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How we protect our clients from financial scams

September 24, 2013

Every so often—but more often than he prefers—William A. Matysik will call a Vanguard client. He'll do so because Vanguard associates or computer systems have spotted unusual activity in that client's account.

William MatysikThere may be a good reason for the activity. Sometimes, there isn't.

Mr. Matysik, a 30-year veteran of law enforcement who now heads Vanguard's Fraud Prevention Team, calls to determine which is the reality. If the client has fallen prey to a scam, he'll seek to limit the damage.

"I'll identify myself, tell the client my concerns, and ask if they mind sharing details," he says. "I hate to see people taken advantage of. It's why I got into law enforcement."

The seamy side of the internet

These days, scammers blend old-fashioned trickery with ultra-modern technology.

Ellen Rinaldi"The internet is wonderful, but it does have a dark side," says Ellen Rinaldi, who heads Vanguard Security and Contingency Services.

Mr. Matysik is on the lookout for fraud hallmarks, especially a request that money be paid now to gain a promised windfall later. Typically, an overseas bank is involved, and often the scammer's English is poor (some less-developed countries are scammer havens). The victims are frequently elderly and trusting.

"Scammers' workdays are spent trying to steal other people's money. They're professionals with time on their hands," Mr. Matysik says. "And the internet is free and fast."

Cultivating long-distance love

One scam is the romance hoax. The scammer cultivates an online relationship with the victim over many months. Pictures and private information may be exchanged. Romance blooms. And, eventually, there's a "money need," says Mr. Matysik.

That's why one of his first questions is whether the client has actually met the other party. "Victims are crushed when the money runs out and the contact stops," he says.

Vanguard e-mails to clients in the United States only come from vanguard.com or evanguard.com. If you receive a questionable e-mail claiming to be from Vanguard, please forward it to abuse@vanguard.com immediately.

Scammers work the phones, too

Sometimes a client receives a phone call from a "grandchild" in distress abroad, with a plea "not to tell Mom and Dad." The grandchild's voice may not sound quite right, but that's due to stress or a poor connection, the client reasons. The need for quick cash is reinforced when a "law-enforcement official" gets on the line.

Younger clients may get taken when, out of the blue, they're told that they've won an international sweepstakes or inherited a large sum from a previously unknown relative. The target then receives follow-up calls—from a "customs officer," a "tax official," a "banker"—each asking for a payment in order to release the money.

If it seems too good to be true ...

Scammers' toolkits can also include high-pressure spiels, official-looking stationery, and false addresses.

Perhaps the most important defense is to heed the old rule: If something sounds too good to be true, it probably is.

Ms. Rinaldi recalls a Russian proverb often cited by President Ronald Reagan: "Trust, but verify." In the world of scams, she says, a good rule is: "Don't trust ... and verify."

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