I had another topic in mind for today, but the start of this week has been so disturbing that I had to change gears.
Last week was spring break in our family and we took a long-planned trip to the Caribbean (out of the country) with a couple other families. My son Sam joined us from IU for the last half of the trip. My wife and I flew out of Midway, Sam flew out of Indianapolis.
As we were dealing with the chaos that is Midway on the Sunday evening after spring break, Sam forwarded me a voicemail over the phone text. The accompanying message from him was “is this legit?” While I was walking with purpose to retrieve the car, I half listened to the message. It was from a major bank fraud department, sounded professional, requesting a call back about recent suspicious activity on his debit card. I texted him back, “seems legit, you should check the account activity on your phone app.”
He texted back, “I don’t have that bank, and listen again, the voicemail is for YOU.” Just as I was reading the text and getting to the car, a new voicemail notification appeared on my phone. It was the exact same message, requesting a call back about my debit card. Now, I definitely don’t have a debit card with that bank, but I do have a credit card I had used on the trip. I also have the credit card set up to send alerts to my phone every time it is used, and I knew no suspicious transactions had occurred and no transactions had been held or denied. I decided not to react and stay focused on the job of surviving Midway. Red flags were flying in my head.
Getting back into the swing of things at the office the next day, an urgent email sat in the top of my inbox. The email was from our Oak Partners office in eastern Indiana. The email was from an experienced advisor who had also been on spring break the week before.
The advisor had returned to an alert on our account management surveillance system. While he was gone, a good client and family friend had requested a huge withdrawal, north of $200,000, from an annuity account serviced by the office. Thinking a withdrawal of this nature was unusual and would typically involve a planning conversation about taxes and timing, he called the client first thing Monday morning. The client had no idea about the withdrawal, neither did the operations assistant in the office. They called the insurance company for the withdrawal documents, which were attached to the email he had sent me.
The somewhat complicated withdrawal documents were in good order. The signature on the documents matched other signatures on file for the client. The docs requested the funds be sent to a checking account in the client’s name, a blurry VOID check was attached, and they even requested tax withholding as to look more typical. Fortunately, the insurance company could not read the VOID check, and instead sent a check to the client’s address. Unfortunately, the insurance company processed the paperwork without any red flags. Our office was able to obtain the withdrawal check and reverse the process.
Obviously, these situations are disturbing, but the aspects disturbing me the most are the sophistication of both fraud attempts. Maybe the debit card fraudsters just had lucky timing and managed to call both Sam and I while we were traveling internationally and at a higher state of alert. But maybe it wasn’t luck. How did these fraudsters get access to our phone numbers? Why would they call Sam looking for me? We have no joint financial accounts. There’s only three sources that knew we were traveling out of the country and had our phone numbers, the phone company, the airlines and the government. The prospects are terrifying.
When it comes to the annuity withdrawal, the fraudsters had to discover the annuity (probably mail theft or an email hack), get ahold of the account information, understand at least something about the product itself, have enough information to either open a checking account in the client’s name or be able to create a fake check and obtain a copy of the client’s signature. This was not a simple phishing attempt, this was highly developed financial knowledge.
I can say without hesitation, our offices used to encounter two or three financial fraud attempts against clients in a year. In the past year, it’s now two or three a month. I have other stories that are even more terrifying. Unfortunately, it's time for extreme vigilance.
So, what’s my primary advice? Slow down. Develop a relationship with a trusted advisor such as a financial advisor, banker or accountant. Use your intuition, and ask for advice when something seems even slightly awry. I know I beat this drum a lot, but in my experience education and relationships are the best countermeasures.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stock investing includes risks, including fluctuating prices and loss of principal. No investment strategy can guarantee a profit or preserve against loss. Past performance is not a guarantee of future results. This material may contain forward looking statements; there are no guarantees that these outcomes will come to pass.
