What if financial fraud doesn’t fit into your financial plan?

Hi everyone! Welcome back to Melissa Making Cents!

One of the most heart breaking things I hear as a CERTIFIED FINANCIAL PLANNER™, is "I was taken advantage of". It almost always means that I'm going to have a hard conversation, and as an empathetic person I feel each and every word that is spoken.  Nothing will derail your financial plan faster than some sort of fraud.  Financial fraud will take a toll on your wallet as well as your mental health, but all is not lost. As a victim of financial fraud myself, I'm here to say that it's possible to regroup and still build a healthy financial future.

Last week, I covered some of the most common financial scams and frauds, as well as some tips to avoid them. But the truth of the matter is, technology keeps getting more and more sophisticated, and so do the scammers. That means even the most tech-savvy people can fall victim to a fraudulent event -- having their tax identity stolen, their credit card skimmed, or their financial information collected through a phishing scam. Today I’ll share what to do if you find yourself the target of a scam or fraud. And it all starts with...

Take a deep breath. 

As simple as this sounds, it’s important to breathe. Sure, you can yell and scream if you want to! But... you still need to breathe.   Depending on the type of fraud, you might be in for a long battle. Stepping back for a minute will help you to reset and get yourself organized for the next steps you’ll need to take. 

If you are a victim of credit card fraud or bank fraud, contact your financial institution right away.

Even if you keep your debit and credit cards with you at all times, that doesn’t mean that your financial accounts are immune from fraud. Fraudsters can steal your account information online or through card skimmers, which are devices that capture the card data stored in the magnetic strip on the back. Card skimmers can be found at ATMs, gas pumps, or any other point-of-sale system -- and consumers often won’t be able to catch them until after their card information is stolen.

Just because your card is in your wallet doesn't mean it's safe. Thieves can use a pocketsize card readers connected to their phones that can read your card info by simply being close to your wallet.  (They can be purchased on sites like Amazon) Think about how many times someone has accidently brushed against you while out in public.  I like to recommend that you only keep one or two credit cards in your wallet, and leave your debit card at home! Credit cards offer a little more protection than debit cards, and you do not want your hard earned bank account cleared by a seedy opportunist.  Try locking your cards on your bank's mobile app, or investing in an RFID shield.

Check your bank  and credit card statements often to see if any purchases have been made falsely under your account. If you find something on your account that you didn’t buy, alert the bank or credit card company immediately and dispute the charges. They will likely cancel your credit card or debit card and issue a new one. I also highly recommend changing your password on any accounts that were linked to the credit or debit card. Remember that the sooner you are able to detect fraud, the better the chances of mitigating any long-lasting, negative effects on your finances.

For more advanced scams, you may need to get law enforcement or government agencies involved.

Some scams are far more sophisticated than swiping a credit card number. For example, a few weeks ago I learned that a scammer filed an unemployment claim under my name with the Texas Workforce Commission--and taking care of that one was a doozy! If you are the victim of fraud or a scam, it is so important to report it to the appropriate agency. According to some estimates, only 14 percent of victims report a scam, which only emboldens scammers to continue their criminal activity. 

Start by contacting your local law enforcement. You can also contact the Federal Trade Commission (FTC) and file a complaint. If you’ve been the victim of a Social Security scam, contact the Social Security Administration, too. 

I also recommend contacting all three credit bureaus and creating an alert. Look through your credit report and confirm all activity. Close any accounts you didn’t open and keep an eye on your finances going forward.

For scams that involve your tax identity, contact the IRS.

Tax identity fraud, in my opinion, is a nightmare. Tax identity fraud occurs when someone steals your Social Security Number in order to claim a tax refund or report their employment earnings under your name. Often, scammers will do this early in the year before you’ve had a chance to file your own tax return. If the IRS suspects that your SSN has been stolen, they will inform you in writing and ask you to confirm your identity. IRS offers its own procedure for dealing with tax identity fraud, detailed below:

• Respond immediately to any IRS notice, using the phone number provided within the notice.
• Complete IRS Form 14039, Identity Theft Affidavit. 
• Continue to pay your taxes and file your tax return. You may do so using paper if necessary.
• Contact the Identity Protection Specialized Unit if you previously contacted the IRS and do not yet have a resolution.

Some people might be nervous about calling the IRS, but remember that they are there to help you. The IRS will never threaten you or ask for money over the phone. In addition to following the steps provided by the IRS, you should always file a police report.

Keep Detailed Records of Financial Fraud

It's a good idea to keep any documentation related to your fraud case organized.  Having a list of who you spoke to as well as the date, might come in handy if you get conflicting information. 

If you’ve been the victim of a fraudulent event, don’t feel ashamed or embarrassed. 

Being the victim of a scam or fraud might be a blow to your confidence. But that doesn’t mean you should let it ruin your life. Focus instead on protecting your finances and your identity, and getting yourself back on track. 

It also helps to remember that you don’t need to go through it alone. As a CERTIFIED FINANCIAL PLANNER™, I’ve worked with clients to develop healthy financial habits to help them avoid scams, and also to deal with the aftermath if they were a victim of fraud. If you or a family member need some guidance in recovering from financial fraud, please call or email to schedule an appointment with me.

Until next time...this is Melissa Making Cents!

Melissa Anne Cox CERTIFIED FINANCIAL PLANNER™ is also a College Planning and Student Loan Advisor, and Financial Coach in Dallas, Texas.