October ScamWatch

Welcome back, dear readers, to ScamWatch—the monthly series where we try to shed light on dark corners of the financial world. We hope it adds some … plates to your armor? Links to your chainmail? We will workshop these metaphors.

Anyone can get conned.

Among the more sobering news we saw this month, UK watchdog Report Fraud said Brits lost almost £93 million to Ponzi schemes in the 12 months through June 2026. That is up almost 50% from 2024.^[i] That far exceeds inflation over this period, which tells you the bad guys are finding more ways to hook people. “Stuart McFadden, the co-founder of Refundee, which has so far recovered more than £140m for scam victims, said: ‘Ponzi schemes are a booming industry, representing a low-risk, high-reward opportunity for fraudsters. Using sophisticated marketing strategies – from employing online influencers and running social media adverts to appearing on podcasts and at in-person events – these scams can quickly attract millions of pounds of investment.’”^[ii]

Real estate was a popular theme. Multiple alleged Ponzi schemes told investors they were funding new developments—commercial, residential, gas stations, you name it. But most incoming money went to pay early investors, and the authorities allege they weren’t backing the advertised properties.

But Ponzi schemes weren’t the biggest investor fraud this last year. Even bigger: “Recovery fraud,” where scammers pretend to be government workers who will help prior scam victims get their money back … for a fee.^[iii]

Obviously, they see prior victims as easier marks. Fool me once, shame on you, etc.. We have a hunch as to why it works, and it is the same reason we suspect actual fraud losses are higher than the official tallies: With fraud, society often blames the victim. Because a fraudulent scheme’s red flags are so obvious in hindsight, people think anyone who fell for them must be dumb, mentally ill or senile. Victims can project that mentality onto themselves, especially if they have to confess their loss to a spouse or family member. As an excellent Bloomberg essay put it last month, they start seeing themselves as “the author of a foolish mistake,” not “the victim of a crime.”^[iv] That shame can lead to staying silent and falling victim again. And again. And again.

The reality: Anyone can get scammed. Vulnerability has nothing to do with age, profession, IQ points or education level. “Scammers rarely find us on a good day. They find us when we’re tired, stressed or distracted — and the scams frequently manufacture urgency of their own: a payment that must be made now, an opportunity about to disappear, a threat of penalties or even arrest. In that moment, we’re expected to recall the many dozens of scams that now exist and spot the deception, even as artificial intelligence makes it easier to produce convincing messages, voices and images.”^[v]

This is why our blanket advice often amounts to “hang up the phone” when you get a call (or text, social media message, etc.) that gets your heart rate up. Don’t force yourself to try to think on your feet. Walk away, take a few deep breaths and remind yourself of scam red flags. Google whatever it is they were calling you about. If the caller is legit, they will be fine with this. If you say, “I gotta go see if you are doing fraud,” they will laugh and say “of course, we’re here whenever you’re ready.” If they curse and call you names, they have done your homework for you.

Beware suspicious invitations and WalMart impersonators!

Googling things that smell a little scammy really does help. The Internet has some problems, but it is very good at exposing new tricks.

Here is one The Guardian reported on this month: a phishing scam using fake meeting requests on calendar apps like Google or Microsoft. These are especially sneaky because if your settings aren’t just right, anyone can drop a meeting on your calendar without making you open an email. Their request can go to your spam folder but it will still create an entry on your electronic calendar. It might look like it is from your company. It might appear to be from a payment processor about new charges or subscription renewals. But in this case, it is a trap.

Here is how it works.

“You will receive an email and see an entry in your calendar. The titles vary: examples seen by the Guardian include fake meetings, notifications of voicemail messages, and software renewals. [Threat detection engineer Luke] Wescott says this is standard. ‘We typically see stuff like “New voicemail received”, “Payment receipt confirmation – $298.99”, “PayPal unusual activity” warnings, “Your auto-payment will be processed within 24 hours”, and invitations to bid on a contract,’ he says. … Wescott adds: ‘Either they want you to click a link to a fake login page like Microsoft, Google or PayPal, and enter your password, or to call a “support” number to cancel a charge that never actually happened.’” In both cases, the goal is to steal your login credentials and wreak havoc.

Just getting a phony calendar invitation doesn’t compromise you. You have to click or call. So just be paranoid. Don’t click on links or call phone numbers in unexpected communications. If you think there is a chance something is real, go to their website and find their official phone number to call. Or if you are worried you might actually have phony credit card charges, login to your account in the normal way and check.

All this applies to text messages and voicemail, too. We just got one from someone pretending to be “Olivia from WalMart account security” letting us know “a pre-authorized purchase for a MacBook Pro and iPhone in the amount of $2499 has been charged on a WalMart account registered to your name and phone number.”^[vi] “Olivia” wants us to call to let “her” know if this is a bogus charge. But WalMart’s actual security page has a different procedure for dealing with unrecognized charges. So we Googled the text of the message and sure enough, “Olivia” is AI-generated and trying to steal our financial data. Rude.

What Shakespeare knew.

Our last item here is a little niche, but there was a great Wall Street Journal op-ed this month about why financial fraud happens. It is geared toward training businesspeople on ethics in hopes they won’t do the next Enron, WorldCom or Theranos. But we think it kind of applies here, too, because it answers a question we have long had: How do registered investment advisers like Bernie Madoff, who had legal duties of loyalty and care to their clients, decide to steal from those who trusted them? Why did they break the rules?

Accounting Professor Shivaram Rajgopal has an answer: Just read Macbeth! “It isn’t just a clinical rundown of poor decisions. Shakespeare gives us an intimate portrait of a man talking himself into doing wrong, over and over, with the audience inside his head the whole way.”^[vii] Macbeth wasn’t amoral, confused or duped. He knew right from wrong and all the reasons not to (spoiler alert) kill Duncan.

“That is the first step down the slope to fraud: a person who sees the ethical line clearly and crosses it anyway. The second step comes when Lady Macbeth urges her husband on. She doesn’t argue that killing Duncan is right. She doesn’t engage the ethics at all. She gets personal.”^[viii] Then comes step three: Doing wrong repeatedly to cover your tracks. Finding all those new investors at the bottom of the Ponzi scheme to pay out the suspicious folks on top.

So remember Macbeth the next time a seemingly nice person tells you about the investment fund they have started and how if you give them $50,000 they will multiply it to $5 million in 10 years by building luxury condos and gas stations. Macbeth presented as a stand-up guy, too, but it was a front.