Do Not Send Money or Personal Data Without Verifying the Recipient
January 11, 2023
Do Not Send Money or Personal Data Without Verifying the Recipient
While impersonation scams are certainly not new, there are surprising new variants every day. In a February 2021 report, FINRA observed an increase in cyber-related incidents, including fraudsters creating fake websites using the names and professional details of actual industry professionals (who have no connection to the imposter sites). And more recently in late July 2021, the FBI and Securities and Exchange Commission issued a warning to investors about this problem (see Investors Alert at https://bit.ly/3zL0TBV).
Impersonation is one of the oldest scams, but it can be difficult to spot unless you know what you’re looking for. Here are six tips to help spot the fakes.
FINRA encourages investors to “ask and check” by using BrokerCheck before investing with an investment professional. Don’t assume that the information you receive is legitimate. Go directly to the sources that collect the regulatory information to produce these reports, including FINRA’s BrokerCheck, the SEC’s Investment Adviser Public Disclosure and state registration databases. You can search both professionals and firms not only by name, but also by their registration number — known as a CRD number.
Compare whatever BrokerCheck report or other documentation you receive from an individual or firm soliciting your business with the real reports you obtain yourself from BrokerCheck or the sources above. Be wary of typos, and look for differences in the reports. For instance, in a recent scam, the doctored information was in fonts that were different from fonts used in other parts of the report, items appeared to be pasted into the document, and the state of the branch office address was not included in the list of states where the individual was licensed.
Take a few moments to use a common search engine to type in the name of the individual who is soliciting your business and the firm name, and see what comes up. Does it match the information provided to you, including the contact information? If something doesn’t look right, do a little more digging, including a map search on the address or a reverse lookup on the phone number. Be sure to check all this information against a reliable source such as BrokerCheck, where you can verify whether the phone number or website listed in the firm’s Client Relationship Summary (Form CRS) matches. When scanning LinkedIn profiles, be aware that scammers often copy select information from a registered person’s LinkedIn profile to create the appearance of legitimacy.
Don’t ever send money or personal information, such as your driver’s license, passport, Social Security number, date of birth or bank account information, until you verify who contacted you.
Sometimes a scammer will ask you to send money or personal information to a personal (rather than a firm’s) email address or to respond to phone numbers that are not listed as official firm contacts. One general rule all investors should follow: If you invest through an account at a financial firm, use BrokerCheck to verify that the firm is registered and send all deposits directly to the financial firm. If an individual pitches an investment opportunity that requires you to write a check directly to him or to a third party, proceed with caution.
Be cautious of guarantees, unregistered products, overly consistent or high returns, complex strategies, missing documentation, account discrepancies and pushy salespeople. The vast majority of investment professionals are trustworthy individuals, but there are always exceptions who might look to take advantage of your trust. Practice spotting the persuasion tactics that con artists use, and always exercise healthy skepticism. For instance, be wary of sales pitches that make exaggerated claims about performance. This is a red flag of fraud.
If you are suspicious about information you receive from an individual or firm soliciting your business, contact FINRA or another regulator BEFORE you send any personal or financial information. If you are an investment professional and have concerns that someone is using your name or information as part of a potential scam, contact your firm’s compliance department, and alert FINRA by calling the BrokerCheck hotline at (800) 289-9999 or emailing BrokerCheck@finra.org.
