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					                                             SAIF Quarterly
                                                                    Winter 2010




             Fraudsters attempt to sway their victims
In her classic book, “Persuasion,” Jane Austen writes about Anne Elliot, the central character who was
persuaded not to marry the love of her life, Captain Frederick Wentworth.

Several years later, at age 27, Elliot again meets Wentworth. Now more confident in her own choices,
she does not refuse his offer of marriage. But because Elliot earlier opened herself to the sway of some-
one else, the couple lost seven years of wedded life together.

Similarly, fraudsters attempt to persuade people right out of their money. And they often succeed be-
cause they employ persuasion tactics that work.

After analyzing 600 hours of undercover audio taps provided by law enforcement agencies, researchers
have discovered how scammers lure victims.

These researchers, funded by the Financial Industry Regulatory Authority’s Investor Education Foun-
dation (FINRA), found there are five common persuasion tactics scammers use.

If you familiarize yourself with these tactics outlined below, you’ll be better able to protect yourself,
your family and your friends from financial fraud.

If you believe someone has been scammed, you can get help. Call the West Virginia Securities Commis-
sion toll-free at (888) 724-3982 or click on www.wvsao.gov. You may also contact FINRA at www.finra.
org/complaint or the Securities and Exchange Commission’s Office of Investor Education and Advo-
cacy at (899) SEC-0330.

•       The “phantom riches” tactic: dangling the prospect of wealth you want but can’t have. For in-
stance, saying “These oil wells are guaranteed to produce $4,000 a month in income for you.”
•       The “reciprocity” tactic: offering to do a small favor for you so that you’ll do a big favor in re-
turn. “I’ll give you a break in my commission if you buy this product now.”
•       The “scarcity” tactic: claiming limited supply to force a sense of urgency. “We’ve only got a few
of these products left, so you’d better hurry and buy.”
•       The “social consensus” tactic: leading you to believe your friends (church members, club offi-
cers, etc.) already have invested. “Everyone in your neighborhood is rushing to participate.”
•       The “source credibility” tactic: trying to seem knowledgeable and experienced. “I have an MBA
from Harvard.”




 West Virginia State Auditor Glen B. Gainer III, right, addresses about 600 attendees
 at an Oct. 19 Money Smart Week event at the Charleston Civic Center. At left is
                                                                                        Senate President Earl Ray Tomblin (now acting governor)
 Attorney General Darrell McGraw. Sponsored by the AARP Foundation, the
                                                                                        welcomed Money Smart Week’s spokesperson Benjamin
 Auditor’s Office and others, the event included a series of free classes designed to
                                                                                        Franklin, aka the Rev. Leon Alexander, to the Capitol
 help people manage their personal finances. West Virginia will celebrate its second
                                                                                        before the event at the Civic Center.
 Money Smart Week April 2 to 9, 2011.
                      Surf safely when shopping online
Do you have plans to shop online for the holiday this year?

According to the National Retail Federation, more than 43 percent of us will shop online. Even the social networking sites are
getting into the act by posting ads for Amazon and other businesses.

Of course, the scammers know this. They will be trying to get your personal information in a variety of ways. They will offer you
things that make Black Friday deals look like a rip-off. But remember: If it sounds too good to be true, it probably is.

You can protect yourself by doing a few things. Have the latest virus checker and firewall installed, running, and updated on your
computer. Also, have several spyware detectors installed on your computer and run them often. Don’t open emails from someone
you don’t know.

Whether you are on a social networking site or just shopping online, you should be very careful what you post online. If you are
going to travel for the holidays, NEVER post that fact online. You are telling the world your home will be empty for a while.

Don’t post your personal information, such as your real name and birthday online. Much information about you can be obtained
by knowing these things. Make your Facebook profile private and never say “OK” to a friend request from someone you don’t
know. You may be opening a door for a hacker to access your private information.

Shopping online can be fun and can give you access to very good prices. It can also give personal information to those who would
steal your identity. Protect yourself by researching any company you are considering
doing business with. Also, research the products you plan to purchase. There are many
reviews of Internet stores at the online sites of the major news services. Many
newspapers also publish customer satisfaction reports of online stores. If you are
going to buy online this year, do your homework first to be sure your experience is a
good one.


--Field Representative Dave Shelene

                                                                                     State Auditor Glen B. Gainer III kicked off this year’s
                                                                                     United Way campaign in Weirton in October. At center is
                                                                                     Kristin Cross, campaign chairwoman and field representa-
                                                                                     tive for the West Virginia State Auditor’s Office. Beside
                                                                                     Kristin is Scott Winwood, campaign vice chairman and
                                                                                     president/CEO of First Choice America Community
                                                                                     Federal Credit Union.


                  Beware of checking account scammers
As I travel about north-central West Virginia for Auditor Glen B. Gainer III, I both teach and learn about various financial scams.

A continuing problem exists with telemarketers who ask for your checking account numbers.

Automatic debiting of your checking account can be legitimate. For instance, some people pay for products or make car payments
this way.

But a phone scammer unscrupulously may ask for the number printed on your checks. Unless you are familiar with the company
and agree to pay for something, do not give out account information over the phone for “verification,” “computer purposes” or any
other seemingly legitimate-sounding reason.

The Federal Trade Commission provides the following example of how you might become a victim. You get a postcard
congratulating you on a free prize you’ve won. If you respond by calling a phone number on the card, the first question a
telemarketer may ask is, “Do you have a checking account?”

If you say “yes,” the telemarketer explains the great-sounding offer. But he may ask you to read off the numbers at the bottom of
one of your checks. He may tell you the information will help ensure that you qualify for the offer or that it will allow him to debit
your checking account to pay for the mailing of your free gift.

Once he acquires the checking account number, it is put on a “demand draft,” which is processed much like a check but does not
require your signature. The draft includes your name, account number and an amount.

When your bank receives the draft, it takes the amount on the form from your checking account to pay the scammer’s bank. Until
you receive your bank statement, you may not know that your bank has paid the draft with your money.

As you can see, it’s difficult to detect this debit scam before you lose money.

So remember, no legitimate company will ask for your account number unless you expressly have agreed to this payment method.
If you authorize payment, the company must get your written authorization, tape record your authorization or send you a written
confirmation before debiting your account.

If you feel you have been wronged, you may call toll-free lines at Seniors Against Investment Fraud at (888) 724-3982, the
Attorney General’s Consumer Hotline at (800) 368-8808 or the Federal Trade Commission at (877) FTC-HELP (382-4357).

--James Terango, Director of Field Services