16 Jan Financial Fraud Case Study #1 – Text Fraud

Remote Access Scam – Jane Doe lost $10K 

Summary: A Gemmer client fell victim to fraud after responding to a text message from a bad actor posing as a representative of their financial institution and then granted the bad actor remote access to her computer. The bad actor used the client’s saved credentials and logged onto the custodian’s website to make transactions. Suspicious activity was detected in the client’s brokerage account, but despite our immediate outreach, the client did not act promptly, which allowed the fraudster to set up wire requests to transfer money out of the client’s bank account. 

Timeline of events:

• The custodian detected suspicious activity in a client’s account and contacted Gemmer. The “client” initiated several withdrawals from her brokerage account to her linked bank account, which was unusual.

• We immediately notified the advisor and asked if the client had initiated the transactions. 

• The custodian and advisor made several attempts to reach the client but were unsuccessful. 

• When the advisor finally made contact, she confirmed that she did not authorize the transactions and was advised to contact the custodian’s fraud department. 

• When the client contacted the custodian, she did not speak to the fraud team as directed. She only changed her password, not addressing the fraudulent activity.

• Later, the client informed their advisor about receiving a suspicious text and allowing someone remote access to their computer. The client was advised to contact their bank and put a freeze on her accounts. 

• In the meantime, the fraudster set up wire requests to transfer money out of the client’s bank account. 

• The client eventually contacted her bank; however, she didn’t request a freeze on her accounts or initiate a wire recall. 

Conclusion: By obtaining remote access to the client’s computer, the fraudster was able to transfer funds out of the client’s bank using saved credentials from her computer. The client felt embarrassed and therefore did not respond quickly to the attempts made by the advisor and the custodian; she also provided incomplete information to all parties involved. Since the funds were transferred from the client’s brokerage account to her linked bank account, the custodian’s fraud guarantee did not apply in this situation. While the custodian offers a security guarantee to cover losses from unauthorized activity in clients’ accounts, this incident fell outside of those protections.

Lessons Learned:

1. Do not click links in text messages and emails unless you are expecting it, and verify incoming phone numbers independently. You can do this by simply Googling the phone number.

2. Take prompt and immediate action if you believe you may be a victim of fraud.  Contact us immediately if you get an odd text or see unusual activity in your account.

3. If a text communication is initiated by a financial firm (bank, credit card, etc.), proceed with caution.

4. Clients should notify their financial institutions immediately when suspicious activity has been detected.

5. If you are receiving phone calls from your Wright Wealth Advisor, Gemmer, or Schwab, respond promptly!

Here is an excellent article on avoiding text scams: https://consumer.ftc.gov/articles/how-recognize-and-report-spam-text-messages

Stay safe out there!

Information is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products, or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this post (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of Angela Wright, an Investment Adviser Representative of Gemmer Asset Management LLC (“GAM”) and should not be regarded as the views of GAM, or a description of advisory services provided by GAM or performance returns of any GAM client.  References to securities or market-related performance data are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.