An Atlanta woman, who chose to protect her identity with the pseudonym Yvonne, was defrauded of her life savings by a fake financial adviser.
Prior to the scam, she said she’d prided herself on her “common sense” and research skills. “My family would be the first to tell people, she’s the ‘go-to,’” she told WSB-TV Atlanta. But now, she’s out more than $120,000.
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In an effort to invest for her family’s future, Yvonne decided to contact a finance professional she’d spotted on YouTube. The person appeared to receive glowing reviews on social media.
Before sending any money, Yvonne looked the person up on BrokerCheck, an online tool from the Financial Industry Regulatory Authority (FINRA) that shows investors the employment history, certifications, and any violations for brokers and financial advisers.
It appeared that the person was registered, licensed, and allegedly worked for a company Yvonne recognized — Fidelity.
“I thought I had done my research,” she told the news outlet. “[This money] was a lifetime of work to me. My future.”
After calling FINRA to double-check if the investor was legitimate, Yvonne sent the finance professional $5,000 via Automated Clearing House (ACH).
Over the next few weeks, she received messages from the supposed adviser showing her that her crypto investment was growing. But when Yvonne went to cash out, everything went south.
A case of stolen identity
When Yvonne was ready to withdraw her money after seeing significant growth, the scammer insisted she pay taxes on her investment gains or risk legal action.
They then directed her to create an account on Crypto.com to submit the payment, to which Yvonne complied.
This was followed up with another message asking for additional funds for taxes, then another message insisting Yvonne pay thousands of dollars for an international business permit certificate, all in crypto.
By that point, Yvonne had sent multiple payments totaling more than $120,000 — her entire life savings. Then, the scammer disappeared.
Later, Yvonne learned that the Fidelity financial adviser was legitimate — but someone had stolen their identity and was using it to defraud unsuspecting clients.
Yvonne was only able to recover the $5,000 from her initial investment, which was sent through ACH payments. The rest, which she sent via crypto, is gone.
In this situation, Yvonne took the right initial steps: she researched the financial adviser and verified their credentials — yet, she still lost all her savings. So, how can you protect yourself when even doing your due diligence isn’t enough?
Read more: Don’t leave your family unprotected — find life insurance coverage up to $2 million with no medical exam or blood test
How to avoid similar scams
According to the Federal Trade Commission (FTC), consumers reported losing $4.6 billion to investment scams alone in 2023.
Data from Statista also revealed that seniors specifically reported more than $1.2 billion in losses solely from investment scams. This is a significant surge from the $98 million disclosed in 2020 — an increase of 10 times.
Before investing your money, research the finance professional’s credentials on the FINRA website. If possible, ask for an in-person meeting so you can chat face-to-face. If that’s not feasible, call the company directly to verify the adviser’s identity.
When sending money, always use established payment methods, like ACH, that offers protections. Many scammers will often ask you to pay in a specific way, such as a certain payment app or via wire transfer.
Nacha, the organization that governs ACH payments, offers fraud protections — which is what allowed Yvnonne to recover her initial $5,000 investment.
Funds sent via cryptocurrencies, many of which are unregulated and untraceable, do not offer the same protections.
According to research from the FTC, scammers most often pretend to be from a well-known organization. They may claim they’re from the Social Security Association, IRS, Medicare, or the FTC. In Yvonne’s case, it was Fidelity.
Don’t invest in what you don’t understand. If you don’t know enough about the company, financial adviser, or the industry in which the company/expert operates, avoid it at all costs.
Be skeptical of advisers who offer overly lucrative returns or promise a specific (often very high) return on your investment. Trust your gut: if something seems too good to be true, it probably is.
Financial advisers generally do not make such concrete promises because the market can change quickly and they won’t pressure you to act immediately.
If you do happen to send money to someone before realizing it’s a scam, contact the FBI’s Internet Crime Complaint Center (IC3) immediately.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
