One old dirty trick is still with us. However, other financial matters are changing quickly. Check out this week’s financial wrap.
Tax and Social Security Scammers Add to Their Bag of Tricks
The phone rings. Caller ID shows a Washington, D.C. number. You answer and an official-sounding recording says you are in trouble with the Internal Revenue Service (IRS). Or, your social security number has been used in criminal activity. You need to respond quickly.
You are on your way to losing money to a scam artist if you obey the instructions.
“Consumers reported losing more than $3.3 billion to fraud in 2020, up from $1.8 billion in 2019,” states a report from the Federal Trade Commission. “Nearly $1.2 billion of losses reported last year were due to imposter scams, while online shopping accounted for about $246 million in reported losses from consumers.”
Expanding Fraud Opportunities
The IRS and social security scams have been around for years. But now the same techniques are being used to take advantage of fraud related to COVID-19.
The crimes include stealing unemployment benefits, stimulus checks, fake COVID treatments, and bogus charities.
Formula for Fraud
The tried and true template for all these frauds is the IRS phone fraud. Although it can and has been carried out with texts and emails.
With IRS phone fraud, you get a call like the one detailed above. Fear is a big part of the scheme’s success.
The call seems official because it comes from a Washington, D. C. number. However, scammers spoof calls. That is where false information is used to make the call appear to come from a legitimate source. Some phone providers even offer spoofing services that work like prepaid calling cards.
The Call Is Not From the Government
“Government agencies like the Internal Revenue Service (IRS) or the Social Security Administration (SSA) won’t call, text, or email you out of the blue to demand payment right away,” writes FTC Attorney Emily Wu in an agency blog post.
The IRS Confirms Wu’s Assertion
“The IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information,” the service says.
To help consumers, the IRS has posted a list of current scams.
To report a scam call, email or text, contact the FTC.
Here is how the FTC suggests you handle a government imposter call.
Here’s Why Your Next Car (New or Used) Will Cost More
You may have heard semiconductor chips are in short supply. The chip drought will short circuit any ideas you had about getting a bargain on your next car.
Semiconductors make up around forty percent of the cost of a new car, according to consulting firm Deloitte. Without them, modern automobiles can not function properly. Auto manufacturers around the world have slowed production as a result of the shortage. That means fewer new cars are coming to market.
Check out Saving Advice’s look into the semiconductor shortage and the impact it will have on your wallet. Our special cover will be available in Sunday’s edition.
IPOs Continue To Boom, SPACs Bust As Opportunity Opens for Small Investors
The surge in IPOs that began last year has charged into 2021 and is rising. Meanwhile, small investors are able to join the stampede.
Companies raised $174 billion on 494 offerings in 2020, according to FactSet, a financial data and software company.
“In aggregate, IPOs raised $174 billion in 2020, a 150% increase over 2019,” according to FactSet.
The number of companies raising over $1 billion set a record at 28. DoorDash and Airbnb both exceeding $3 billion.
IPO Market Off to a Strong Start in 2021
This year is shaping up as an IPO tsunami. Through mid-March, 302 IPOs have raised 102.3 billion, according to Dealogic.
SPACs Go Splat
The only sour note is the recent downturn in Special Purpose Acquisition Companies (SPAC).
SPACs are often called “blank check” companies. They are shell companies. These companies raise money through a stock offering to invest in other companies.
SPACs joined in the IPO surge last year. They now have an estimated $1 trillion in buying power, according to Business Insider. However, average SPAC returns are minus 34 percent between January 2019 and June 2020. Many are trading below their IPO price. Consequently, the market seems to be cooling.
IPOs have long been reserved for wealthy and institutional investors. However, SoFi is trying to change that. The investment company is offering IPOs to clients with $3,000 or more in their account. Robinhood is planning to do something similar.
Vaccine Passports Are Coming
Soon, you may be asked to show your passport when you attend public events. No, not that passport. The one showing you have been vaccinated against COVID-19.
The Biden Administration is considering “vaccine passports”. These credentials would be displayed on free smartphone apps or printed.
The White House, various tech companies, local governments, and universities in the United States are trying to develop a credentials plan.
Internationally, the World Health Organization (WHO) is exploring vaccination passport ideas.
Several airlines are testing a digital travel pass developed by the International Air Transportation Association.
The European Commission is contemplating a “digital green certificate”. The voucher would be for travel within the European Union. It would be proof of vaccination, a negative COVID test, or a previous infection.
Everybody Has a Plan
Countries and organizations are researching or have announced plans to implement vaccination passports.
Israel is developing a “green pass” to travel. In Demark, a “Coronapas” will be required to enter hair salons, movie theaters, and restaurants, according to the BBC. Meanwhile, Sweden, Estonia, and Greece are also considering issuing vaccine passports.
The potential for chaos is great.
The Federal Health IT Coordinating Council cited the need for one coordinated plan to avoid confusion.
The council stressed that “A chaotic and ineffective vaccine credential approach could hamper our pandemic response,” The Washington Post reported.
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