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In times of national emergency or market disruption, scammers capitalize on public fear to take advantage of vulnerable consumers. FinCEN and many other organizations have issued warnings and red flags to help financial institutions and their customers identify and stop potential scams, including:
Imposter scams
The World Health Organization and other agencies are being impersonated in an attempt to obtain money and/or sensitive information from computers. FinCEN has also issued warnings on fraudulent charities and crowdfunding efforts. Following are some tips to follow and pass along to your consumers:
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Check the website domain for spelling errors or inconsistencies—most charities use ".org," and WHO only uses ".int"
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Be wary of organizations directly contacting you asking for money or personal information
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Don't respond to emails requesting sensitive personal information or banking information
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Search the organization's official website and initiate activity only on the official website of legitimate institutions—often, there will be FAQs about whether or not they send certain types of communications
Investment scams
The SEC has issued a warning against investing in companies claiming that their products or services can prevent, treat, cure, or otherwise be used to help stop the Coronavirus (COVID-19), and that their stocks will sharply increase as a result.
- Microcap stocks are especially risky because they often involve small companies with limited publicly available information, allowing fraudsters to spread misinformation as part of their scheme
- Rumors and aggressive promotion involving products or services that claim to be able to stop the outbreak may be indicative of a "pump-and-dump" scheme in which a buzz is generated to temporarily increase stock prices, allowing fraudsters to sell high and leaving investors to cope with losses
Product scams
Currently, there are no FDA-approved medicines to prevent or treat COVID-19. The FTC and FDA have identified several companies marketing colloidal and other silver products, essential oils, teas, and tinctures, among other products, as treatments and/or cures for COVID-19. A list of companies making these claims and their products can be viewed on the FDA's website.
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Research products to see if they are FDA-approved before purchase
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Consult with a physician before purchasing or taking unapproved product
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Visit the CDC's FAQ page for best practices on how to prevent the spread of coronavirus and what to do if you are feeling sick
Insider trading
FinCEN has received reports of suspected insider trading related to COVID-19. Tips on suspected insider trading that has not been properly reported can be submitted to the SEC.
What should you do?
SWBC Payments advises financial institution clients to inform consumers of scams and red flags. Implement enhanced unusual and suspicious activity monitoring to identify potential instances of fraud impacting consumers. Review internal controls over payment size, type, and frequency requiring additional approval. Financial institutions whose members or customers have been impacted should follow their regulatory reporting requirements.
If you require legal assistance, please contact your legal counsel or a professional practitioner. This update is intended for informational purposes only. SWBC does not render legal advice or recommendations.
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Fraud & Cyber SecurityElizabeth Cardenas
As a payments compliance manager, Elizabeth Cardenas is responsible for identifying fraud and money laundering concerns in electronic cash management (ECM) to support SWBC's Payments clients. Elizabeth is CAMS certified, has a bachelor's degree in modern languages and linguistics from the University of Texas at San Antonio and is fluent in Japanese and proficient in several other languages.
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