Almost everyone with a cellphone, a computer or an e-mail account has received a communication about an unclaimed lottery prize, the availability of federal funds, or more recently, about funds blocked by the war in Ukraine… all you need to do is provide some basic information and the money is yours. Yeah, right.

These are but a few of the fraud schemes scammers use to steal people’s money or identity for illegal purposes.

According to LexisNexis Risk Solutions website, the cost of fraud for U.S. financial services and lending firms has increased between 6.7% and 9.9%, when compared to data before the pandemic. As of last January, for every dollar lost to fraud in the U.S., financial services firms lost more than $4.00. In 2019, those losses were $3.25, and $3.64 in 2020. The LexisNexis Fraud Multiplier for U.S. lenders is now $4.16, compared to $3.90 in early 2020, prior to the pandemic.

“Fraud impacts all levels [of economic activity]. We cannot think less of it because it only affects one, instead of the other. It affects everything… from people’s confidence on financial processes to financial assets, even if the defrauded assets are recovered,” said Zoimé Álvarez, executive vice president of the Puerto Rico Bankers Association (PRBA).

But, even though the losses due to financial fraud are in the range of billions of dollars every year, that amount is merely “a fraction” of the total amount of both personal and commercial transactions conducted every year, Álvarez assured.

“Since the creation of the credit card, it [fraud] has always been considered something minor when compared with the global use of the payment method. Proportionally, it is something minor because there are hundreds of millions of transactions being done through credit and debit, and electronic transfers,” explained the PRBA executive.

Still, Álvarez recognized that electronic devices, credit and debit cards must be protected “like if they were cash.”

What People Fall For

“Scammers are very creative people and their success depends on using the trendier methods,” argued Álvarez, who quoted as an example of a possible scam the blackout that affected Puerto Rico last week.

“Local scammers –but they could be anywhere in the world– could take advantage of this circumstance by posing as an official of the Treasury Department and calling a person ‘to inform’ him that he may not receive his tax refund check because of the blackout, if he does not provide some personal information. Knowing there was a blackout, a concerned taxpayer may consider such claim to be true and provide the information the scammers require and be exposed to significant losses,” said Álvarez.

For the PRBA vice president, “scammers’ pitch depend on their ability to convince the victim that they are who they claim to be and that he can validate the truthfulness of the information they are providing.” And this can be done via a phone call, a text message, an email or a regular letter.

According to the Bureau of Criminal Investigations (CIC, for its Spanish acronym) of the Puerto Rico Police Department, this type of crime recurs because people do not verify the validity of the source that initiates the contact, and volunteer their personal information.

For María Ripepi, president of the PRBA’s Security Committee, today people are giving away “unknowingly,” all the information scammers need to continue in business.

“People publish all their personal information on their social networks. Scammers identify the latest social and market trends and use that information to create false and fraudulent campaigns. And since many people saw those campaigns on social networks, they assume they are real, and they fall for them,” Ripepi argued.

What To Do

In the second phase of its public service campaign about financial fraud –“Si huele a pescao, es un pescao” (If it smells fishy, it is a fish) – the PRBA identifies the most common fraud methods and suggest people how to act if they come across suspicious communications requiring personal information.

The campaign, which includes print and video ads, identifies phone calls, text messages, emails, unsolicited internet links and printed documents as possible methods for scammers to try to obtain information from victims. People are urged to rely on their suspicions to avoid falling for the scam. “If it looks too good to be true, it probably isn’t,” said Álvarez.

To avoid falling victim to fraud, Ripepi reiterated the campaign’s recommendations: 1. do not provide any personal information; 2. do not reveal your passwords/secret numbers; 3. do not follow unsolicited links, and 4. do not act under pressure.

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