We recently had a client fall prey to a sophisticated Schwab Bank scam. They gave us permission to share this fraud story with you to hopefully prevent others from being scammed. This fraud began with the scammer sending a text message to the client’s cell phone. The text message read:

Charles Schwab Bank Fraud Dept: [Name] Did You Make A Scheduled Transfer For $2,500.00 To Jessica Johnson Reply Yes or No. CA 345768/ To Opt Out Reply STOP

The scammers had this client’s first name and listed it where “[Name]” is quoted above. They also mentioned the name “Jessica Johnson” which is unknown and unrelated to the client. The “345768” appears to be a random string of numbers.

The client replied “No” and the scammers sent back:

Charles Schwab Bank Fraud Dept: Thank You No Further Action Is Needed A Customer Service Representative Will Be Contacting You Shortly

The scammers tell you that no further action is needed to try to keep you from calling the real Schwab Bank. After a brief wait, the scammer called the client.

On the phone, the scammers talked the client through how to accomplish two wire transfers of about $5,500 each. They lied to say that these transfers were to return the funds to the account, but this is how the scammers stole the funds. Thankfully, the client called our firm immediately after and together the advisor and client were able to work with Schwab to cancel the second wire transfer.

This scam is sophisticated and efficient for the scammers. The fraudsters probably sent thousands of these messages without even knowing if the recipients actually have a Schwab account. The scam works because many people do, and if you have a Schwab account, the scam seems more legitimate.

These type of scams are sometimes called “Imposter Scams” because they are trying to impersonate a trusted financial institution. When you receive a text message from banks where you have no accounts, services you have never subscribe to, warranties for cars you don’t own, or governmental services you are not receiving, the scam seems stupid. However, when the scammer gets lucky and finds a match, it can be hard to identify the scam as fraud.

How to Protect Yourself from This Fraud

1. Silence unknown callers on your cell phone. The number of spam callers and text messages is remarkable. By silencing calls from unknown numbers, you protect yourself from being scammed by them. Silenced calls will be sent to voicemail without ringing. A voicemail from someone pretending to be Schwab is much less effective partially because it gives you a chance to call “Schwab” back at their actual phone number.

2. Distrust all incoming calls. Unless you initiate the call to a number that you previously had on record, the call is suspect. Whenever you are dealing with a suspicious call, do not give them any financial information or initiate any payments. At Schwab, most legitimate concerns that they have are given case IDs. If Schwab has called you, ask them if there is a case ID for the problem. Then, regardless of whether they have a case ID or not, hang up and call them back at their legitimate number. Schwab’s main phone numbers can be found on their contact us page Schwab.com/Contact-Us. Once you get a representative, you can give them back the case ID or a description of the problem so they can verify it was actually them talking to you before.

3. Never wire money. In “Seven Elder Abuse Scams and How to Protect Yourself” I write:

In addition to not giving out any financial information, my rule of thumb is that I never wire money. Yes, I know it is sometimes supposedly “required” for real estate transactions, and they may say it is required in order to buy a car, but wire transfers are the most dangerous method of transferring money. You can almost always find another option if you push hard enough. Push harder; I do not recommend them.

Since the client had done nothing wrong, a legitimate financial institution would not require the client to pay any money in order to report or correct the fraud. You are never ever required to pay money in order to receive money which you should be owed nor in order to reverse a fraudulent transaction.

4. Call your financial institution immediately. If you do fall prey to this scam, call your financial institution as quickly as possible. If you have wired the money, it may be lost. But if you report it quickly, your financial institution may be able to stop the wire transfer.

In this case, one of the two wire transfers wire had gone through. Because the scam was caught so quickly, the client only lost one wire transfer of $5,500 instead of both.

We have a lot of clients who fall prey to a scam. It is something to be sad about, but it is nothing to be ashamed about. If you fall prey, you are the victim and only the scammer should feel ashamed about what they have done. Talking openly about what happened can help others learn about the methods that scammers use and hopefully avoid them in the future.

You can file a report with the police if you are scammed. You can also report it to your financial institution, the FTC online, and the FBI’s internet crime complaint center www.ic3.gov. However, the best outcome is to be vigilant to avoid these scams in the first place.

Featured photo by Gilles Lambert on Unsplash. Image has been cropped. Photo of text message used with permission.