This is a case of a wealth advisor doing the right thing for a client by delivering bad news.

In a story reported by Joh Kador for Wealth Management, a wealth advisor with Regent Atlantic, Melissa Weisz, received an oddly-specific request from a newly-divorced client for a cash transfer from her managed account to another person’s personal checking account. Following company policy to confirm large cash transactions with the client verbally, Weisz reached out to ask the woman why she so urgently needed such a large amount of cash and in such a peculiarly specific amount. After significant pushback, the client disclosed that she was in a romantic relationship with a man she knew only through emails and texts. Can you guess the rest?

How can you tell a romantic scam from love?

Money. Typically, vulnerable victims, blinded by the promise of companionship and love, lose common sense and (this is important) resent any interference from “outsiders” who threaten the narrative. In these instances, what is an adviser’s responsibility – particularly when a client threatens to take their money elsewhere to a more cooperative agent?

One strategy is to do nothing and permit the client to be further exploited. A second strategy is to interfere and risk losing the client.

Embarrassment fuels the scam

Shame, humiliation, and secrecy are features of confidence scams, whether it be credit card, bank account, or other fraudulent actions.

Do romance scams follow a predictable pattern?

Yes, frequently. Scammers are well organized and often convincing. They work from internet cafes and are difficult, if not impossible to trace. They troll for victims online, often targeting recently bereaved widows, widowers, or divorcees who have posted on dating websites or social media. They craft fake profiles targeting very specific targets – striking up email/social media conversations to strike up conversations and build connections.

They are very patient. In the instance of Weisz’s client, the scammer met her on a dating site and led her along for more than six months before asking for money. His photo was “cute.” He said he was a 67-year-old transportation industry consultant working for a Fortune 500 company in Chicago. He said his wife of 30 years had passed away, and he was looking to buy a house in the city where Gloria lived.

When they moved off the site to cell phone texts and email,  the relationship progressed. The scammer sent flowers and began to ask first for small favors—a systematic way scammers test the victim’s trust. About eight months into the relationship, Thomas asked Gloria for a loan of $2,400. He was in Europe, and his bank card wasn’t working. Moreover, it would be challenging to communicate with him. Weisz’s client got a cashier’s check for $2,400 from the bank and convincingly justified why she needed to mail it to a third person – not directly to the scammer. She fully expected to be repaid. But then there was another loan request – also urgent. And then the scammer offered to meet her in person, but first, he needed nearly $50,000 to reclaim some equipment. That’s when Weisz was brought in.

How bad are romance scams?

Very costly. In 2019, romance scammers secured more than $201 million from unsuspecting victims — up nearly 40% since 2018—according to the Federal Trade Commission’s Consumer Sentinel Network. The median reported loss per victim from romance scams is $2,600; for people over 70 years old, that number exceeded $10,000. More than 25,000 consumers filed a report with the FTC about romance scams in 2019. But these numbers undercount the true extent of the fraud: Estimates are that only 15% of victims ever file reports. And during COVID, the number likely is even higher.

How can an advisor save a client?

It’s risky. After all, it is the client’s money. Weisz persisted. Finally, her client swore her to secrecy and told her she was in love with a man she met on a dating site. The man, a well-off international transportation industry consultant, needed $47,772 to release some equipment from customs. And…she resented her adviser’s unwillingness to do as she asked and risk losing a romantic future. Weisz asked the client to meet her at the transferring bank, where even the bank officer expressed skepticism about the transaction. Weisz even got the scammer on the phone. He had an answer for everything but wouldn’t provide any identification. When asked to provide a scan of his passport to authorize the transaction, he refused. At that point, the client agreed to call the police, who informed her that the Fortune 500 company the man claimed to work for had no record of any such employee.

Hurt and disappointed, the client acknowledged that her adviser had saved her, although she initially felt Weisz was ruining what seemed to be a real relationship. The client did lose approximately $10,000 to the scammer. But she was protected from losing even more.

How Advisors Can Protect Clients from Romance Scams

In reporting this story, Kador advises advisers to act as front-line defenders of their clients. It can be possible to prevent harm by paying attention to irregular cash transactions and being willing to:

• Question any urgency about financial decisions that clients may express.
• Encourage clients to get to know the person, not the profile.
• Encourage clients to set up video chats with new love interests early on.
• Watch for clients who overshare on social media.
• Ask clients if they researched relationships.
• Warn clients never to send money to anyone they have communicated only with online.
• Question any major life event created or changed because of an online relationship.
• Encourage clients to subject profile photos to a reverse online image search on Google. If the profile photo is associated with different names, the profile is undoubtedly fake.
• Ask clients to file reports with the Federal Trade Commission, FBI, local police, and the website if victimized.

Where was compliance?

In this instance, Weisz acted as the CCO for her client. For that, she deserves kudos. As do you, in protecting your firm and its clients from bad actors. And that’s where Patrina comes in, providing compliance professionals like you and your team with reliable and cost-effective cloud-based compliance solutions. For more than 25 years, Patrina has been helping compliance professionals like you stay on the “straight and narrow” efficiently and cost-effectively. So, let’s talk. Call 212-233-1155 to ask about Patrina’s cost-effective, designated third-party services, comprehensive, 8-module compliance solution, compliant data capture, file storage, and records archiving specifically designed for the financial services community. Be smart. Be covered. Let’s talk.