Financial Fraud: Could It Happen To You?

Financial Fraud is rampant and sophisticated.  In the past six months, I know of five cases close to home where people were almost victims of financial fraud. An overview of some of the types of financial fraud shows just how sophisticated and widespread the attacks are.

Some cases involve a scammer hacking into a person’s email. We have seen cases where the hacker impersonates the victim and emails a professional such as a financial advisor asking for money. A step further is when a hacker intercepts a document, edits the instructions, and sends it on the person’s behalf, often directing money to the wrong account.

Other cases get more personal. Scammers will often call potential victims by phone, telling lies to bait them for personal financial information. This can be anything from someone impersonating an IRS agent demanding payment to someone pretending to represent your credit card company under the pretense of helping you stop a fake, fraudulent charge. Scammers have an uncanny way of making the potential victims feel like they are legitimate businesspeople. In these types of cases, there are several common characteristics.

  • Urgency and distress. In most situations, the victims will be prompted to send money or provide personal information to help their own circumstances, but sometimes scammers relay their own bad circumstances looking for pity. Regardless, victims are motivated by the need to act quickly to get things cleared up or help someone. This characteristic can go both ways, either the scammer offering assistance with a problem or asking for assistance for themselves. When the scammer offers help, they will usually request or pretend to verify certain pieces of private information. When the scammer asks to be helped, they will sometimes offer to pay extra for the convenience of the potential victim sending money on their behalf. For example, the scammer may request $500 but then send the potential victim a check for $1,000, and the extra $500 is the “reward” for helping the scammer. However, once the victim’s check is cashed, the bank will find out that the original $1,000 check was bad.
  • Secrecy: The scammer often directs the victim not to tell a soul, or else the resolution will not come to fruition.
  • Demographics: Anyone can be a victim, but often scammers target people who live alone or in retirement communities.

The bottom line is that fraud can come at you from anywhere and in just about any form.  To best protect yourself, follow these three rules:

  • NEVER give any financial or personal information to someone you do not know.
  • NEVER transfer any funds to someone you do not know.  If you know them, make sure to speak with them, not merely email correspondence or text messages.
  • ALWAYS contact your financial advisor (or trusted advisor) if you have any suspicions about potential financial fraud.

The above cases reflect circumstances where thieves make direct contact with you in some form.  In many cases, thieves will get enough financial information to either set up new accounts in your name or directly hack your credit cards, bank accounts, or investment accounts through some form of hacking.

Today, virtually all credit card companies allow smartphone access to your accounts.  For credit cards, consider setting smartphone text alerts for charges over a pre-determined amount, say, $20.  You use a credit card for a $21 gas purchase, and you will immediately get a text alert.  If a thief uses your credit card, you will know immediately.  For bank and investment accounts, take a moment to log in and check your balance and transactions at the end of the day.  For credit protection, get and review your credit report annually.  It is free from  If you do not intend to apply for new credit in the near future, you may also consider placing a ‘credit freeze’ at the credit bureaus,, and  This prevents anyone from opening new credit in your name.

By taking the time to put a few protective measures in place now, you can significantly protect yourself from becoming a victim of financial fraud.


For weekly insights, follow The Welch Group every Tuesday morning on WBRC Fox 6 for the money Tuesday segment.


Financial Fraud: Could It Happen To You?

Financial fraud is both rampant and sophisticated.  Do this to protect yourself:

  • NEVER give out your personal information
  • NEVER transfer funds to anyone you don’t know
  • ALWAYS contact your financial advisor if suspicious



professional photo of certified financial planner Stewart Welch wearing black suit and red tie

Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States.  He is the author or co-author of six books, including 50 Rules of Success;  J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaire; and 100 Tips for Creating a Champagne Retirement on a Shoestring Budget. For more information, visit The Welch Group. Consult your financial advisor before acting on comments in this article.






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