Don’t Fall for Fraud – How to Spot Red Flags

Season 3, Episode 3

In our Financial Literacy Month episode, Laurel Road’s Director of Credit and Operational Strategy, Jessica Agnello, and Laurel Road’s Product Operations Manager, Cheryl Forth, join the podcast for a conversation about financial fraud and scams – a growing problem in our increasingly cashless world. The discussion covers how to identify the red flags of a scam and best practices for protecting your money.

Transcript

Eric Sutton [00:00:08] Hi everyone. This is Eric and you’re listening to Financing Ambition, a Laurel Road podcast. In today’s episode, we’re going to help you celebrate Financial Literacy Month by talking in-depth about something every person needs to be literate about in today’s digital-first world, and that’s financial fraud and scams.

Unfortunately, fraud is something we see all too often in our industry as we continue to become more of a cashless society and increasingly rely on smart devices and apps to manage our personal finances. In fact, in their annual data book, the Federal Trade Commission (FTC) reported that:

• People lost $10 billion to scams in 2023. That’s $1 billion more than in 2022, and it’s the highest ever and reported losses to the FTC.
• 1 in 4 people reported losing money to scams with a median loss of $500 per person.
• Email was the number one contact method for scammers in 2023, especially when scammers were pretending to be a business or government agency to steal money.

So, to help you understand what to look out for and best practices for protecting yourself from becoming a victim of common scams, I’m very happy to welcome two of my fellow Laurel Road team members – both of whom are experts on the subject of fraud prevention and cybersecurity – and that’s Jessica Agnello, our Credit Officer and VP of Strategic Initiatives. And Cheryl Forth, our Product Operations Manager. Jessica and Cheryl, welcome to the podcast.

Jessica Agnello [00:01:50] Great to be here, Eric. Thanks.

Cheryl Forth [00:01:51] Thanks for having us.

Eric Sutton [00:01:52] I’m really glad to have you both here. So, let’s get started with a quick introduction for our listeners so they can get to know you a bit and, you know, get a better sense of exactly what you do here at Laurel Road. Jessica, let’s start with you and then we’ll pass the mic over to Cheryl.

Jessica Agnello [00:02:07] Thanks, Eric. My name is Jessica Agnello. I am Laurel Road’s Director of Credit and Operational Strategy, and I’ve been with Laura Road from the beginning. It’s been so rewarding to be a part of its growth from a single product shop, part of a local community bank, to this full-scale national digital bank. And as we’ve grown, it’s raised a lot of opportunity to see how our members have been impacted by fraud and suspicious activity and figure out how we can best protect our members, be that through systems or infrastructure, or through educating our members against the near infinite ways fraudsters can strike.

Cheryl Forth [00:02:38] And I am the Product Operations Manager for Laurel Road. I have worked for KeyBank since the mid 90s in a variety of roles starting in branch banking, then our Contact Center Operations, and finally in key technology. In that time. I’ve seen many fraud scams and have helped victims personally during my branch banking years. While at Key’s Contact Center, I had the opportunity to develop processes and training programs to detect fraud callers and help prevent losses to our clients. And in my current role, my team partners very closely with our front lines and back-office key partners to improve our detection of fraud attempts and protect our members. We are also very focused on improving the member experience around fraud events and account reviews for members dealing with a potential fraud event. We understand how upsetting this can be and want to help you through the process.

Eric Sutton [00:03:30] Okay. Thank you to you both for those introductions. I know I can speak for our listeners and for myself when I say that I’m grateful to have experts of your caliber here on the on the pod to talk about cybercrime, because it is such a prominent and growing problem. So, I’d love to start today’s discussion by talking about how cybercrime is impacting the financial services industry generally. So, Jessica, what kind of fraud are banks subject to? What challenges are banks like Laurel Road experiencing in addition to what the consumers are facing?

Jessica Agnello [00:04:06] So, I think the themes industrywide show that a fraudster is usually going to try to attack one of a few primary ways. Oftentimes the attempt takes the form of a fraudster impersonating someone. So, we call these imposter schemes. It could be that they’re impersonating your bank or the IRS with a really well-executed website that looks just like your bank’s. Or, it could be the sometimes comical claims. It’s your grandfather – “I’m in Egypt and I need $10,000 to make it home.” These folks don’t really care if they sound silly or you respond with, “Wow, incredible. My grandfather passed away in 2005. It’s a miracle.” They just hang up and hope they have better luck on the next number on their list. Investment scams are tricky too, especially in the Bitcoin world where there’s such limited regulation and the law and technology really has to catch up to an entirely new type of currency. But speaking of technology, IT technology is now allowing fraudsters to create deepfakes of you and of people you know. So, these video or voice messages can be so convincing and can sound so much like the person they’re pretending to be, that it’s almost impossible to tell the difference. If something seems out of character, or a business is calling you for something you haven’t requested, it’s not paranoid. It’s actually safe to say, can I call you back at the number I can verify belongs to you? Because it’s just getting harder and harder for banks and their members and customers to be confident that they’re talking to the right person with the right intentions.

Eric Sutton [00:05:31] Wow. I mean, it’s really scary out there. There’s just so much happening in the world of scams. And, you know, I’m glad we’re spreading awareness about how dangerous it is and, and how costly the problem is. What do you think, Jessica? Are these cybercrime trends here to stay or maybe are they becoming even more problematic as we continue to morph into a cashless world?

Jessica Agnello [00:05:57] So, I think one of the trickiest parts of fraud is there’s no such thing as business as usual. No matter how educated you are, how vigilant you are, fraud is constantly evolving. And I don’t say that to strike fear, but rather to kind of highlight that as soon as the industry or the average consumer catches on to one method of attack, there’s another new one right behind it. And I also think the way that everyone swipes and taps their card, and the frequency with which we do that is making it so much harder to notice when things do start to go awry. Where a bank statement used to kind of be this one page, you know, summary of everything in a month. People would take cash out from the ATM on Sunday and make that work through the whole week. I find myself tapping my card even when I do have cash in my wallet, and that means there’s so many transactions on a given bank statement, it can make it harder to notice when a fraudster tries a smaller transaction, to see how diligently you’re monitoring or what they can get away with.

Eric Sutton [00:06:52] Yeah, that makes a lot of sense. I’m in the same boat, so I’m curious about what the banks can do. What do banks need to do today to combat scams and stay ahead of criminals? Sheryl, anything you can share about what we’re doing at Laurel Road to protect our members?

Cheryl Forth [00:07:09] That’s a great question, Eric. We are constantly investing in new technology, analyzing data, and staying current with new and existing trends to keep you and our bank safe. Now, I can’t give you the details of all of our strategies, Eric, but rest assured we have a team of experts working around the clock to stop bad actors from getting in the door. We’re also taking steps to communicate with our members and help educate on common scams, how to recognize them, and what steps to take if you think you might be a victim.

Eric Sutton [00:07:39] Okay. Yeah, it stands to reason that spreading awareness and helping to educate the public would help in combatting the problem. And you know, I’ll mention that we have a resource within our financial resource hub, which we can link to in our episode notes that goes into detail about some of these common scams that we’re mentioning. And while I won’t have time to go over on today’s episode in detail, what’s involved in every one of those scams, I can say that they include:

• Phishing and smishing (which happen on email and text messages, respectively)
• Business Email Compromise (BEC)
• Websites spoofing
• Impersonation scams
• Online purchase scams
• Mailbox scams and email bombing
• Money mule new job romance scams

And the list just goes on! I’m wondering, Cheryl, what are the most common scams from this list that we encounter as a digital bank? And also, what happens to a victim in the aftermath of one of these scams?

Cheryl Forth [00:08:44] You would be amazed at the sheer volume and different approaches scammers take to try to pirate you and your money. Before I get into the volume of these scams, I wanted to talk first about the increase in lost in stolen check. You may have heard on the news recently where scammers will target mailboxes, both your personal mailbox and those blue USPS boxes to try to steal your checks and information.

Stolen checks can be used in a variety of ways. Scammers can change the payee and try to negotiate them. This can be hard to spot right away, as you expected your check number 500 for $100 to clear. They can also wash all the info off the checks except for your signature. They can change the payee, the amount, the date, even the check number. If you don’t watch your account daily, it may take a few days or longer to notice that one or even several checks have cleared that you didn’t write. They may also use your routing and account number to try to set up ACH withdrawals and other external transfer methods to move your money to others. Their goal is to get the money out and try to funnel it through a few people and a few banks as quickly as possible.

Now, mule scams have dozens of variations, but most of the popular ones are romance scam, impersonating an old friend or family member. Inheritance scams and work from home scams. They also may target you and trying to sell a good or service online, often offering to pay upfront and have someone else pick up the item. They may try to pay you more and ask you to return some of the funds to the mover or another party. They may seem very trustworthy, telling you to wait till the funds clear to pay them back, but don’t trust this. They most likely have stolen someone else’s check or PayPal account to move the funds to you, and it may take more than two days to return. It may take longer for that true account owner to notice and report the fraud. We call these mule scams because they get you to move, or mule, stolen money for them. This helps them launder money.

Now, one of the current trends I’m also hearing about is the “oops! I called, texted or DM’d you by mistake as I thought you were my friend. And hey, can we be friends now?” This one fairly quickly moves into a discussion about how much money they have made in crypto, and how they can help you. You’re our new friend. Double or triple your money too. For free. Now, I think we all think that we wouldn’t fall for these scams, but they can be very convincing. They know that we like to trust others and like to be helpful. And of course, we all also really do want to double or triple our money. Be wary of anyone asking you to purchase gift cards to pay a ransom, bribe, or for any other reason as well. Once you have been a scam victim, you may also be targeted by recovery scammers who claim they can help you get your money back. Know that this is also a scam.

Eric Sutton [00:11:36] Wow. It’s shocking how frequently those types of scams occur, and also how many people don’t recognize they’re being used for a scam like a money laundering scam. Understanding how to identify the signs and different phases of money laundering and how to be vigilant is something that we’re trained extensively on here at Laurel Road and KeyBank, so I think it would be helpful for our listeners to talk a little bit more about money laundering and what that is, so they know better what to look out for. Jessica, what can you share with our listeners?

Jessica Agnello [00:12:09] So, most simply, money laundering is the attempt to make bad or ill-gotten money look clean. And it’s basically a three-step process. It starts with what we call placement, and that’s getting the money into the financial system. The next stage is layering, and this is when they’ll try to move the money around so often that it’s difficult to tell where it came from. And it’s basically muddying the audit trail. And finally, there’s integration. So, these funds are now viewed as legal tender. They’re legit. So, criminal can use the funds however they want with the appearance of legitimacy.

So, banks have entire teams stacked against preventing money laundering. We refer to them as AML or anti-money laundering teams. Like everything else we’ve discussed though, it’s constantly evolving. So, these teams stay vigilant to ensure we’re taking a stand to prevent money laundering and whatever new forms and attempts fraudsters are bringing.

Eric Sutton [00:13:01] Anything you would add to that? Cheryl.

Cheryl Forth [00:13:04] We most often see this at the placement stage where money is moved to you or through your account from one or several store sources, and then moved out to one or several sources. Scammers are not just trying to steal your money. They also want you to help move their stolen money. This might make it seem that you, the victim, are the suspect, even unknowingly when you helped me all the money in this manner. It can be hard for law enforcement and banks to tell between a victim and a suspect.

Eric Sutton [00:13:32] That’s very helpful. Those details. Thank you both. Jessica, you brought up great points about, you know, what we do or earlier, what we do as a digital bank to both protect ourselves and our members from scams. And I want to talk a little more in depth about that since we’ve got listeners here probably curious about that very thing. I know one thing that we do for members is what we call a security review, which can be triggered for a number of reasons. Cheryl, what can you tell us about that? If anything.

Cheryl Forth [00:14:03] In order to best protect our members, it’s important that we get to know them at the digital bank. That’s not always as simple. So, we focus on knowing your patterns, normal transactions, normal contact patterns, even normal online banking logins. Now, I still can’t give details of our exact strategies, but when we see activity that is different than the normal pattern, we may take appropriate steps to ensure the activity is legitimate. This might include restricting access to online banking and your account while a review is conducted. I know that it’s frustrating, and we work diligently to make this process is as quick and painless as possible, and to find better ways to keep you informed throughout the process. And this can be even more difficult when a new relationship is established, and we need to request information or document. We don’t yet know what normal account usage looks like for you with a new member. We understand any review or request for information is frustrating. It’s only because of the sheer volume of scams and identity theft that we take these measures to protect the real you.

Eric Sutton [00:15:07] Okay. Thank you. Cheryl. I think you’ve summarized that really well. We’ve talked a lot today about how common types of fraud and scams work. Now, I’d like us to also talk about scams related to student loan debt, specifically those related to federal student loan forgiveness programs.

In previous episodes, we’ve talked a lot about the benefits of federal student loan forgiveness programs like income Driven Repayment (IDR) and Public Service Loan Forgiveness (PSLF) as well as the annual subscription membership programs that we offer to help folks manage the complex requirements of those federal programs.

You know, during the pandemic, we saw a really big surge of fraudsters impersonating the federal government, whether it was phone calls, emails, text messages. All claiming to be from the Treasury Department and offering stimulus payments or other Covid-19 related grants in exchange for personal financial information, for example, or for a fee in advance, or a charge of any kind, including the purchase of gift cards. And unfortunately, since the pause on federal student loan payments ended in the fall, we’re seeing another surge in fraudsters impersonating the federal government and preying on student loan borrowers.

The media reported recently that hundreds of thousands of robocalls were made to borrowers by these scammers, claiming they were calling from the federal government or from a loan servicer. Jessica, can you talk a little bit more about this particular problem and what student loan borrowers should be looking out for?

Jessica Agnello [00:16:46] So the past several years have brought so much confusion surrounding federal student loan repayment forgiveness. And unfortunately, any time there’s confusion, there’s a schemer looking for an opportunity to strike. These scams are taking so many different forms. As you mentioned, Eric, it could be emails, phone calls, texts, and they’re looking to prey on the confusion to obtain your personal information like your date of birth and social security number, and use that in any number of different ways to open accounts in your name, to transact in your name, etc.

Eric Sutton [00:17:17] Okay, what are some of the telltale signs of a student loan forgiveness scam?

Jessica Agnello [00:17:21] Some of the biggest signs could include a cold call about student loan forgiveness, somebody reaching out to you, unsolicited demands for upfront payment or urgent limited time offers, promises, guarantees of total loan forgiveness or instant student loan forgiveness. Requests for you to share your financial student aid credentials, anything of that nature, especially if you have not engaged in, you know, any of these processes recently to sort of prompt a true student loan servicer from contacting you.

Eric Sutton [00:17:55] Okay. That’s really helpful for people to know, I think. And just to be crystal clear for our listeners,

• Laurel Road and our GradFin team will never cold call student loan borrowers. To talk to one of our student loan specialist borrowers have to schedule a phone consultation through our online scheduler.
• We will never promise immediate forgiveness because it simply doesn’t exist – the federal student loan forgiveness programs that we help members navigate through our IDR and PSLF Membership programs really help members understand what they need to do to meet the requirements of that forgiveness program over the 10 to 25 years that they’re enrolled and they’re making payments on their loans, etc.
• We’ll also never call and ask for membership payments over the phone or make student loan payments on your behalf. Anything else you would add to that from a product operations perspective, Cheryl?

Cheryl Forth [00:18:50] I think that’s all really great advice, Eric. If you weren’t expecting a call from your bank, another company, or really anyone that’s asking for your personal identifying information, don’t give it out. Do not trust the source of any unsolicited call, text, or email.

Eric Sutton [00:19:05] So, we’re getting close to the end of our time together today, but I’d love to close out today’s discussion by talking about best practices for protecting yourself and your family members from all the different types of scams we’ve been talking about today. Looking for the top three things that listeners can do to protect themselves and their family from scams in today’s environment. Jessica, how about you go first?

Jessica Agnello [00:19:29] So, I would say first is, be skeptical, especially of unsolicited calls from numbers you don’t recognize. If you click a link in an email, check with that address bar has brought you to the intended website. Don’t worry about sounding paranoid or looking silly, even if it’s truly someone from the bank calling you. They should be very understanding of why you’re taking the time to protect your information. If someone’s trying to create a sense of urgency about sending their money quickly, consider it a huge red flag. Last thing will say about having a healthy dose of skepticism. If it sounds too good to be true, it probably is. Unfortunately, it’s unlikely someone is actually calling to tell you you’ve won the grand prize in a contest you don’t remember entering. Next is be vigilant. The earlier you catch suspicious or unusual activity, the better. Doing the mental math on how much money should be in your checking account is great, but checking with your bank itself can tip you off to unusual activity earlier. Keep your contact information up to date. Enable push notifications on your banking mobile apps. It’s a great way for the bank to contact you quickly if they see something unusual or suspicious. And when trusted institutions advise, your information may have been compromised. Take it seriously. That’s number three. In a world where so much data is flowing in so many different directions. Change your passwords and change them often, especially when a trusted institution advises you. Your information may have been compromised. Every week I’m contacted by a company or even by Apple, right through their password saving technology to let me know. One of my passwords has been involved in a data leak or a data breach. I used to ignore them and decide to roll the dice or try my chances. You really only need to be a victim. Wants to realize how important it is to heed those prompts, even if it means having to keep one more string of random letters and numbers in your brain. It’s worth it, and you really should heed that advice and change those passwords.

Eric Sutton [00:21:22] Really good advice. Thank you, Jessica. And Cheryl, what are your top three best practices for staying vigilant against fraud and scams?

Cheryl Forth [00:21:30] Well, some of these bear repeating. My first is don’t trust but verify. If you get an unsolicited call, text or email. Do not click on link. Don’t answer authentication questions and definitely don’t provide a one-time passcode in that situation. It might be an attempt to take over one or more of your accounts or credentials. Instead, I recommend contacting the company at the number on your card or from the contact us information on the website. Fraudsters have gotten really good at making it appear like that email or phone call originated from a reputable source.

Now, my second tip is don’t share your usernames and passwords with anyone. Not your friend, not their accountant or lawyer, not your new employer. I would not even give them to a family member if they should have access to your accounts. Consider adding them as an owner so they can create their own credentials. I also encourage you, if annoying, and how hard it is to remember to not use the same username and password across multiple companies. Change them up. If a fraudster figures out one, they will use or sell that info to others who may try to defraud you elsewhere in the future.

And then finally watch your accounts for transactions you did not authorize. Report. Then immediately report any suspicious activity as soon as possible. And please work with your bank to complete any affidavit or paperwork needed to protect yourself. File a police report if you are a victim, even if it’s a mail victim – if the activity involved any transaction by mail. I would also encourage you to report it to the US Postal Inspectors. They are a very impressive investigative agency and have had really great success in tracking and catching the kingpins in some of these scams. You can also protect yourself from future identity theft by requesting the consumer reporting agencies to block you from new inquiries without your consent.

Eric Sutton [00:23:21] All right. Thank you both very, very helpful tips and hopefully we can all be a bit safer out there in this digital, cashless world now that we are armed with all these insights. You both provided some really great advice today about how to protect yourself from fraud and how to spot scammers. So, really big thanks to you both for joining us today.

Jessica Agnello [00:23:44] Thanks for having us, Eric.

Cheryl Forth [00:23:45] Thanks for the opportunity, Eric.

Eric Sutton [00:23:47] And thanks to everyone out there for listening. Stay tuned for the next episode of Financing Ambition and for more curated financial education content. Follow Laurel Road on Facebook, Instagram, and LinkedIn, and visit our Financial Resource Hub online at laurelroad.com/resources.

Episode References

Student Loan Forgiveness Scams and How to Avoid Them

How to Protect Yourself from Common Scams

Disclosures: 

Only the U.S. Department of Education is able to make a final determination of whether a borrower’s payment history is compliant with federal repayment programs. See student archives for more details. This podcast is produced for information purposes only and is not an offer or solicitation of any product, any views, opinions, findings and conclusions expressed in this podcast are solely those of the participants and do not necessarily reflect the views of Laurel Road or its affiliates. Laurel Road, KeyBank and its affiliates are not providing any financial, economic, legal accounting or tax advice or recommendations in this podcast. The information contained in this recording may not be current, and Laurel Road has no obligation to provide any updates or changes. Neither Laurel Road nor any of its affiliates makes any representation or warranty of any kind as to the accuracy or completeness of the information in this podcast, and expressly disclaims any and all liability around such. Our guests may receive compensation for promoting Laurel Road. Unauthorized use or reproduction of this podcast is expressly prohibited. Loan approval is subject to credit approval and program guidelines. Programs, rates, terms and products vary and are subject to change at any time without notice. Student loans, mortgages, personal loans, and credit cards are not FDIC insured or guaranteed. For more information and disclosures, go to Laurel Road AECOM. Laurel Road is a brand of KeyBank member FDIC.

This podcast is produced for information purposes only and is not an offer or solicitation of any product. Any views, opinions, findings and conclusions expressed in this podcast are solely those of the participants and do not necessarily reflect the views of Laurel Road or its affiliates. Laurel Road, KeyBank and its affiliates are not providing any financial, economic, legal, accounting or tax advice or recommendations in this podcast. The information contained in this recording may not be current, and Laurel Road has no obligation to provide any updates or changes. Neither Laurel Road nor any of its affiliates makes any representation or warranty, of any kind, as to the accuracy or completeness of the information in this podcast and expressly disclaims any and all liabilities around such.

Our guest(s) have received compensation for promoting Laurel Road. For more information and full disclosures, go to [Laurel Road-dot-com]. Loan approval is subject to credit approval and program guidelines. Programs, rates, terms and products vary and are subject to change at any time without notice. Unauthorized use or reproduction of this podcast is expressly prohibited. Student loans, mortgages, personal loans, and credit cards ARE NOT FDIC INSURED OR GUARANTEED. Laurel Road is a brand of KeyBank, Member FDIC, Equal Housing Lender and NMLS number 399797.