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Cover Your Assets: 8 Lessons from a Scam

Cover Your Assets: 8 Lessons from a Scam

| January 16, 2021

My client has given me permission to share this story. I've changed his name and some details to protect his privacy but the important lessons remain.

On a busy Sunday of running errands, John's phone rang while he was driving. It was his bank. He had them on caller ID, so he assumed it was a legitimate call. He picked up the phone.

 John: Hello, this is John.

Banker: Hello John, this is Fred from XYZ Bank fraud department, and we'd like to go over a few suspicious charges on your debit card to make sure they are from you. 

Lesson 1: When speaking with your financial institution, don't multitask. It's difficult because often times your on hold for 30 minutes and need to do other things. Get a pen and paper and document when you called and with whom you spoke. CYA: Cover your Assets!

Lesson 2: Scammers can spoof (copy) a phone number that isn't really theirs. I don't know how they do it, nor do I care. Just know caller ID no longer means anything. Also, the caller had a perfect American accent. Stereotypically, scammers are from India, Russia or the Philippines. Not anymore. Furthermore, many financial institutions use those same countries for legitimate customer service. So accents mean nothing.

John: No, none of those three charges are from me. I've been ripped off.

Banker: Don't worry, John, you won't be held liable. We'll reverse those charges and freeze your card and issue you a new one since this one has been compromised...

Lesson 3: This scam engenders trust because they are supposedly saving you from scammers. It's an effective psychological trick that leads to the next layer of deception.

Banker: We'll just need to verify a few things. Can you give me the last four digits of your credit card?

John: Sure, it's 6587.

Banker: That's correct. And your address on file?

John: 123 Pleasant Street Anytown, FL 327XX.

Banker: That's what we have here. Okay, and can you verify the 3 digit CVV on the back of your card?

John: It's 666. 

Lesson 4: When you have to "verify" your data it puts the scammer in a false seat of authority. He probably didn't know ANY of this information. But you feel beholden to "prove" you are who you say you are.

Lesson 5: The last four digits of your credit card are often the four digits that are the most unique. Unless you are purchasing over the phone, be very careful who you give your 3 or 4 digit CVV number to.

Lesson 6: Sometimes it's a good idea to make them verify that they are who they say they are. Log in to your account and look at the last three transactions. Ask them to verify that they see those as well. This may not be perfect, but if they can't verify, increase your suspicions.

After hanging up, John felt uneasy about the phone call. He especially was concerned about why they needed the CVV number if no purchase was being made. He called his bank, but it was Sunday so there was nobody there.

Lesson 7: Call the number on the back of your credit card to report fraud and freeze the card in a situation like this. John realized this a little too late.

Unfortunately, about $600 was withdrawn from the account. Then a series of CVS drug store transactions showed up on his activity. By the end of the hour, his account was emptied, totaling over $4,500. Fortunately, it was his operational checking account and not his savings account where much more money was kept.

Lesson 8: It's great having your money market or savings account as an overdraft backup to your checking. That way you don't have to worry as much about transferring before a large purchase with your debit card. However, this could hurt you if your debit card is compromised. Luckily for John, it wasn't linked.

It's important to know that John is a smart guy with a graduate degree and a successful career. The problem is John's not a criminal or a dirt bag nor does he have any in his group of friends. Like John, it's hard for me to realize that people would prey upon our faith in humanity.

I once heard that eternal diligence is the price of freedom. Unfortunately, it's the price of not getting scammed. Please forward this to a friend so this scam has less effect on the people you care about. If you'd like to learn more about how to repair your situation once you have been scammed, click here.