Spotting and stopping more sophisticated scams

In crossover scams, fraudsters combine common techniques to make their scheme more convincing and harder to detect. These scammers employ various methods of outreach, such as phone calls, emails, or text messages, and use social engineering tactics to build trust. They often request payment through a fraudulent money transfer method, making it difficult for victims to trace the transactions.

Crossover scams are particularly dangerous because they blend different elements of various scams over weeks, months, or even years, increasing the fraudster’s likelihood of success. Scammers may impersonate trusted entities such as banks, government agencies, or well-known companies to trick investors into providing sensitive information or making financial transactions.

The costs of fraudulent activity extend beyond financial losses. Scammers manipulate and deceive victims into trusting them. As a result, victims often experience emotional stress, including depressive symptoms, anger, and disappointment. The scams can also lead to marital problems and a significant drop in financial well-being and confidence.²

“The reality is that these scammers are con artists who prey on the victims’ fears and needs in persuading them to act,” said Vanessa Richards, global head of Vanguard Fraud Prevention and Physical Security.

Collectively, these risks can be mitigated by understanding how the scams operate. The scenarios that follow illustrate two common crossover scams.

In this type of scam, the fraudster initiates contact with the victim using various methods, such as online pop-up windows, phishing emails, or social media platforms. Once contact is established, and the victim’s computer is compromised, the victim is transferred to other scammers posing as representatives of trusted entities such as fraud departments, the FBI, or the U.S. Department of the Treasury. The impersonators inform the victim that “immediate actions are needed” to keep the person’s assets safe.

If the misrepresentation is successful, the scammer will persuade the victim to move funds to a “new secure account.” During the transfer process, whether the victim moves funds in person, through a courier service, or digitally, the assets are stolen.

Another common multifaceted attack is a personal relationship and investment scam, which uses emotional manipulation to build a sense of dependency. Following initial contact using a social media platform or other networking site, fraudsters establish a relationship with victims through frequent communication.

Once trust is established, scammers encourage victims to join an investment opportunity on a fake website. After the victims initiate the transfer of funds, the websites provide a false narrative that the investment is producing high returns, encouraging the victims to invest additional funds. When the victims later want to withdraw assets, they are told that they must pay taxes and fees. By this point, the assets and additional fees are with the scammer. This crossover scam differs from the singular personal relationship/romance scam, in which the victim is manipulated into sending money to the scammer directly.

These scenarios illustrate how important it is for investors to be aware of the initial signs of crossover scams and how they can morph into larger issues. Scammers intentionally confuse investors, especially seniors, by promising high returns and making the schemes more complex, involving multiple channels and modes of contact. 

As crossover scams become more sophisticated, remember that Vanguard will never:

• Instruct investors to keep activities secret from their trusted or designated contacts.

• Recommend liquidating assets to cash or commodities, such as cryptocurrency or precious metals, as this does not align with our approach.

• Ask investors to perform a certain type of transaction to “protect” their assets.

• Encourage investors to act dishonestly, such as telling family members or loved ones false reasons for withdrawing funds.

Investors who receive a suspicious communication from a financial institution should contact the institution separately using verified public contact information to raise their concerns and report the correspondence.

While crossover scams can be complex, investors should pause and think before they act on an unsolicited request. Ask another person whom you know and trust before acting. Awareness and vigilance are key to safeguarding assets from these increasingly complicated fraudulent schemes.