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

PRIMER ON FRAUD PREVENTION – Lesson #3

Advance Fee Schemes – Variations on a Theme

In lesson #2, we addressed the typical advance fee scheme. As the public gets smarter, crooks must develop variations that lack the ring of familiarity.

Take, for instance, the “Grandparent Scam”. This scam relies on the susceptibility of doting grandparents who would do anything for kith and kin. Out of the blue one night, they receive a call from someone purporting to be a close relative – grandchild, nephew, cousin – any relationship will do, provided the target is willing to pay to protect them.

The Setup

Like every other Advance Fee Scheme, this con starts with a story. Billie is in trouble. He has been arrested, or lost his passport, or been robbed, or been involved in some terrible accident. He is terrified of his parents finding out, and had no one else to turn to but you. He needs money, and must have it immediately, or some profound consequence will befall him. He is usually traveling out of the country, and has no other way to get money.

The Proof

The skeptical and wily grandparent is too smart to take the story at face value; he must speak to someone in authority. In the case of an arrest, that someone may be a police desk sergeant. In the case of an accident, it may be the admitting nurse at the hospital. It may be a clerk at Western Union, or a consular officer. Conveniently, that person is always within reach of the telephone. The person confirms the story, and provides whatever other information may be necessary to sweeten the bait. Often, the sweetener is important information that Billie left out, usually with extraordinary detail. Of course, the entire story is false.

The Hook

The hook is the tricky part in the Grandparent Scam. There are too many ways that a cautious target can detect the scam. The thieves will usually have pre-arranged a story that prevents the target from checking them out and calling back. For example, if Billie is arrested and must post bail (even more interesting if Billie is arrested in Mexico where he is presumed guilty until proven innocent), he may be entitled to one telephone call. If bail cannot be arranged during the call, he will be booked, or imprisoned, or left in a cold dark cage to vegetate.

In the case of an accident, Billie may not be available at all. He may be in emergency surgery to stop the bleeding. (This story is compelling if there is concern that the grandparent may know Billie too well to be tricked by a fake voice.) His medical insurance card has been rejected or cancelled, and the hospital requires payment by wire transfer, postal money order, or Green Dot MoneyPaks.

Curiously, even if the target has a chance to speak with Billie, more often than not there is not enough familiarity to detect the fraud. Youngster’s voices tend to be sufficiently fungible to fool the most devoted grandparent.

Most important to the success of this scam is that the child is too afraid to call his parents, and asks that the grandparent not tell them. The child will straighten it out with his parents when he returns, and all money paid will be promptly paid back.

The Sting

Once the grandparent performs the ultimate act of love by sending money to “save” Billie, the scam is completed. The next morning, grandpa will call Billie’s parents, only to find that Billie spent the night safe in bed. Grandpa has become another victim.

How can I avoid the scam?

The shrewd grandparent avoids the scam by seeing it for what it is before the thieves set the hook. Grandpa can place the thieves on hold while he calls his children to get more information about Billie’s whereabouts. Of course, the thieves will hang up.

A cool game of “Columbo”, in which the grandparent asks an endless litany of questions, will yield the same result. When the thieves know that Grandpa knows, they will hang up.

Alternatively, Grandpa can wish Billie well, and advise him to be straight with his parents, and hang up. Once the thieves know that the grandparent is not an easy target, they will try the scam on someone less gullible.

The truly shrewd grandparent might obtain an address to which a check can be sent, then turn the information over to the authorities.

The bottom line is that avoiding the scam requires mental preparation. One must decide not to be a victim.

And if, by some chance, Billie really does get in trouble, congratulate him on being related to such wise grandparents, and hang up.

Copyright © Gregory D. Lucas 2014