Lessons Learned From an ‘Almost’ Scam; Read More in September/October BizVoice

Have you ever been financially scammed?

I was, nearly. In my senior year of college, I got a phone call one night from a chipper-sounding gal that let me know I had won something (I don’t even remember now what the thing was!) and all I had to do was give my credit card information (I didn’t have a credit card, but did have a debit card. So, that’s much worse).

She made it sound like a sweet deal and was very persuasive. I obliged and handed out my numbers.

There was something in the pit of my stomach that didn’t feel right in the moment. As soon as I’d hung up the phone, I knew I’d made a huge mistake. I was at the local branch of my bank the first thing the next morning. As I stumbled through my explanation and through the tears of worry – and most of all embarrassment: how could I have fallen for it? – they assured me they had canceled my card and nothing illicit had happened.

I was lucky.

Lucky I listened to my gut and stopped it before anything could happen.
And lucky I was a college kid who didn’t have much money in her account anyway, had things turned out differently.

Not a grandmother who is scammed into giving away her life savings. Or a single parent in a desperate situation who is willing to put their hope into something – anything – that seems like a way out of a financial mess, only to have things get a lot worse.

And while banks and financial institutions have become more proactive about educating customers, improving their fraud policies and offering protection services and other means of fortification, there are still “bad actors” out there causing financial havoc.
As those “bad actors” have become more sophisticated over time, the ease of the internet has made all of us relax on our privacy and security. Who’s got a banking app on their phone? Is your password secure enough a thief couldn’t guess it? Are the answers to the security questions easy enough to figure out if someone were to do some research into your social media presence?

What are banking institutions doing to fight fraud? And how can customers – businesses and individuals – help shield their interests from falling into the hands of scammers?

We’re diving into the topic of fighting financial fraud in the September-October edition of BizVoice®. I’ll be speaking with Andy Shank, professional fraud investigator for Elements Financial, who spent 13 years as an investigator with the Indiana State Police and worked with the Federal Bureau of Investigation in that time.

We’ll look at what financial institutions are doing to guard their customers’ interests and ward against fraud, and Hoosier experts will offer tips on how you can protect your company and your personal financial interests.

See you in September!

Cato Scholars: Stimulus Could Lead to Scams to Make Madoff Blush

Here’s an uplifting gem from the folks at the Cato Institute. They assert President Obama’s stimulus package (and health care plan) could end up leading to major scams to seize money from the federal government — scams in which we’d all be investing. They speculate:

Government fraud has been in the news lately because analysts are expecting major abuses of the Obama administration’s $787 billion stimulus plan. One Deloitte expert argued that "swindlers, con men, and thieves could siphon off as much as $50 billion" of stimulus funds, which are vulnerable because policymakers are under pressure to shovel it out the door quickly.

Even more troubling is the potential for fraud and abuse created by President Obama’s other big spending proposals — particularly his giant health-care plan. Obama wants to inject hundreds of billions more tax dollars into federal health care instead of fundamentally reforming Medicare and Medicaid — broken programs that are already subject to Madoff-sized larceny. That is incredibly unfair to those of us paying the bills.

Take Medicare. The Government Accountability Office reports that the program makes about $17 billion in improper payments each year. And that doesn’t include problems in the new $60-billion-per-year prescription-drug plan, which is a juicy target for criminals. Harvard University’s Malcolm Sparrow, a specialist in health-care fraud, recently testified to Congress that official estimates are "lacking in rigor," are "comfortingly low and quite misleading," and exclude many kinds of fraud and abuse. He thinks that as much as 20 percent of the federal health-care budget is consumed by fraud, which would be $85 billion a year for Medicare.

Medicare makes a staggering 1.2 billion electronic payments each year, making it highly vulnerable to cheating by health-care providers and organized-crime rings. Criminals need only fill out the government forms carefully and the "claims will be paid in full and on time, without a hiccup, by a computer, and with no human involvement at all," according to Sparrow. A perfect example is the recent case of a high-school dropout in Miami who was able to single-handedly bilk Medicare out of $105 million from her laptop by submitting 140,000 separate claims for equipment and services.

So what do you think? Do you expect this to happen or do we all need to stop worrying so much?

SBA: Businesses Should Beware of Stimulus Scam Letters

A press release from the Small Business Administration:

WASHINGTON – The U.S. Small Business Administration issued a scam alert (Feb. 18) to small businesses, warning them not to respond to letters falsely claiming to have been sent by the SBA asking for bank account information in order to qualify them for federal tax rebates. 

The fraudulent letters were sent out with what appears to be an SBA letterhead to small businesses across the country, advising recipients that they may be eligible for a tax rebate under the Economic Stimulus Act, and that SBA is assessing their eligibility for such a rebate.  The letter asks the small business to provide the name of its bank and account number. 

These letters have not been sent by or authorized by the SBA, and all small businesses are strongly advised not to respond to them.

The scheme is similar in many ways to e-mail scams often referred to as “phishing” that seek personal data and financial account information that enables another party to access (an) individual’s bank accounts or to engage in identity theft.

The SBA is working with the SBA Office of Inspector General to investigate this matter. The Office of Inspector General asks that anyone who receives such a letter report it to the OIG Fraud Line at 1 (800) 767-0385, or e-mail at OIGHotline@sba.gov.

Scam Alert: Rokita’s Letter to Businesses About New Scam

Dear Indiana business:

I am writing to alert you of a continuing scam being perpetrated on Indiana businesses. Several businesses have reported receiving a deceptive letter that would appear to come from an official government source. The letter solicits an annual fee of $125 or $150 and claims it will be used for record keeping and processing of a company’s annual minutes. It gives the appearance of coming from a legitimate government agency and cites fictitious state law.  

Specifically, copies of the letter that have been forwarded to my office appear to come from the "Indiana Corporate Compliance Business Division." They include a return by date to give the false impression that action is necessary on your part.  

This letter is NOT an official correspondence from my Business Services Division or any other Indiana state agency. Investigators from my office are working with federal law enforcement to determine who is responsible for these letters and ensure they are stopped. If you received one of these solicitations, ignore it!  If you have already responded to such a letters and believe you are a victim of this scam, please call the Business Services Division at (317) 232-6576. 

Please also remember you can securely comply with your legitimate business entity reporting requirements to the state securely online through the INBiz portal found on my Web page at www.sos.in.gov/business. As always, my office will provide you with a courtesy reminder when your report is due to be filed. Legitimate notices from my office include the state seal of Indiana and my name.

Best regards,

Todd Rokita, Indiana Secretary of State

Scam Alert: USLBA Wants YOUR Money

Investments in chambers of commerce and other legitimate business organizations are beneficial at all times. We at the Indiana Chamber, and many of our colleagues, are passionate about what we do. That’s why we take it somewhat personally when others try to use the “association” name to illicitly extract your hard-earned money.

Here’s the latest: A letter from the U.S. Local Business Association informing your company that you have won a Best of (insert local community) award. It instructs you to simply fill out the order form to receive your plaque. At the end, you learn that this plaque will cost anywhere from $100 to $700, according to various reports.

The problems, cited by various Better Business Bureau chapters and others:

  • There is no way to contact the company other than e-mail
  • Web site domain registration for the organization has been completed privately
  • You must provide and submit information about your company before finding out the cost of the award plaque
  • Before you agree to accept the award, the organization already has a press release on its web site stating that you are a recipient

The “vanity scam” label comes from the fact that you might (I repeat might) actually get an overpriced plaque you can hang on the wall and look at. It means absolutely nothing, however, and, in fact, will probably be a detriment as customers or clients will at some point realize that you have been a victim, not a victor.

At least one Indiana company reports receiving this solicitation (example here). To all, be forewarned.