Participants and plan sponsors need to be on guard for the scams

A law firm partner sends an email to another partner that he’s in trouble, and that the other partner should go to Walgreens and buy gift cards and send over the information for the gift card number and pin. The people at Walgreens told him it was a scam and like many law firm partners, he was too arrogant to think he was being scammed. The best part is he was scammed and wanted the law firm to reimburse him for the $750.

While the Brooklyn in me, won’t allow me to fall for that or other Venmo/Zelle scams, not everyone is that street-smart. Plan participants and sponsors can be scammed and with 401(k) plans having transactions being done online, plan providers, as well as plan sponsors, will have to make sure that distributions are for the right people, at the right address. When we have seen lawsuits for cyber scams in 401(k) plans, it usually happens when the plan provider doesn’t see the scam coming, such as a participant claiming a new address and a new checking account for the ACH. Continued vigilance and security measures will curtail cyber thefts of plan distributions.

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