NerdWallet's Smart Money Podcast - Swindled or Safe? Improve Your Scam Awareness and Protect Your Finances

Episode Date: December 18, 2024

Learn how financial scammers exploit emotions and how you can protect your finances from their latest tactics. How can you protect your money from online scams? What steps can you take to safeguard yourself from financial deception? Hosts Sean Pyles and Anna Helhoski delve into the harrowing tale of Judith, a 79-year-old who fell victim to a sophisticated scam that led to the loss of nearly $600,000. Joined by Michelle Singletary, a personal finance columnist for the Washington Post, they unravel the tactics scammers use to prey on emotions and trust, emphasizing the importance of awareness and empathy in scam prevention. Then, Sean and Anna break down recent financial headlines, including updates on the Federal Reserve's interest rate decisions, the Consumer Financial Protection Bureau's new rule on overdraft fees, and the halted merger between Albertsons and Kroger.  We're off next week, but you can follow our latest coverage on NerdWallet's financial news hub: https://www.nerdwallet.com/h/news/financial-news  In their conversation, the Nerds discuss: scam prevention, online scams, phone scams, scam awareness, financial fraud, scammer tactics, protecting your savings, scam victims, scammer manipulation, scam warning signs, elderly scam victims, scam support, scam protection tips, FBI impersonation scam, financial security, bank manager intervention, scam victim recovery, fraud prevention, scam prevention strategies, protecting retirement savings, scam red flags, scam recovery, scam education, online fraud, scam prevention awareness, and scam victim advocacy. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

Welcome to NerdWallet's Smart Money Podcast. I'm Sean Piles. And I'm Anna Helhosky. And this is our weekly money news roundup, where we break down the latest in the world of finance to help you be smarter with your money. We'll go deep into a single topic, then leave you with the latest money headlines. Today, we're talking about how to protect yourself and your money from the vicious world of online scams. Only they're not just online anymore. They're on your phone. And if you think it can't happen to you because you're either too smart or too informed or too lucky, you're wrong. As has been proven time and time again, when completely normal people

have their life savings stripped away before they realize what's happening. Today, we're going to hear about one specific story that we read about in The Washington Post, a seven-part series about these types of fraud that is just a jaw-dropping read. It's called Scammed, and you should find it and absorb its implications. We're joined by the author Michelle Singletary, a personal finance columnist for The Washington Post. Michelle, thanks for joining us. Oh, thank you for having me. We're talking about a seven-part series, so you should check out the entire thing. But Michelle, if you could give us a condensed version of how this scam played out. Each part of the series deconstructs what happened.

So part one is about this lovely, kind-hearted woman, Judith, who, when she was 79, it up and the person said, Rockville Police Department. She told him she'd been getting calls and they said, let us transfer you to the chief of police. And this person said that she was under investigation for money laundering. Her social security number had been used and connected to a drug cartel, and that this is a very serious thing and she needed to take care of it. Then proceeded to say that they were referring the caller, transferring it to the FBI. Now, all along the way, the caller ID said Rockville Police Department. It said the FBI. So she had no reason to believe initially that she wasn't talking to agents of the FBI. Well, of course she wasn't. And after about three months of long conversations, they

asked this person who was pretending to be a real FBI agent with his resume and everything, persuaded her that she needed to move her money into some sort of government locker to protect it while they were pursuing the criminal case. And at the end of the day, over three months, nearly $600,000 of all of her retirement savings were stolen. God, it's just a heartbreaking story. And as you mentioned in your piece, so often people who are scammed are hesitant to make their stories public. I'm wondering, how did you connect with Judith? The first time she was interested in telling her story to help other folks. When you read the series, you'll find her life's work is working in the public service. She was a therapist. She worked with children and dementia patients. I mean, her life

was helping other people. When this happened to her, when she became a crime victim, she wanted to put the warning out that this could happen to anybody because this is a highly educated woman. She's 79, but all there, I mean, there's no mental incapacity at all. When I met her for the first time, it was really hard for her to share it again. Over multiple interviews, going there, spending time with her, spending time with her daughter, she was able to unpack everything. She gave me access to everything, every document, every email, photos of the bundles of money taken from her and drop-offs. She just gave me complete access. And I think she opened up because the questions

that I asked, and this is why the series is different, at no point did I tell her this red flag, did you not notice this? Did you not see this? I just said, tell me what happened. What was it that convinced her that the con was real? What about this particular type of scam makes it so believable? The caller ID appeared to come from the FBI. And the person impersonated an FBI agent who had been working in the criminal crime area of money laundering and things like that. So when the person told her the agent's name, Wayne A. Jacobs, she looked him up. There's his resume.

There's said he worked in Washington. The person had said, oh, I work in Washington. All the details panned out when she did online research. She thought, well, this is the agent. And then they sent her documents that looked official. When you microscopically look at it, there's some tell signs. But for example, when the scam was finally revealed to her, it was because a Maryland investigator, fraud investigator said, hey, look at the email address. It said WayneAJacobs at USA.com. She said, well, how would I know that?

How would I know that it should have said FBI.gov? Michelle, you wrote about how the scammer preyed on Judith's emotions. Fear is a big one, but there's also a bonding element to their tactics too. Can you tell us more about that? These are long con games. He was on the phone with her for about three months, twice a day at 9 a.m. in the morning, 6 p.m. at night, talking to her. So initially, there wasn't no ask for money. It was like telling her about the criminal activity, that they were selling drugs to children, that we've been trying to get this drug cartel. And it was a real drug cartel.

She looked that up. There is a case against them. So they fed her all this information that is real, even though they weren't. That's how they sort of laid the groundwork. So she's telling them about her life. This scam was targeted specifically to her because they had enough information about her that they go, oh, I see that you were a therapist. I see that you worked here. It's all true. So who would know that but the government? And that's how they pulled down her guard. You point out the judgment Judith was likely to face in the wake of this crime.

How could you hand over so much money and why didn't you see red flags? I do hate to admit it, but anytime I hear about a scam, that tends to be my initial reaction. It's so easy to put blame on the victim. But is one of the takeaways from your reporting that this can actually happen to anyone? That's exactly right. And that's where I was hoping that the series was different. Instead of just focusing on the amount of money lost or all the red flags she missed, it was saying she is a crime victim. It is one of the few crimes where we feel it's okay to say, well,

why didn't you do this? Or didn't you know that? If someone snatches someone's purse and they're showing up to file a complaint, you don't say, well, why would you hang in a bag on your arm? You know, you should have had it tucked in your coat. I mean, we treat these people as if they willingly one day woke up and said, I want to give a scammer all of my life savings. And it puts them on the defense. It makes them go silent. I talked to many victims who have not come forward. They know they're going to face scrutiny and shame and embarrassment because how we talk to them, how we describe the crime. I just wanted to have empathy for this woman who lost all of her savings because some awful person tricked her, conned her, manipulated her, made her believe something, and that she was

helping out the government. I would say that if you think that you are above falling victim or prey to a scam, you are actually more likely to fall victim to one of these scams because you have hubris involved and you think that you're above it, and no one is. How did Judith ultimately find out that she had been scammed? And is it clear where her money ended up? It is clear where her money went up. There were about five banks involved. So all her retirement money was Morgan Stanley. And then when she went to pull it all out, they suspected something was wrong. They eventually, and this is emails that Judith shared with me, not Morgan Stanley, although Morgan Stanley did provide a statement that they tried to warn her, but in the end, it's her money and they gave it over to her

because it's her money. Then the scammer manipulated and tricked her into taking the money and divided it into four banks in Maryland because they know the system, right? If you pull almost $600,000 and then you put it into an account and then try to take it all at once, that's going to send all kinds of bills. And so pulling out $10,000 to $20,000 at a time from those different banks, the scammer was hoping that nobody would notice, that they wouldn't say something. And in one of the parts, I talked to a scam victim and a bank manager actually saved her from having more money stolen because he suspected something. But instead of saying, ma'am, I think this is a scam. He said, hey, why don't you come into my office? Let's talk about what's going on. Where's the money being sent again? Let me just make sure it's going to be sent to the right address. Then he pulled it up on his computer and showed her that it was an abandoned house. So see how he did that

differently. He didn't go, nobody would ask you for that. He said, hey, let's see where the address, let's just double check where the money's being sent. That's a different way. And when he did that, and he showed her on the computer, that's when she came out of the ether. And they called the police and they came to the bank branch. It's almost like a matter of deprogramming people who have been thought to think a certain way and be in a certain reality that's not true. You have to show them some little pieces and lead them to the actual reality that they have been scammed. That's exactly right. You have to lead them. You have to be gentle. You can't be judgmental because they are in this ether and you have to slowly pull them out. Because remember, the scammer has been talking to them every day, week in, week out. You think you're talking to a police, a real agent of the

FBI. And the agent is saying the whole time, listen, don't tell anybody because this could jeopardize the case. So there was enough nuggets of truth to make it believable. Where is Judith now? Has she been able to find any recourse for going through this? Unfortunately, her money's gone. The FBI did get the case. And in fact, she was one of 13 victims with the same scammer using the same agent's information. The amount of money stolen from them was almost $3 million. And they tracked it to a syndicate in India. And that's where it is now. There are investigators in India trying to track it down. But in all likelihood, the money is all gone. She was able to get back about $50,000 through the quick thinking of a local investigator.

Some of the money was sent in cashier checks, so they were able to track it to California, to a woman who was supposed to pick it up, who herself was a scam victim. And she suspected something and didn't pick up the checks, and they were able to have that money sent back to Judah. She's also facing a huge tax bill. Because this was tax-advantaged retirement money, the government, she took a withdrawal. She's getting taxed on it because they just see it as withdrawal. There was a law change, you know, the 2017 tax law change took out the deduction for theft. So many scam victims are facing huge tax bills for retirement money that they no longer have. Just rubbing salt in the wounds there. That's awful. That's right. Why is it so difficult for people who are scammed to see relief,

to get their money back? Is it in part because these are often international crime organizations? That's correct. Lots of times the money's in cash or gold or things that are not traceable. Oddly enough, they are in some cases able to track it if cryptocurrency was used, but if it's cash or gold bars, the money's gone. And in her case, it's very unlikely. The case is still pending. Sometimes if they are able to catch the syndicate and freeze bank accounts and identify victims, some money can be returned, but often not. They never see this money again. Now, Judith is older, and there's this perception that seniors are more vulnerable. I myself saw my grandmother scammed out of quite a bit of money several years ago. They told her

that they had my brother held hostage in Canada. But the Federal Trade Commission says people in their 20s are scammed at higher rates than those in older age brackets. That's exactly right. It irritates me so because they make it sound like these feeble old people sitting by their phone answering calls from scammers. That's just not how it happens at all. Young adults, I think, is twice as likely to fall for or be victimized in a scam because they're online more, they're searching for jobs, the avenues where the scammers are, young adults are, right? The reason why we see more stories about the elderly population is because they've got the money. They've got big retirement accounts and the scammers know that. So they are targeting them, particularly not because of their age, but because they've got the money. They've spent life careers saving up. And so the score,

if you will, is larger with them than with a young adult who may only have, you know, a couple thousand dollars. And that's why we see the large dollar amounts in the elderly community. So we have to change our language of that. It's not because they're old, it's because they've got the money that they are targets. Yeah. So Michelle, this is such a cautionary tale, and there are likely many thousands of them. When you're facing such an organized, persistent opponent, what are the top things that you can and should do to safeguard yourself from these types of scams? It's going to take efforts from everybody, the police, the technology companies. There's got to be more effort to prevent spoofing of calls so people can't change ID numbers and

show that they're from the Rockville Police Department when it really is a call center in India. The police need more resources to be able to go out to the communities for fraud prevention, but also put people on these cases because we tell people to file a police report, but that doesn't necessarily mean somebody's going to be assigned to look into that. It just helps the data collection more than anything. And I think in terms of prevention, we have to be as persistent as the scammers. For example, in my family group, I regularly send text messages or emails like, hey, this new scam is out or hey, I got this. Don't click on anything in this because I got something similar to that. So we have to have conversations. We have friend groups or you're meeting for the holidays now. Make this part of the family dinner. I know it doesn't sound so festive, but just say, hey, did you read that seven-part series in the Washington Post?

Let's talk about that. How would you respond? What can we do to protect each other? I was on another program and one of the hosts said that her and her husband have a code word so that if someone calls pretending to be one of them, they have to tell them the code word. I love that. I'm going to actually institute that with my own husband because I tell people the other thing is don't trust anything. No text, email, nothing.

Just blanket nobody. I don't believe anybody. If my husband called me, I don't believe you. If he walked in my door right now and said something, I said, baby, I'm going to check that. And it's sad that we have to do that, but you have to just say, I don't believe anything. I got a text message from my bank that said my credit card had been compromised. And the text came in under other texts, legitimate texts from my bank. So previous texts, absolutely legitimate. But I said, you know what? I don't know. They might've figured out a way to tap into this.

So I called them. I said, have you been trying to reach me? And they said, we sure have. Your card has been compromised. And I said, well, I'm sorry I called you. You did send me a text, but I didn't believe it. And so the representative said, that's exactly what you should do. Never feel that you are being a burden or anything.

Just call and check everything. That's great advice. Michelle Singletary, a personal finance columnist for The Washington Post. Thank you so much for taking us through this journey and for your reporting. Thank you for having me and for spending the time on this. We need to be doing this regularly so that it becomes part of our conversations on a regular basis. And not just when we have these big stories, somebody loses a million or 600,000. I mean, constantly talking about it so that it's in the front part of people's minds and when they get these calls. That's right. Up next, a few money headlines

in the last few days. Anna, do you know what week this is? Oh, it's the last week of work for us before a holiday break. Yes, indeed. But also, it's Fed Week. Jerome Powell vying with Santa for most important person of the coming week. Right. The Federal Reserve's Open Market Committee is meeting well as we speak to make the final decision of the year about whether to continue bringing down a key interest rate. We're taping this on Tuesday, and that decision will come on Wednesday. Yes, and one of the key indicators the FOMC will be considering is the latest on inflation pressures at the consumer

level. This is the Consumer Price Index, and for the month of November, it rose 2.7% over the same period a year ago. And if you take out volatile food and energy prices, you get the so-called core CPI, and it rose 3.3% over a year ago. So this economy has not yet fully slayed the inflation dragon, though we're way down from the peak inflation, which hit 9.1% two years ago. The Fed's target inflation rate is 2%. Some of the biggest price increases were in hotel prices, cars and trucks, and medical care. Sean, the outgoing Biden administration is leaving some items in consumer stockings. Last week, the Consumer Financial Protection Bureau issued the latest rule in its ongoing effort to crack down on so-called junk fees. This one limits overdraft fees that banks can charge people who take out more money than

what's in their accounts. Basically, banks have three options under this new rule. They can charge customers a flat $5 overdraft fee, they can set a fee that covers their losses or costs from overdrafts and no more, or they can treat an overdraft like a loan or a line of credit. In that last case, those would be subject to the same laws as any other loan, including disclosures about interest being charged. The CFPB says on average, banks charge $35 for overdrafts. It says this new rule could save consumers $5 billion a year in fees. But Sean, it's possible that these rules could become toothless under the incoming Trump administration. Whomever is appointed to head the bureau could simply

decide not to enforce the rule or roll it back. And finally, Anna, Albertsons and Kroger are calling it quits. There will be no merger of the grocery giants. Yeah, Albertsons pulled out of the proposed deal and sued Kroger for alleged breach of contract. It says Kroger didn't do enough to address the concerns regulators had about the merger. The lawsuit and announcement came a day after judges in two separate cases about the merger issued rulings that would have blocked it anyway. So there's a story that's no longer a story. That's it for the latest edition of Money News. You can always find the latest financial news at NerdWallet's Financial News Hub, which we will link to in today's show notes.

Also, we always welcome your money questions and comments. turn to the nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. Or send us a voice memo at podcast at nerdwallet.com. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeart Radio to automatically download new episodes. Today's episode was produced by Tess Biglin and myself and edited by Rick VanderKneife. Here's our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.