Recognizing common scams targeting clients

VERNESA HARPER:  My role is dedicated to keeping you and your firm aware of fraud and cybersecurity threats that you may encounter. Today, I want to bring attention to common fraud scams that clients are falling prey to, so that you can help protect your clients from falling victim.

A scam is a deceptive scheme used to either convince your clients to send funds to a malicious third party or trick them into doing something that allows the scammer to access funds or data, for example, granting access to a mobile device.

Scams are on the rise, and, unfortunately, the scammers are becoming more sophisticated and difficult to detect. And, remember, the Schwab Security Guarantee often doesn't cover the losses from these incidents because the client willingly authorized the disbursements. It's important to be able to recognize these scams so that you can help your clients avoid them.

Usually, the process starts when scammers gather information about your clients online.

Next, they use the information combined with a sense of urgency and an insistence on secrecy to either charm or scare the victim into sending funds. One positive hook scammers might use is a romance scam, where the fraudster convinces the victim that they have found true love. A reward-based scam offers an investment that promises unrealistic returns or get rich quick promises. And the lottery scam. Clients are led to believe their winning ship has come in. The fear-based schemes include IRS scams, where the scammer tells the client that they owe money to the government. There's tech support scams. The client's device has been compromised, and they're being told that their funds need to be moved to secure them. Then we have the person in need scam. Your loved one is in trouble and needs cash immediately.

In most cases, the scammer insists the funds are needed as soon as possible, hoping the sense of urgency will cause the victim to act before they can think it through. They're also told to keep their activity a secret. This keeps the victim from sharing with others, who might point out that the whole scenario is suspicious.

Once the victim has bought into the scam, the fraudster will generally keep making bigger and bigger requests until the funds are drained or the scam is discovered.

The best time to stop a scam is before it starts. So what can you do to help prevent your clients from being the victim of a scam?

Number one, know your client's spending habits and the important people in their lives. Look out for increases in activity or change in behavior. Is there suddenly a new person involved in their life?

Number two, educate your clients on the fact that scammers are out there and targeting investors. Let them know that they should never feel pressured to send funds or should not send money to someone they have only met online.

Number three, turn on the disbursement alerts in Schwab Advisor Center. If you see suspicious activity, ask questions.

And, lastly, number four, if you have concerns, please report them to Schwab. You do not need to be absolutely certain it's a scam before you reach out to us.

If your client becomes the victim of a scam, report it to Schwab, law enforcement and Adult Protective Services, if applicable.

Remember, the best time to stop a scam is before it happens, so educating your clients on common scams is the best way to help them protect themselves.

For additional fraud prevention resources, go to Schwab Advisor Center, the Cybersecurity Resource Center.