A Phone Call Could Wipe Out Your Investment Gains

Doc's note: It's a scammers favorite time of year – and they never take a holiday. Last year, the Federal Trade Commission reported that consumers lost more than $10 billion to fraud. And it's only going to get worse...

In today's issue (adapted from a recent Chaikin PowerFeed issue), Marc Chaikin details the latest scams that you need to look out for...

Amalia Speedone wished she never responded to that text message from "Bank of America"...

Just a few days earlier, the bank had contacted her about a suspicious charge on her card. She successfully stopped the fraud.

Now, she figured Bank of America was texting her about a new threat.

"They said it's two charges... a total of $3,400... so I panicked," she said earlier this year in an interview with Baltimore's WMAR-2 News.

The text told her to reply "No" if she hadn't authorized the payment. Then it instructed her to reply "1" to speak to a representative.

Someone called her immediately. And everything seemed legitimate.

As Speedone explained...

They had my new address, they had my name, but they also were able to confirm the last four digits of my bank number.

The person on the phone said Speedone would need to use Zelle to solve the problem.

You might be familiar with Zelle. It's a digital-payment service that launched in the U.S. in 2017.

Zelle connects directly to your bank account. It allows you to send money almost instantly.

Speedone followed the instructions from the person on the phone. She set up a transfer for the amount she believed had been taken from her account. As the person on the phone said, this was part of the claims process.

You can probably guess that Speedone was not talking to anyone from Bank of America...

As she said in her interview...

As soon as I accepted it, they said, "OK, look back at your balance and tell me what you see." And I look back at my balance, and the $3,452 was gone. And I said, "What the ****," and the phone disconnected.

Speedone immediately contacted an actual customer-service representative at Bank of America. But they couldn't do anything to help her.

That's because she used Zelle...

Services like Zelle can send money instantly. But in order to do that, they sacrifice the ability to reverse a transaction. Users are warned to only use the service with family, friends, or other trusted parties.

Zelle is one of dozens of new real-time payment services. And it's far from the only one used by scammers...

In 2020, Lisa Williams set up an account with Cash App – another popular digital-payment service. It's owned by Block (SQ).

Williams is a director at a nonprofit in Detroit. She used a Cash App account to collect donations to buy groceries for local families that were struggling during the pandemic.

When she had trouble accessing the money, she used Google to look up the phone number for Cash App's customer service.

The number Williams found seemed legitimate. But once again, it turned out to be a scammer posing as a company representative.

Over the phone, the scammer got enough info from Williams to drain her Cash App account. Thankfully, it was only $335. Her nonprofit was able to cover the loss in order to buy food for 100 people.

It's tough to get solid data about this type of fraud. But the numbers we have show that it's a big problem...

Zelle customers disputed more than $206 million worth of transactions as scams in 2023. The company says that less than 0.1% of all transactions on its platform are fraudulent.

A recent survey by J.D. Power found that about 3% of Zelle users said they had lost money to a scam. That number was lower than similar services like Cash App, Venmo, and PayPal.

The FBI publishes an annual update on cybercrime. Its latest numbers show a record number of complaints by Americans – more than 880,000 in 2023. That's up 10% versus 2022.

Those complaints included more than $12.5 billion in losses – a 22% increase from the year before.

The FBI numbers include all kinds of Internet-based fraud – not just the kind based on real-time payments. In fact, the biggest losses are cryptocurrency-related investment fraud. The FBI says that losses from crypto fraud rose to more than $3.9 billion last year. That's up 53% versus 2022.

In short, scams are becoming more common – and easier to pull off – as money evolves. If you haven't been the target of a scam (whether a successful or unsuccessful one), you no doubt know somebody who has.

As we head into the holiday season, I urge you to stay vigilant...

A simple phone call or text like the one Amalia Speedone received could end up wiping out your accounts.

So take the extra time to make sure you're talking to someone legitimate. The bank is never in a rush like scammers are. And remember, you can always call the bank back using an official number.

You worked hard to make money in the markets... Don't let scammers take those gains away.

Good investing,

Marc Chaikin

Editor's note: A rare market signal with a 93% historical success rate just triggered. Marc calls it the "5X Signal." And he believes it will shape the market in 2025. Marc revealed the full story (and two free recommendations) on Tuesday. If you missed it, click here to see it now.