cold calling

Who's Calling, Please? Brokerage Impostor Cold Calls

Since many people who invest money through FINRA-registered brokers do not know what FINRA (Financial Regulatory Agency) is, let alone keep up with the agency's latest warnings, we like to raise awareness out there among everyone who is kind enough to read our blog  whenever FINRA issues a new alert or warning. Usually these warnings come as a result of an uptick in cases seen in FINRA's arbitration process. And so, by our reasoning, if FINRA has been seeing more cases of a certain type of investment fraud or broker misconduct, then maybe you out there have too. Or maybe we can help prevent others from falling prey to it. At any rate, this week saw FINRA issue a new alert titled, "Cold Calls from Brokerage Firm Impostors--Beware of Old-Fashioned Phishing."


As the warning describes, scam artists have recently been cold-calling citizens while impersonating at least one well-known brokerage firm and engaging them in conversation in the hope of getting people to reveal personal financial information, including of course their social security numbers. As FINRA notes, this scheme is a throwback twist on what's known as Internet "phishing," or spattering people with spam messages with the intention of culling financial information for nefarious purposes. We say "throwback" because this more recent version of the scam uses not email but the somewhat old-fashioned telephone cold-call, which as the fraudsters must know adds a much more personal element to the phishing. After all, over the past decade or so we've learned to be very suspicious of emails find their way into our inbox from Nigeria and so on, but we may be a little less wary of an actual person talking to us on the phone, especially if they say they work for such-and-such major brokerage firm. 

The mechanics of the scam work like this. Once the caller gets you on the line, he or she will tell you about a special offer on Certificates of Deposit (CDs) or some other financial product. They'll insist that, if you invest, you can get yields well above the norm. If you seem even remotely interested, they don't go in for the kill right away. They say they'll have their supervisor get back to you with more information, or else they may send you applications forms to fill out. At some point in these interactions, however, they will try to obtain your personal financial information. Once they have it, they'll use it to steal your money or your identity.  And that's very bad news indeed.

FINRA provides a few useful tips for how to avoid getting fleeced by this particular scam. We would add that like most scams, the fraudsters rely on two key dynamics: false promises and lack of due diligence. You can beat this scam and many others like it simply by always sticking to the rule of thumb that "if it sounds too good to be true, it probably is;" and by insisting that, rather you giving them more information, they give you more information. That way, you can look more deeply into the background they claim to have, whether it's with a large brokerage company or as an independent. You can call the brokerage itself, the compliance office, FINRA's general intake phone line, or use FINRA's BrokerCheck to see if your shady cold-caller is who they say they are.  

If you or anyone you know has been the victim of investment fraud or broker misconduct, please contact us immediately for a free consultation.