Imagine you’re at home when you get a call out of the blue. It’s a number you don’t recognize.
A young man speaks in a worried, shaky voice.
“Grandpa! It’s me, Michael. I really need your help right now.”
It’s your grandson. Is something wrong?
“There was this car accident, and … and I’m in jail now,” he continues. “I’m really, really sorry. Please don’t tell Mom and Dad.”
Before you can ask any questions, a police officer picks up the phone.
He explains that Michael needs $9,000 in cash right away for his bail. The officer gives you the address to send the money, then hangs up.
Worried sick, you rush to the bank to withdraw the cash. Then you head to FedEx and have it shipped overnight in an envelope.
The next day, you call Michael to see if he made it out of jail OK.
Except he has no idea what you’re talking about.
Your heart sinks to the bottom of your stomach as you realize what had happened.
You’ve been scammed.
The story above may seem incredible. But it’s more common than you think.
The Federal Trade Commission reported that scammers stole $41 million last year by impersonating family members or friends.
Most people age 70 or over who were scammed said someone called them pretending to be their grandchild.
And earlier this month, three men scammed a New York grandfather out of $80,000. The imposters pretended to be the man’s grandson and two lawyers.
Your best defense against scams is knowledge.
Read on to find out how to protect your money the next time you get a suspicious phone call.
How to Beat the Grandparent Scam
There are many variations of this scam. But there’s a common theme: untraceable payments.
Of the seniors who reported falling victim to the grandparent scam, 1 in 4 said the imposter demanded cash sent through the mail.
Wire transfers through a service such as Western Union are another common method. According to Wells Fargo: “A wire transfer is an immediate form of payment. Once a scammer has obtained the funds you wired, […] the wire transfer cannot be reversed.”
Other scammers have demanded payment through gift cards.
They ask you to buy thousands of dollars’ worth of gift cards and read the card numbers over the phone.
If someone specifically requests a strange payment method like the ones listed above, there’s a good chance they’re scamming you.
Here are some other key tips:
- Ask for details. The imposter likely has a vague story with little to no information. If they have a difficult time giving you details about what happened, they’re probably scamming you.
- Ask personal questions. Scammers typically know little about who they’re impersonating. It’s a huge warning sign if the person calling can’t even answer simple questions about themselves.
- Hang up and call back. Dial the person’s phone number to make sure it’s really them. Or if they say they’re in jail, find out where they are and call the county jail to find out if the person’s there. (If the caller can’t or won’t tell you where they are, it’s probably a scam.)
- Don’t act impulsively. Scammers will demand that you rush to send them money immediately. Instead, take a moment to analyze the situation. Most likely, the story you heard on the phone doesn’t make a lot of sense when you think about it.
- Verify the story. Imposters will often plead with you to not tell any relatives about their situation. But that’s just part of the scam. You should always contact your relatives if you think there’s a family emergency.
- Report the crime. If you think you’ve been targeted by a scammer, call the police and tell them what happened. The information you give is essential for catching the criminals. You can also report scams to the Federal Trade Commission by going here.
Announcing: A New Opportunity for Retirees
Learning about dangerous scams is a critical part of protecting your wealth.
Of course, it’s also important to grow the wealth you already have.
That’s why renowned economist and financial expert Ted Bauman just announced a shift to include more aggressive and more active stock picking in his Bauman Letter.
Ted says: “What I’ve learned is that many people feel that they don’t have enough money invested to survive their retirement, so they still want to play the stock market. That had a big impact on the decision we made to reorient The Bauman Letter approach.”
Ted’s subscribers will see the changes in the March issue of his newsletter, along with a new stock pick.
Anyway, that’s it from me for this week. I’ll be on the lookout for other dangerous scams you should watch out for.
Also … have you or someone you know been targeted by a scammer?
If so, I’d like to hear your story. You can send it to SovereignInvestor@banyanhill.com.
Assistant Managing Editor, Banyan Hill Publishing