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Hold the Phone: Protect Yourself Financially From Telephone Fraud

Personal Finance

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The growing issue of telephone fraud may not get as much recognition as Internet scams, but being aware of how telephone fraud originates and knowing what to do if you find yourself speaking with a scammer can help you guard against financial risk.

The Internet has earned a reputation as a venue rife with fraudsters, but sometimes the common scammers can actually be easier to identify online than over the phone. From the often-mocked “Nigerian prince” emails to the “free offer” banners that mysteriously require a credit card and a small payment, most of us know which emails to open and which ads to avoid clicking on.

The telephone provides a different experience, though. You can’t see the person you’re talking to and conversations happen in real time so it can be harder to assess the legitimacy of an offer. And telephone fraudsters rely on those elements.

But how does a telephone scam start?

According to NPR, many times fraudsters acquire telephone numbers via stolen lists, and the first thing they do is have a computer call the numbers in that list. If there’s any noise on the other end – someone saying hello, a person breathing, etc. – they know they’ve reached a real person.

"OK, if you want a moment to process this, we're going to send the law enforcement in front of your doorstep."

The next step is impersonating a reputable organization like a bank or a government office, and the fraudsters apply heavy pressure and refuse to give you time to think. Vijay Balasubramaniyan, CEO of Pindrop Security in Atlanta, recalls a scam from 2014: “We last year had this IRS call where they were saying you owe back taxes… they're like OK, if you want a moment to process this, we're going to send the law enforcement in front of your doorstep.”

Perhaps the most well known telephone scam group is Cardholder Services. Going to this page and reading people’s experiences in the comment section is alarming. In 2012 the Federal Trade Commission (FTC) declared “Rachel” from Cardholder Services public enemy number one, and in 2015 the FTC mailed 16,590 refund checks totaling more than $700,000 to people who had been tricked by Cardholder Services.

Most of the time these fraudulent calls start with a robotic voice leaving a recorded message that prompts you to hit “1” on your keypad to speak to a real person. Other times a person will actually contact you, usually from a number that has been spoofed. People who have received calls from the notorious Cardholder Services group have reported the phone number showing up as a spouse or even their own home.

Another popular scam is calling from what appears to be a long distance number with a legitimate U.S. area code and leaving an urgent voicemail prompting a callback. According to Forbes, though, these numbers are not long distance numbers but rather area codes associated with various islands in the Caribbean where a call can cost several dollars per minute. You can view the full list of area codes and countries here.

Unfortunately, nobody is immune to attempts at telephone fraud since referencing the “do not call” list is something usually reserved for people who are interested in obeying the law. So what do you do if you find yourself in one of these phone calls? Balasubramaniyan says to do some quick research. “Make sure the phone number matches the number on the back of your credit card or debit card or the company's website.” Also, the FTC has provided a list of questions to ask yourself:

  • Who is calling and why?
  • Why are they demanding an answer right away? Is that what a legitimate business would do?
  • If it’s free, why are they asking me to pay?
  • Why am I “confirming” my account information — or giving it out?

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