The Expert Podcast

Sadly we're still seeing a large number of online scams that are taking money from victims. A lot of it still has to do with digital currency or cryptocurrency or Bitcoin. Usually it's not actually Bitcoin—it's other types of digital currency or crypto. And then what happens is a victim will be contacted either through social media, a dating site, text message spam, or some other method, and there'll be a conversation that'll start. Sometimes that has nothing to do with investing or sending money. It has to do with something else—maybe a social conversation, it may be a dating conversation, it might be somebody saying it's a wrong number.

We've had a lot of clients that have said, "I just got this random text that said, 'Hey is Joe there?'" and they say, "Well no, Joe's not here, this is the wrong number." And then they'll say, "Well, I'm telling him where do I send the money from his investment?" And then it gets the curiosity of that person raised up, and they start asking questions. No matter how you get into these scams, what will happen is they'll keep asking for money.

What we're seeing more and more—which is very troubling—are victims starting to borrow money, take out loans, to put into these scams. Well, you would think, "Why would a victim borrow money to send to one of these scams?" Well, here's how it works: the scammer says, "Look, if you put in three thousand dollars," they start with a relatively low number—one thousand, two thousand, three thousand—you can double your money in a month.

So you put in $3,000 and they send you back a statement that says, "Hey, your $3,000 is now $5,000, now it's $5,500." They show it going up. And sometimes the victim will say, "Okay, I want to take it out now." And they said, "Well, we said in a month—you have to wait a month because it's locked up for a month." That's the story they tell, and that buys them some time to continue the conversation.

So what happens during that month? Well, what they'll say is, "You know, your account now is up over $6,000. If you get your account to $10,000, it will double again and you'll have $20,000." So they'll ask you for another $4,000. And sometimes you'll say, "I don't have that much money," and they'll tell you that they're gonna loan you the money. They'll say, "If you come up with $1,000, we'll loan you the other $3,000."

So what they're doing is they're pretending to give you money—it's not even real money. This is all like Monopoly money. They're just making up numbers on a statement. But when they tell you that they're loaning you money, it makes you feel special—that you have somebody willing to take a chance with you, to give you credit.

So now they loan you $3,000, you put in $1,000, now your account's at $10,000. And they send you a statement that says, "Look, your account is now $18,000. You know, if you had your account at $30,000, it will double again and you'll be at $60,000." Or sometimes they'll say it'll triple and you'll have $100,000.

So can you come up with another $10,000? "No, I can't," you'll say. Well, they'll say they'll loan another $3,000. And they'll tell you to go get a loan—a personal loan, a credit card loan, home equity loan, take money out of your 401(k), whatever it is—to cover the difference.

And if you bucket that or resist it, they'll say, "Look, we're loaning you money, so isn't it fair that you go borrow money somewhere else too? We can't loan you all the money. And look how much you already made." And you think it's a no-brainer—you already doubled your money. But the amount that's showing on your statement is just fake. They just made up this statement on a word processor.

But the fact that they're using psychology—to tell you that first of all your profits are going up, and second of all that they're loaning you money, they're doing you a favor—makes you feel kind of entitled and maybe even somewhat obligated to them to borrow more money.

Over the last few months, 50 percent of the fraud victims we've spoken to have borrowed money from third parties—their bank, credit card advance, home equity loan, borrowed money from the 401(k)—to put into the scam. So now, when the scam blows up, not only did they lose cash out of their pocket, but now they have loans that they have to make payments on.

So be aware that this is a more aggressive stance the fraudsters are taking—to make you take out loans to put into their scam so they can get more money out of your pocket.