In a world where Elizabeth Holmes, Anna Delvey and the Tinder Swindler co-exist, it seems like scammers are waiting for unsuspecting victims around every corner. Sometimes, those victims are even sophisticated finance professionals.
Andrew, a 27-year-old certified financial planner, learned this lesson the hard way last month when he was conned out of $3,000 by someone impersonating an investment advisor on Instagram. According to cybersecurity experts, Andrew – who asked for his last name to be withheld to protect his job security – is far from alone.
More than 95,000 people lost a collective $770 million in scams or hacks initiated on social media platforms in 2021 , according to the Federal Trade Commission. Such issues “will become part of our daily life,” Theresa Payton, CEO of Fortalice Solutions and a former White House CIO, tells CNBC Make It. “We’re going to have to put up with them, just as there used to be people trying to cash out fake checks.”
Part of the reason social media scams and hacks are so frequent, Payton says, is because of who and how they target their victims online. She says several high-profile people, from Elon Musk to President Joe Biden, have been caught in similar types of schemes.
“Fraudsters and cybercriminals could actually teach a masterclass in human behavior,” she said. “They find people who are legitimate, who have a following, who have a great background, then lure them in using social media engineering, so they can lure in other people, too.”
Andrew’s story, while harrowing, ends on a positive note: He was able to recover his $3,000. But it’s proof that everyone’s at risk these days – even financial professionals. Here’s how Andrew got scammed, and the four major red flags he missed, according to Payton: 1. A pitch that’s too good to be true
It all started when Andrew saw his friend post a video on Instagram. In the video, the friend said he’d received a large return on a $3,000 cash investment in less than 24 hours, from working with an investment advisor. The friend tagged the advisor in the post, and added screenshots purporting to show how his investment had quickly ballooned to $40,000.
Andrew felt suspicious, but intrigued: He and the friend shared an interest in the stock market and cryptocurrency. So he direct messaged the friend to learn more, and quickly received a personal endorsement of the strategy.
“The first red flag is his friend suddenly bragging about what they’re doing and how much money they’re making,” Payton says. “If you’re making money, who has time to brag about it? It’s like when your friends get hacked and start posting, ‘I lost this much weight in seven days.’ If it’s anything sounds too good to be true, even if it matches your friend’s career background, it probably is.”
She also recommends picking up the phone and calling that friend directly, in case someone else is controlling their account. Or, if you don’t have their number, message them asking for a “unique or special” detail. Who is my favorite NASCAR driver? Who is your favorite college sports team?
“Sometimes those questions actually make fraudsters abandon the account,” Payton says. 2. A consistent back-and-forth
Still, Andrew wasn’t sold. He reached out to the advisor tagged in his friend’s post, inquiring about the impossibly high return on investment. The advisor “inferred that there’s some kind of derivative [crypto market] that most people aren’t privy to,” Andrew says.
Quickly, the two established a rapport. The more crypto-related jargon the advisor used, the more Andrew believed he was legitimate.
The speed of the advisor’s response should have been another red flag, Payton says.
“If somebody is frequently responding to your DMs, it’s less likely that it’s really a person responding,” she says. “It’s more likely that it’s from a script with canned responses.” 3. An ultimatum
Andrew, following instructions, put $1,000 in a Zelle account and another roughly $2,000 in bitcoin in Cash App. He gave the accounts’ information to the advisor, who sent Andrew a link to a site that appeared to be Forex, an online foreign exchange market. Within five minutes, Andrew watched his $3,000 investment jump to more than $42,000.
Starting to feel uneasy, Andrew said he was ready to cash out. The advisor, who now controlled the accounts, agreed to release the funds — but only if Andrew recorded a video of himself endorsing the process.
Andrew says he initially resisted, because “it’s against the CFP code of conduct to provide unsolicited financial advice while promising returns.” But the advisor […]
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