Scams Proliferate Amidst Remote Working Arrangements
The COVID-19 crisis has made an impact on every part of daily life. That includes the economy, of course; and the stock market. Unfortunately such incredible turmoil creates even greater than usual opportunities for fraud.
The securities industry regulatory body, FINRA, has issued several warnings to investors recently pointing out various types of fraud that could reach them during the crisis. It has also put its broker-dealers on notice not only to continue to carefully monitor brokers but also to watch out for frauds that target firms and their customers.
New scams have been born during COVID-19. Old scams have also found new life during the crisis. Recent events have left investors vulnerable in ways that are familiar and unfamiliar. Perhaps the greatest shift has been the remote working environment, which has affected hundreds of millions of people around the world, and tens of millions of Americans. FINRA pointed out that bad actors — fraudsters — have been using firms’ relationships with customers and especially communications with investors to get at their money. The key to combatting this new outbreak of fraud is to remain vigilant. That goes for broker-dealers, brokers, and investors alike.
FINRA highlighted four major scams to watch out for:
(1) fraudulent account openings and money transfers
(2) firm imposter scams
(3) IT Help Desk scams
(4) business email compromise schemes
Fraudulent Account Openings and Money Transfers
FINRA said that some brokerage firms have reported a spike in fraudulent new accounts. These accounts can be hidden during a surge in new account openings in general. Most at risk appears to be firms who are offering online account opening. Fraudsters use phony accounts to divert congressional stimulus funds, unemployment payments or other payments, or to engage in automated clearing house (ACH) fraud.
Firm Imposter Scams
Remote working environments and telecommuting setups appear to have increased opportunities for fraudsters to impersonate broker firms and investment professionals. They make send phony communications and create fraudulent websites or social media that resemble legitimate sources. The scam works by getting customers to provide personal information, including existing account information, logins, usernames and passwords. Customers are often tricked into doing this because the impersonation is so convincing; it can even involve phone calls or video chats. In some cases, fraudsters may seek to reduce the likelihood that customers will realize they have been the target of a fraud by directing them not to contact the firm by phone due to long wait times.
IT Help Desk Scams
Again, remote work arrangements have offered scam artists a new way to trick investors. In this attack, fraudsters contact customers pretending to be offering a solution to an IT problem connected to the customer’s financial firm. These IT Help Desk scams often involve pretending to resolve a technical issue related to the firm’s online platform or the customer account; the aim is to steal personal confidential information such as account login and passwords or account numbers. FINRA pointed out that these scams resemble the so-called “virus protection” scam that flared up several years ago.
Business Email Compromise Schemes
Business email compromise schemes typically involve those who have the ability to perform legitimate funds transfers. Fraudsters may take advantage of remote working environments to pose, via email or text message, as firm leadership to request illegitimate fund transfers. According to the FBI, in a typical business email compromise scheme, the victim receives an email they believe is from a company they normally conduct business with, but this specific email requests funds be sent to a new account or otherwise alters the standard payment practices.
Pennsylvania & New Jersey Securities Litigation Firm
If you or someone you know has been the victim of investment fraud or broker misconduct, please contact our attorneys immediately for a free consultation at 215 462 3330 or by using our online contact form.
