Last week I learned that the father of a family friend had been scammed out of several thousand dollars. I never cease to be astounded that people fall for these scams, but today I want to talk about financial fraud in detail in the hope that you can protect yourself.

My friend’s father fell for a gift card scam. There are many variations of this scam, but they ultimately involve getting someone to purchase thousands of dollars worth of gift cards and sending the PIN numbers to the scammer. You may think “How on earth does someone fall for something like that?” Here’s how.

The scammer pretends to be someone the person knows. In this particular case, they pretended to be a contractor that worked for the company employing the victim. So, when they reach out, there is an immediate familiarity: “Oh, I know who this is.”

Then they describe a difficult situation they are in. Maybe they are at a conference at a remote location, and realized that they needed to hand out gifts. They can’t leave the conference, so they reached out to you to help them.

But have no fear. They will have their secretary issue a cashier’s check and send it next day air to you. They will send you a check for $3,000, but they only need you to buy $2,200 of gift cards. The other $800 is profit to you. They prey on your desire to make some fast and easy money.

You get the cashier’s check and deposit it. The bank accepts it. They may even credit your account. So, if you were having apprehensions, you are now feeling much better. After all, the money is in your account.

Now you go buy the cards. The scammer asks you to send them the PIN from each card. That way, they can drain the cards immediately.

In the meantime, the check is returned to the bank. It’s a fraud. Yes, banks accept fraudulent checks all the time, but when they are returned guess who is on the hook for the money? You are. In this case, the $3,000 credit was removed from the victim’s account, and now instead of earning $800 he is out $2,200 for the gift cards he bought.

Let me make something crystal clear. Nobody will reach out to you out of the blue and ask you to go buy thousands of dollars of gift cards. That is a huge, huge red flag. In a case like that, if you really don’t believe you are dealing with a scammer, make an independent attempt to verify the information.

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Case in point. I recently got an email from “my CEO.” It looked authentic. It said “Robert, can you send me your cell number for an urgent task?”

This is the boss. Naturally, most people are going to jump to attention when it’s a message from the boss. My CEO is normally three offices down from me, but he was at a conference at the time.

Then I took a closer look at the email. There was an obvious typo. Then I noticed that while the name was right in the email header, it came from a Gmail account. This seemed fishy, so I reached out to my CEO in a separate email. He confirmed that it didn’t come from him.

I later learned that a number of people in the office had been specifically targeted. They were called out by name. The scammer likely knew the CEO was away, and they used that information to execute the scam. I learned from some who actually fell for the initial email that the “urgent task” was indeed to go out and buy gift cards and send the information to “him” at the conference.

It’s frustrating to me that people fall for these things, but as we get older, sometimes our reasoning ability begins to decline. We may fall for something that wouldn’t have slipped past us a decade ago. But fraud doesn’t just come in the form of a Nigerian prince or Iraqi general who needs your help smuggling millions of dollars out of their country.

Don’t be afraid to ask someone for a second opinion. If it seems the least bit fishy, do independent confirmation. Don’t be a victim.

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