Spotting fraud victims

Thousands of Americans fall victim to various fraudulent scams every year. New communications technologies have sparked a proliferation of telephone impersonation scams, malware computer hijacking, email scams, identity theft, and lonely-hearts cons.

These scams have one thing in common: the use of fear, confusion, and desperation to separate vulnerable people from their money. A new class of international cybercriminal, adept at exploiting security flaws and legal loopholes, is finding creative ways to pilfer and launder money.

Technology’s expanded reach widens the potential victim pool, allowing criminals “to steal a little bit from a lot of people,” according to anti-money-laundering expert Dennis Lormel, president and CEO of anti-fraud consultancy DML Associates and former head of the FBI’s financial crimes section.

“If you think about how many people this is touching, those $3,000 or $4,000 are perfect amounts because very quickly they add up,” Lormel said. Incremental scams often fail to trigger law enforcement’s investigative thresholds, and the crimes can often go uninvestigated, he said.

That often leaves it to caretakers and accountants to be watchful for victimization, but these smaller amounts may be harder to spot from an accounting standpoint as well. However, there are subtle signs of fraud victimization to watch out for, experts say, including the following:

Sudden secrecy

Scam victims often feel considerable shame and embarrassment for falling prey to criminals, according to a recent study by Barclays, and victims will hide that from others, said Amy Nofziger, regional director with the AARP Fraud Watch Network.

“Are they secretive with their phone, or are they on their phone a lot?” she said. “One of the things we know about scammers is that the scammers will continuously have the victim on the phone.”

Abrupt changes in financial behavior

Pay attention to a client’s suddenly needing more money for fixed expenses, asking to move significant amounts of money around, or expressing new financial worries.

“Listen for signs like saying, ‘I am a little short this month,’ when you know that their expenses are usually pretty constant,” said Nofziger.

Isolation

Be aware of a client’s social interactions. There is a higher chance of falling prey to a scammer if a client is isolated physically or socially, according to Marti DeLiema, Ph.D., a fraud prevention researcher at the Stanford Center on Longevity.

“The scammers always say that they have the best luck with people who are alone,” she said.