Scam stoppers: 5 ways CPAs can help older clients fight financial fraud

Four out of five CPAs attending a recent AICPA ENGAGE session said they’ve had clients victimized by a financial scam — and one attendee admitted she also was defrauded.

“I am a CPA. I’ve been in business for over 50 years,” she said. “And I was fooled by it because I love my grandchildren.”

The ENGAGE attendee recounted how a frenzied phone call from her grandson (rather, someone impersonating her grandson) prompted her to scramble to help him out of a sticky legal situation by quickly securing $9,000 in cash that an Uber picked up and delivered — straight to the scammer.

Journalist and retirement expert Robert Powell, the ENGAGE presenter of the session “Inside Today’s Most Dangerous Scams: A CPA’s Guide to Safeguarding Client Wealth,” suggested a two-step authentication approach to deal with such a situation — asking the caller to confirm the name of the hospital where they were born or their siblings’ names.

But Powell readily admitted that in the heat of such a moment, logic often goes out of the window. Most commonly, such scams lean on creating a palpable sense of urgency, heightened by technological advances that make it easier than ever for scammers to impersonate a loved one.

Incidents aren’t isolated; they’re an epidemic. Among the 81% of session attendees working with at least one victim of a financial scam, half put the loss at more than $10,000. More than half said no money has been recovered on behalf of the compromised client.

“A scammer may only need five minutes to separate your client from their money, and you may be the only person that’s standing in between them and a life-changing financial loss,” Powell said. “They don’t need just CPAs; they need fraud gatekeepers.”

Powell shared several ways that advisers can help.

Quiz your clients … or at least engage with them

Powell introduced extensive research and resources from Wayne State University’s Institute of Gerontology, including a financial vulnerability assessment that he suggested advisers administer to potentially vulnerable clients to better assess their fraud risk.

Wayne State research, Powell noted, found that high levels of depression and loneliness resulted in a more than threefold increase in susceptibility to fraud.

Regardless of how a client scores on such an assessment or whether they take such an assessment, advisers who remain aware of their clients’ state of mind are ahead of the game.

“If you have regular engagement with your client, they are less likely to be scammed,” Powell said. “It’s really important for you to stay on top of your clients, especially those who might have these risk factors.”

Establish a ‘trusted contact’

Powell suggested setting up a system where every client has an emergency contact of sorts — ideally someone the client is comfortable communicating with in any situation.

“They’re not a power of attorney — they have no authority to make any transfers of money on the client’s behalf — but they’re someone that you could call if you suspect fraudulent activity,” Powell said. “They are someone that is familiar with your client and someone who you could call to say, ‘I think there may be some issues here. They seem to be making some out-of-character transactions. They are not calling me back. Maybe you could just check in on them and see what’s going on.’”

Create an extra step for transfer requests

While a client in the throes of a fraud scheme unfortunately might heed a scammer’s warning to not contact anyone, a level of protection set up before such a threat could save the day.

“I would recommend that you make this a matter of course in your practice is that you’re not going to just move money based on email requests,” Powell said. “Implement some firmwide rules around making sure there’s verbal confirmation so that when you receive an email to transfer some money, you’re not acting only on the email — that you’re actually making a phone call and making sure that that is in fact what the person’s wishes and desires are.”

Involve the proper authorities

Even with such checks in place, scammers still sometimes succeed. If a client realizes they’ve been victimized, Powell said advisers should help them take advantage of a little-known FBI program.

The Financial Fraud Kill Chain (FFKC) streamlines communications among the FBI, victims, and financial institutions to quickly freeze stolen funds. Powell encouraged advisers to instruct victims to immediately ask their financial institution to request a recall of funds and file an IC3 complaint to initiate an FFKC freeze.

Now that you’re educated, pass it on

“Start coaching your clients,” Powell advised. “Hold a webinar or start doing Zoom calls. You want to make sure that they’re fully aware of all the types of scams that are out there.”

The need to learn never stops, Powell said, because the scammers never stop. He suggested setting up a Google Alert that delivers the latest developments in financial fraud.

“Whatever I said today is likely to change tomorrow because of the speed with which things are happening,” Powell said. “At least you’re staying abreast.”

Editor’s note: Those who purchased an all-access pass to ENGAGE can view this and other archived sessions and attend a new lineup of live ENGAGE PLUS sessions on July 16 for additional CPE. If you didn’t attend ENGAGE, you still can access this session.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.