In the world of finance, we often talk about various kinds of risks: market risk, credit risk, operational risk, and so forth. However, today I'd like to take a moment to discuss a risk that's less spoken about in our circles but has grave financial implications.
According to the Federal Trade Commission, financial scams cost Americans over $8.8 billion dollars! Scammers are getting more sophisticated and it's getting harder and harder to differentiate between legitimate callers and fraudulent ones. Today, we are going to dive in to the dark world of Elder Romance scams, and discuss what do you need to know, and the simple steps that you can do to protect yourself and those you love.
How are people falling for these scams at such an alarming rate?
Firstly, let me tell ya, we should never underestimate the power of scams. See, scam artists are a cunning bunch. Their craft is ancient, and they've honed their skills to certain perfection.
Take my mother-in-law, for example - she's a retired CPA, her specialty was being an auditor...ie her job was to catch the people stealing. She lives and breathes numbers...But even she fell victim for a romance scam!
What is a Romance Scam
A romance scam is a deceptive practice where fraudsters feign romantic intentions towards a victim, often going to great lengths to gain their affection and trust, only to exploit them financially.
How does it work?
The Introduction: The scam often begins on dating websites or social networking platforms. The scammer creates a fake profile, often stealing the identity of real people. The one commonality is that their work is secret and requires them to travel a lot.
Building Trust: Once contact is made, they'll work diligently to earn your trust. They will spend a lot o time getting to know you. They will wine and dine you with lots of emails, text and voice calls. They will also seek to drive wedges in your life between you and your loved ones. If you have a family member who is always a pain, they will take your side. They will encourage you to keep the relationship secret...because your family wouldn't understand.
The Ask: Once they believe they've got your trust, the scammer will concoct a financial emergency. It might be a sudden medical bill, a business opportunity, or even a chance to meet in person. The stories are as varied as they are heartbreaking.
The Loss: Believing they are helping a loved one or a future partner, transfer the money. Sadly, this "investment" will never yield returns, and often, the scammers woes will only escalate. If you try to call them on their BS, or cut of your emotional and financial support, they will retaliate. First with emotional blackmail, though they will quickly escalate to real blackmail, threatening to spread all the intimate secrets you've spilled to them...often complete with naughty pictures.
Why People Fall Prey to Scams
The Sting, is one of my favorite movies. For those of you unfamiliar, "The Sting" is a 1973 caper film set in the 1930s where two grifters, played by Paul Newman and Robert Redford, team up to con a mob boss out of a large sum of money as revenge for a murdered friend. Using an elaborate scheme involving fake betting parlors and staged scenarios, the duo engages in a high-stakes game of deception, pulling off one of the most intricate cons in film history.
Today's scams are not like "The Sting", or "Catch me if you can." We gotta rewire our thinking here. Today, scammers are part of organized syndicates, sometimes even government sanctioned, some with hundreds of employees and vast resources. It's almost like a formalized industry, and they're incredibly good at what they do and their sole mission: to make you part ways with your hard-earned cash.
See these scammers, they are smart and sophisticated, they’re not running up to you and saying, "Hey, hand me a hundred bucks, and it's gonna magically turn into two hundred!". Nope, they’re subtler than that. They got their ways, their tricks to mak