serious enough to merit your concern.

But, of course, privacy laws require that they be able to confirm who they are talking to, to assure that sensitive information is not released to an unauthorized party. Therefore, they will need you to provide identifying information, such as your date of birth, your mother’s maiden name, or the three digit code on the back of your credit card.

Once the information is provided, the scam is virtually completed.

The Proof

Of course, what the caller did not count on was reaching a reader of this Blog. When the phone rings, the alarm bells automatically alert you that you may be the target of a scam.

To allay your fears, the caller may tell you to call the fraud department of your bank. (Who really knows how to reach the fraud department of a financial institution?) The caller will, of course offer the convenience of telling you the telephone number to save you the trouble of looking it up. Needless to say, the return call goes straight to the original caller’s desk, and you now have the comfort of knowing the call is genuine. Or do you?

The extra step provides some degree of elusive security. Once the scam artist offers the number, many targets will simply avoid the hassle by engaging in the desired conversation, when there has been no real security provided at all.

The Hook

Once the caller has your attention, they will advise you that someone in Marseilles has been making large charges to your account. They need to know if the charges are genuine. You will deny the charges, alleging them to be fraudulent (unless your wife is actually in Marseilles, in which event, good luck. Keep the dog; lose the wife. Your dog won’t place charges on your credit card).

Your concern that someone is making charges on your account may overshadow the fact that the call itself is fraudulent, inducing you to provide information you would not normally provide.

The Sting

Once the caller has the requested information, it will quickly be used to steal money from you before the caller disappears. You will be left to mitigate the damages by canceling the card, or the account, or by reporting the theft to the proper authorities. But by then, the damage is done.

How can I avoid the scam?

Again, the key to fraud avoidance is a healthy dose of skepticism, coupled with a dash of paranoia. Tell the caller that you do not give information over the telephone; then hang up.

Independently look up the telephone number for your bank, or lending institution, or credit card issuer. For the sake of convenience, your credit card issuer places the fraud prevention number on the back of the card. Get a magnifying glass. You’ll need it.

Call your financial institution using the telephone number you independently confirmed. Using the number the thief provides does nothing but route your call back to the thief. Give that number to the authorities. Otherwise, do not use it!

By independently calling your financial institution, you may learn that the call was fraudulent, and simultaneously save your marriage.

If you are truly lucky, you might be able to hang a stuffed phisherman on your wall. Good luck!

Copyright © Gregory D. Lucas 2014