Protecting Clients from Financial Scams: The Rise of Government Impersonation Fraud

Protecting Clients from Financial Scams: The Rise of Government Impersonation Fraud

Financial scams targeting older adults are on the rise, and as trusted advisors, law firms are uniquely positioned to help clients recognize and avoid these schemes. In our ongoing blog series, we spotlight the most pervasive scams targeting older adults and discuss practical steps law firms can take to educate and protect their clients.

In her latest post, Robin Benchoff, Director of Payments Risk & Controls at SurePoint, focuses on government impersonation scams, a growing threat. These scams involve fraudsters posing as officials from agencies like Social Security, Medicare, or the IRS to deceive clients into providing sensitive information or making fraudulent payments.

Understanding Government Impersonation Scams

A government impersonation scam occurs when a fraudster contacts an individual while pretending to represent a legitimate government agency. These scammers use tactics such as:

• Spoofing caller ID to make it appear that the call is coming from a government office.
• Creating a sense of urgency and claiming that the individual is in legal trouble, has unpaid taxes, or has their Social Security benefits at risk.
• Requesting payment through untraceable methods, such as wire transfers, cryptocurrency, prepaid debit cards, etc.

Older adults, who often rely on Social Security benefits and may be less familiar with digital fraud tactics, are particularly susceptible to these schemes.

The Growing Threat: Alarming New Data

Recent reports highlight the rapid increase in government impersonation scams. According to data from the Federal Trade Commission (FTC), these scams have surged 90% from 2023 to 2024, causing significant financial losses among older adults.

On December 12, 2024, the FBI issued a public warning about the rise in advanced tech support frauds targeting seniors in South Carolina. Data from the FBI’s Internet Crime Complaint Center (IC3) reveals that individuals aged 60 and older reported losses exceeding $9 million from tech support scams between January and November 2024. These multi-layered schemes often involve fraudsters coercing seniors into liquidating their asses to resolve false financial issues.

How Law Firms Can Protect Their Clients

Attorneys are essential in educating and protecting clients against financial scams. Law firms can help their clients recognize fraudulent tactics and take preventative measures by proactively addressing these risks. Here are steps attorneys can recommend:

Educate Clients on Red Flags

• Government agencies never request payments via wire transfers, cryptocurrency, gift cards, or cash.
• Officials will never threaten immediate arrest over the phone.
• Clients should avoid providing personal or financial information in response to unsolicited calls or emails.

Verify Before Taking Action

• Clients receiving a suspicious call or email should independently verify the request by calling the agency directly using an official phone number from the agency’s website.
• Remind clients that caller ID can be spoofed and should not be trusted as proof of identity.

Encourage Reporting

• Victims of scams should report the incident to the FTC, FBI’s IC3, or their state attorney general.
• Many seniors may feel embarrassed about being deceived. Reassure clients that reporting these scams helps prevent future crimes.

A Proactive Approach to Client Protection

As financial scams evolve, law firms must remain vigilant in educating clients and offering guidance on fraud prevention. Older adults are disproportionately targeted, and the consequences of these scams can be financially and emotionally devastating. By staying informed, providing resources, and advocating for strong fraud prevention measures, law firms can serve as a critical line of defense in protecting their clients.

SurePoint’s commitment to the security and confidentiality of client data is evident in our SOC 2 Type II compliance and the development of solutions that adhere to the highest security standards. SurePoint Payment Services provides law firms with an integrated payment solution, ensuring compliance with ABA and IOLTA standards and providing your firm's clients with a seamless and safe payment experience. Connect with an expert today to learn more.