Protecting yourself against financial scams

Key Points

  • Learning how to spot financial scams can help keep your assets secure.
  • Ameriprise and your advisor are here to help support you and family members.
  • Contact your advisor to create a personalized investment strategy and evaluate new investment opportunities you may be considering.

Financial scams have become more prevalent, but knowing the red flags to watch for can help you protect your assets.

Ameriprise and your advisor are here to help support you. To help you spot common scams, following are insights from our Anti-Fraud department. In all cases of financial scams, we will:

  • Work with your financial advisor and power of attorney to assist you and your family members
  • Provide you with information on the scam
  • Contact the law-enforcement authorities when appropriate

Often targeting individuals who have recently lost a spouse or partner, the scammer first builds a personal, trusted relationship over a period of time. Then the scammer fabricates a story about a tied-up asset, such as gold held in customs or broken oil-drilling equipment, and requests an international money wire to free it.

Romance scammers know that banks (Ameriprise Financial Services, Inc. is not a bank) process large volumes of international wires that are less likely to be noticed, so they typically ask their target to transfer funds within bank accounts (also known as a first-party transfer) with seemingly legitimate instructions that it’s to make a home repair or pay off a mortgage or other reasonable expense.

To help protect our clients’ assets, we assess every international wire request from Ameriprise accounts for signs of fraud and work with the Federal Bureau of Investigation (FBI) when appropriate.

Lottery scammers call their targets to inform them they’ve won a lottery and promise to wire the cash or deliver the prize, such as a car, after receiving up-front payment for taxes or fees. Scammers will ask for a cash transfer or even gift cards in some cases. To build credibility, someone posing as an attorney or FBI agent may call the target to “confirm” the lottery winnings will not be used for criminal or terrorist purposes.

Keep in mind that for legitimate lottery prizes, the Internal Revenue Service will automatically take a percentage of the winnings up front, and you would owe the rest at tax time. The IRS will never require up-front payment.

Ponzi scheme criminals typically contact investors with an “exclusive opportunity,” such as an oil or gas offering. Money from new investors is used to pay existing investors, and the scheme eventually falls apart when there are not enough new investors to fund the high payouts. Common warning signs include a lack of disclosure material to research details and risks and a rate of return that would be difficult or impossible to receive elsewhere.

Perpetrators of this scheme aim to rapidly increase the price of a stock they own (usually a micro- or small-cap stock with a low price and/or a low number of shares available to trade) by aggressively calling or emailing investors with false or misleading hype such as “getting in on the ground floor” of the opportunity. The illegal hype attracts new investors, which causes the trading volume and share price to spike. Perpetrators then sell their stake for a profit, causing the share price to drop below the original selling price, and the new investors to lose their money.

Talk to us first

Your advisor can help you:

  • Stay on track to achieve your financial goals with an investment strategy based on your risk tolerance and time horizon.
  • Evaluate new investment opportunities you may be considering.