It’s a well-known scam, familiar enough in the U.S. to be considered a cultural reference: The prince with a favor to ask.
A person claiming to be royalty reaches out via text, email or letter, asking for help in getting money out of their home country. The scam involves offering the potential victim a large portion of that money for their help. All they’ll need is for you to send an up-front payment, which the scammer says is needed to gain access to their funds. Then, they disappear.
As people have caught on to this common scamming approach, PNC Head of Enterprise Fraud Mark Kwapiszeski says scammers have moved beyond this method and into more sophisticated and personal territory and at a higher volume. In fact, the latest data from the Federal Trade Commission shows that consumers lost more than $6 billion to investment and imposter scams in 2022. This is a trend that will continue in 2023, he says.
“Scams will definitely continue to increase in 2023, and they’ll be more sophisticated with many taking a fear-based approach,” said Kwapiszeski.
Scammer creativity has resulted in more people falling victim to well-crafted, elaborate schemes. However, while fear-based scams can be expected to continue to increase, consumers still have all the effective tools they need to protect themselves.
“There are easy ways to combat financial scams, whether they’re fear-based or other,” he said. “The approaches constantly evolve, but there are simple ways to figure them out.”
What is a scam?
According to Kwapiszeski, there are differences between scams and other types of fraud. Understanding the strategies scammers use will empower you, as a consumer, to avoid falling for their tricks. For example, an account takeover is a specific type of fraud where someone infiltrates an account and gains access to that money so they can make unauthorized transactions. It would only be considered a scam if you were duped into providing your account information to someone who then misused that information to take over your account. Another difference can include the consumer moving the money themselves.
“In a scam, the targeted person – typically the actual accountholder -- is the one making the transactions,” said Kwapiszeski. “The scammer, using a variety of tactics that include fear, bank employee impersonation through business email compromise, personal gain or other strategies, convinces the targeted person to make a mistake and authorize transactions. In this case, the right person is making the transactions, but they may not realize they’re falling prey to a person trying to steal their money.”
Modern scamming tactics still heavily use social engineering strategies centered on creating a sense of urgency and often will present situations that hit close to home for consumers. It’s not difficult to gather information about a person’s job, location, interests and other aspects of their life, especially with the presence of social media.
The market segmentation trend
Market segmentation is a tactic used by a marketing company to identify certain customers by geographic, behavioral, demographic, and other types of segments. Based on this information, those consumers could be presented with certain products that may appeal to them via online or other advertising channels.
Scammers have adopted a similar approach of their own, selling personal information to other scammers, segmenting them, and sharing methods about scams that may work on each group of consumers. It’s important to understand that these behind-the-scenes tactics exist, says Kwapiszeski, which is why a story presented by a fraudster may seem extremely real.
For example, a scammer may be able find out where you bank based on social media postings. They could then pose as a tech company, saying your computer and bank account have been compromised. The “bank” will contact you and work with you to pay the “tech company” the money owed to fix the issue. To add a layer of legitimacy, the scammer could even create a fake bank website in case the consumer has suspicions about the interaction.
“Because of these organized tactics, consumers should always have a sense of suspicion when they receive these types of calls. Even if the call seems urgent, always keep these possibilities in mind, and take the right steps to avoid becoming a victim,” said Kwapiszeski.
The right steps – and channel switching
Financial institutions work together on combatting scams. Kwapiszeski calls it a “team sport” approach, one that will continue to take place in 2023.
“At the same time that scammers are sharing information illegally, we’re working to share information about how to prevent attacks and what methods can help keep consumers safe,” he said. “We’re not doing this alone, and that won’t change.”
While scamming’s evolution continues to involve layers of sophistication and information sharing, the steps that consumers can take starts with an easy-to-follow solution: channel switching.
“If at any time you’re contacted by a company asking for personal information or requesting that you perform a transaction, the best thing to do is end that line of communication and start a new one,” said Kwapiszeski. “If scammers reach you by phone, they have most likely spoofed the number from which they are calling. That means they falsified information transmitted to your caller ID display, making the number look more credible. If it’s an email, don’t respond. In either case, call your bank directly by using the number printed on your debit or credit card, or shown on your bank’s mobile app, to confirm if the request was legitimate. It is important for you to initiate the communication when it comes to your bank account information.”
For more information on other helpful tips to remember when protecting yourself against a possible scam, check out PNC’s Update Center. In addition, click here for useful tips on how to avoid social engineering. Click here for more information on the most common types of scams.
