Traci Brown: Welcome to the latest edition of Fraud Busting. I am super excited. I am Traci Brown, the fraud busting body language expert. Today we are in for such a treat. I have Top Economist Mary Kelly, Ph.D. with us today. She’s on top of the new economic landscape in light of this COVID-19 virus and will tell us what we should and should’t be doing in these turbulent times.
She’s got an amazing bio. I’m going to have to read it because it is so amazingly awesome that I don’t want to screw it up. Mary Kelly improves profit and growth in businesses. She is an economist, corporate strategist, leadership development expert. Mary translates economic data that leaders can use to make the right decisions for their business. She’s cited all the time, I mean like everywhere: Money Magazine, Forbes, Success, Wall Street Journal, over 500 TV and radio stations. Here’s what I like about Mary so much is that she translates theory into action. That’s what she’s going to do for us here today. Here’s the cool stuff: She was one of the first women to graduate from the Naval Academy. She served 21 years as a commissioned officer on active duty in the Navy. Some of her favorite jobs included being an intelligence officer – she’s very top secret – a counterterrorism officer, chief of police, HR director, running pay and personnel organizations, and being part of the team in charge of Pearl Harbor – like how awesome is that. She’s got a PhD, but you’ve got two PhDs, don’t you, Mary? Are you underselling yourself here?
Mary Kelly: Kind of, sort of, but nobody really cares about the political science one.
Traci Brown: I think it’s cool. I’m going to go with two. Okay. Let’s see. Oh, she’s a professor at the Naval Academy and at the Air Force Academy. Let’s see, she grew up in a small business family, started working trade shows when she was 10. I mean, there’s a lot to learn just from that. Let’s see, she’s the author of 13 business leadership books, a lot of them. We will talk about all of those because she’s got a new one out. I’m going to let her talk about that in a little bit. Mary, I am so thrilled that you’re with us. Welcome!
Mary Kelly: Hey! I’m so excited to be here today, especially during this time of great uncertainty and for some people this is the great virus crisis.
Traci Brown: Isn’t it though? It is crazy. Before we jump into the hard stuff, because I know that you’re going to have some cutting edge info for us, like really things we all need to know and put into action, what is one thing, I mean we’ve talked a lot about things that everybody knows about you, or at least the cool people, what is one thing people don’t know about you that might be a little bit surprising?
Mary Kelly: I wanted to be a small town veterinarian. When I was a kid, I read all the James Herriot books, you know, All Creatures Great and Small, all that, and being home now with this virus crisis, because we all have to turn off the news at some point and get a sense of reality, so my favorite channel right now is the Vet Channel. It’s like world geography or one of those nature channels. Now I feel real comfortable delivering a cow’s baby. I don’t know if I’m birthing a calf.
Traci Brown: (Laughing). Well, I hope you’re not called to do that soon, but you know in what’s going on right now, you could be. Stay ready. Keep your skills sharp. That’s what I would probably suggest.
Mary Kelly: We don’t know what kind of jobs we’re going to be called on to do in the future, and right now this is where we all have to be sharpening our saw. I just chose a totally different path than what a lot of us do. There you have it.
Traci Brown: I love it. You do live in the country, so be ready. Be on call. When someone dials 911, it might right at your house. Alright, let’s get into it. We’re going to talk about fraud. Really why I wanted to have you on the show is that you have this really unique perspective. You’re always the one I call when I need some truth in trying to understand what’s going on in the world. Let’s talk a little bit about what you’re finding with fraud out there, like the macro impact, and then let’s dial it down into what people need to be doing in light of everything that’s going on now, because it’s different than two weeks ago.
Mary Kelly: It is different. A couple of things. First, anytime there is a time of scarcity where people are feeling afraid and vulnerable, they are looking for a solution, which means they are going online and they are finding a solution that they think is going to solve their problem. Oh my goodness, I suddenly need disinfecting wipes, only to find out it’s newspaper that’s been wetted down. Right now is a time where the bad people on the planet are taking advantage of fairly decent people who are looking for solutions. As a fraud expert, it is more important right now for you than at any other time because you have to be warning people about all the scams, the monsters out there who are preying not only on older people and, hi, we’re calling because there’s a virus in your computer, give us control of your computer, and all of that, but we’ve really got to be . . . In this time of crisis, you’d think the people would pull together, no. What happens is it creates a scarcity mentality and if you are a person who preys on other people, who perpetuates fraud, and you are a criminal, now is when you are kicking it into high gear because people are scared.
Traci Brown: They are. What do you think about . . . Where’s the line between someone who was a good person or maybe is a good person and then steps over? What’s the tipping point there? Have you seen anything on that?
Mary Kelly: The tipping points come at all levels. As we know, criminal behavior does not get limited to people in masks who are breaking into your house, although that will increase as people get more and more desperate. When we’re looking at, again, a 3.6% or 3.7% rate unemployment rate and they’re saying that it could pop up to 30%, people are going to get scared, and this is going to cause normal law-abiding people to do things that they wouldn’t normally do. It’s little stuff like, let’s say a package gets delivered to your house and it’s not intended for you, but it says there’s toilet paper inside. You kind of keep the package.
Traci Brown: Oh, those big boxes that don’t weigh much. That’s what you’re telling us.
Mary Kelly: That’s it. People who would normally be law-abiding people tend to think certain behaviors are okay during a time of crisis. People like us need to just remind people that when you come out of this, you also want to have your dignity and your self-respect, and you still want your neighbors to like you, and you don’t want to be that person that the neighborhood now accuses of stealing their toilet paper.
Traci Brown: Right. There’s karma that goes with it. What else are you seeing? We got good people just stepping over the line just a little bit. That will happen in your neighborhood. How is this for business owners? What are they going to need to shore up, if they haven’t already? Tell me a little bit about that. We could talk about that. We could talk about the impact to business and how that ends up affecting all of us. What are you finding out there?
Mary Kelly: I want to go big picture for a couple seconds. Then I want to bring it on down to what our individual business owners and individuals and our friends can do to protect their own business, their own budget, their own homes, keep their finances secure, look out for their retirement, all of that. First off, with this pandemic, it is hitting the global supply chain as well as . . . It really doesn’t understand boundaries, this pandemic, this virus. But it, kind of, does. So as something to handle, we know that we have to try to contain it within boundaries, but the reality is a virus does not care if you are breathing, standing on the border between Colorado and Kansas. It does not care. We know that right now, in my mind, the economic implications of this is going to kill, and I do mean kill, more people tan the actual virus. Right now in the United States we’re looking at, let’s just say at the time of this taping, around 600 people who have actually died. Well, how many more people are dying because they aren’t getting adequate food because they don’t have the income, because their businesses are failing? We’re going to see an increase in suicide. We’re going to see the economic impacts become even more severe and people get more desperate and that macroeconomic level is going to increase. Businesses don’t know how to proceed. Again, this is uncharted territory for everybody. We’ve never been in a situation where: Will the federal government bail us out if we’re not one of these categories that they used to bail out? Let’s say in the early 1980s with Chevrolet or the banks after the scandal in Texas in the late 1980s.
Traci Brown: The Savings and Loan scandal. Yea.
Mary Kelly: The federal government did bail out a lot of financial institutions after the last recession of 2007 through 2009. Companies don’t really realize or have an idea of: Is the government going to help us? Should we count on the government? What’s the next step? There’s a lot of uncertainty. Whenever there’s uncertainty, there’s unproductivity. Whenever there’s that, everything that people normally do well, which is doing their business, tends to stop. As business owners, we have to do a couple things.
1) We have to know what it is the government might be able to do for us, but what we can do for ourselves as well.
2) Approach your financial institution now. The Federal Reserve just cut rates to 0%. Now, that doesn’t mean you’re going to get a loan for 0%. What that means is that there is more available, loanable funds that financial institutions, your bank, your credit unions can loan out to you.
3) If you don’t have a great relationship with your bank, you probably have some kind of banker on your side, somebody who’s your financial advisor, maybe you’re with one of the big financial institutions: Morgan Stanley, JP Morgan, whoever, and you can go to them and say, “Hey, I would like to get a line of credit now.” This is a key thing. We all know, for business people, it is easy to get a loan when you don’t need the loan.
Traci Brown: Isn’t it though.
Mary Kelly: We all know that. It’s one of those things where if you’re wealthy, it’s really easy to get a loan. When you’re not so wealthy, you don’t know. Now maybe is the time for small businesses to go to their financial institutions and get a loan for a couple things. Here’s how I would use that loan. First, in my business, I’m making sure my people get paid. That’s critical for me to make sure my business continues and keeping your people as long as you can, as long as they are performing. If they’re just sitting at home, not doing anything for you, that’s not necessarily something to be paid for. However, if they are home because they’re on sick leave and you promised to pay sick leave, then you need to be paying sick leave. But keeping people in the certainty category during the crisis does a few things.
1) First, it gives people the disposable income they need to continue to buy the things they need. Disposable income is the money you get to keep after taxes.
2) It keeps your business going.
3) It increases your employee loyalty as we get through those crises.
Traci Brown: Exactly. Ooh, I love that. I love that. Relationships first with the bank. Don’t wait. The government ain’t gonna come knocking at your door to give you money. They’re going to use a lot of times channels that are already there, but you need to make sure that you have the relationship going so you move to first in line when it comes time for any bailout money or programs or whatever the case may be. Let’s see, we know that frauds happen right in front of us, and we know that we can mitigate that by certainty. Let’s see, tell me, what are some of the things that we need to look for specifically about places where money can disappear out of our business.
Mary Kelly: Such a good question. One of the things I’m advising all of my clients to do right now, and people can do this too, so we’re talking about the overarching business as well as individuals. First, if you haven’t in a while, because frankly we’ve been able to get by because the economy’s been doing so well for so long, 12 years of unprecedented growth. There are certain things that we bought or subscribe to, and the subscription is key. What have you subscribed to in the last 12 years that you don’t even realize you subscribe to? Number one. Right.
Traci Brown: (Laughing).
Mary Kelly: We’ve all done it. 1) Look at all of your business expenses, and that includes all of your subscriptions. Look at what I actually need to spend money on, the must-haves, and then you look at everything else and that’s a nice-to-have. It is not a necessity. It is a luxury item. Now, in your business as well as your home life, it is a time to probably cut those luxury items, not because you’re feeling the pinch right now, but because we kind of do have to hunker in for the long haul. One of the easiest ways is to look at all of your monthly subscriptions, go to your credit cards, go to your bank statements, and if you don’t recognize what those things are and they don’t immediately add value to your business, you may want to think about transitioning to something else or, one of my personal favorites, call up that business and just say, “Hey” and this could be your cable, this could be whatever subscription you have. “Hey, I noticed I’m paying this rate for this. Now is not a really good time for me to be paying this. I’m thinking about cancelling. What can you do for me?”
Traci Brown: Oh, there you go. Try to talk them down.
Mary Kelly: Most businesses, because they want to keep you as a client and they want to be a good person and a good business, and we all are in it together, they will work with you in order to either defer payment or perhaps continue the service you’re getting at a lower rate.
2) The same is true with your credit cards. Call up your credit card company and just be nice. Because again, the person answering the phone may be working from home too, their kids are trying to do school, and these are people who can help you. You call them and you can say, and again, your business, an individual, anybody can do this with a credit card, “Hi. My name is ___, and I noticed my APR, my annual percentage rate is maybe at 18%. Right now, I think I’m going to be using my credit cards more. Can you help me adjust that APR?” Now, they’re going to say either “Yes” or “No.” If they say “Yes”, fantastic, yay you. You just saved yourself some money. If they say “No”, be super nice and ask to talk to a supervisor. “Is there someone else there who may be able to look at my account and help me with this?” Be nice.
Traci Brown: I like that line. Say that again.
Mary Kelly: Oh, sure. “Is there someone else there who can help me, look at my account, and possibly help me with a lower APR?” They’re again either going to say “Yes” or they’re going to say “No.” If you get a “Yes”, yay you. You just again saved yourself some money. If they say, “No. There’s nobody else here right now.” Say, “Thank you so much. Have a good day.” Be super nice. They have a tough job so be nice to these people. Wait five minutes and call back. You’re going to get somebody else.
Traci Brown: I know. Right.
Mary Kelly: Those are two easy things that people can do right now in order to save themselves some money and position themselves for the future. Again, back to the budget for just a second. If you are a home or a small business and you’re kind of like, you know what, I know I was supposed to do those budget things before, but I kind of never did, Traci, as you know, I have these for free on my website. Anybody can download.
Traci Brown: Oh yea. Give us. Tell us a little bit about that and where people can get your budget tools. You have a lot of tools that are really cool. Tell us about that.
Mary Kelly: Thanks for that. I have a couple budget tools. Right now, they are on my website which is ProductiveLeaders.com. ProductiveLeaders.com because who wants an unproductive leader?
Traci Brown: Exactly.
Mary Kelly: Do forward slash free. ProductiveLeaders.com/free and my free resources come up. It’s everything from how to just craft your expense report and it’s a downloadable Excel spreadsheet. There’s no sign in. There’s no anything. You download it to your computer. It’s all you. There’s one for home. There’s one for solo entrepreneurs. There’s one for single people. You fill in the blanks. It does the math for you. It’s a great time to just get a good snapshot of where you are right now. Again, some of those things you could be able to cut.
Traci Brown: Yea. It’s all about creating certainty. You’re saving yourself money and creating a bubble around you or around you a certainty that’s going to lead to different decisions and it’s going to lead to different vibes with your employees and even your family, the people that depend on you. Keep yourself safe that way by creating the energy that you want to have and protect yourself that way.
Mary Kelly: Budgets need to be a family affair. You know, you and I know both grew up in Texas.
Traci Brown: Um-hum.
Mary Kelly: In Texas, we do have a large Hispanic population. My Money Smart book, that’s the best-selling personal finance book I wrote a couple of years ago, when people go to the store on ProductiveLeaders.com, that version is in Spanish and it is always free.
Traci Brown: Oh, wow.
Mary Kelly: I started doing that because, again, my friends in the Hispanic community said there’s a higher level of mistrust, and this is certainly something I think we’re going to see moving forward is people are going to be a little bit more suspicious of advice they get or tools they can use, so the idea behind that was making it just free forever to the Hispanic community in an effort to help them get their finances in order as well.
Traci Brown: You’ve used this with cadets at the Air Force Academy, I think you’ve told me, just help people button themselves up so you actually know what’s going on because uncertainty is really what creates the risk in really what we’re going through now. There’s so much uncertainty. Give yourself as much as you can, starting at home.
Mary Kelly: That’s right, and we know that action trumps fear. You can take action and plan for your own budget. You say, okay, I’ve got a level of control over all the crazy that is going on right now. Anytime people say, I feel overwhelmed, you know my first thing is, okay, let’s make a list.
Traci Brown: Um-hum.
Mary Kelly: You have to make a list of action steps. Action steps are things you can cross off that list. Even if it starts with something small, and you know every single day of my life I use my productivity sheet of things to do, followup. This is my way of – and it’s again free on the website – this is my way of keeping control over those things we can control and not worrying about some of the other things. Part of that is, if you think you’re going to make a purchase because it’s going to solve a problem, oh, this is going to be a mask or a ventilator that’s going to help you, just in case, again, you’re the queen of fraud, please, put it down on the list and then let it sit for a while. If you see an ad on social media and it seems too good to be true, it probably is. There are people who are buying things online because they’re desperate and then these things never arrive. Please don’t fall into those traps. Please do not allow fear to trump your action. Action needs to trump fear.
Traci Brown: Ooh, I love that. I love that. We’re moving people into action. We know the risks of fraud. I know you were the chief of police in Hawaii, in Pearl Harbor. She’s got these stories that are amazing. I want to get maybe one or two right now because what we want to do is leave people with something they can look for with their employees. We don’t want to be too suspicious, but we want to keep our eyes open. Fraud is born of lies. How did you used to spot lies when you were dealing with some of the things you dealt with? Did you have any fraud cases that came in front of you? Tell me a little bit about chief of police, like top secret stuff. How can we use that information now for ourselves?
Mary Kelly: Right. The smarter you are, the more clever you are, generally in terms of trying to rip other people off, that’s one of the things I found. First off, a lot of criminal are just going to throw stuff out there to see, hey, is anybody actually going to buy this? Is anybody going to buy into it and be fooled by me? The answer is there’s a lot of it out there and 98% of the people or whatever will say, “Okay, that’s clearly just not true. I’m not going to buy into that.” But, again, in times of desperation, that 98% or whatever falls, so people are more susceptible to lies because they want to believe other people have their solution. The smarter people, that white collar crime, it’s very different from the person who takes a screen off a window and breaks into your house. That doesn’t take a whole lot of brainpower. All they do is they watch your house and see when you’re not there. They hope that you don’t have a big Doberman, and then they bust into your house. That doesn’t take a whole lot of brainpower. But the people who are cleverly trying to rip you off and manipulate you in a way that you are susceptible, they are going to be looking at your social media. What are you fears? What are your pain points? What’s going on?
One of the funnier aspects I had, and this started way before there was social media online and a presence, but it was people who were masquerading as soldiers and sailors in the Persian Gulf and “Oh, I need this help. I desperately need this money.” Now, that has kind of gone mainstream on social media, but back in the day people would make phone calls and say, “Hey, Mrs. So and So, I know you’ve got a sailor who’s also serving in the military, so you might be sympathetic to my situation. This is what I need.” They would call up and they get people to give them money.
Traci Brown: Wow.
Mary Kelly: It’s horrifying. Again, if people are calling you for money, put the phone down. Put the phone down and hang up. Do not fall for this. Anybody who is legitimate is probably not going to call you for money. If it’s not an organization you know, such as your own church, and even so, verify that with everybody. Be really careful so that you don’t fall prey to something that you, very well intentioned, are trying to help other people, and you just get suckered into a scam.
Traci Brown: Wow. Okay. Okay. [Careful with the background there. Todd was going to go right over.] Any little tip offs? Clearly, people asking for money, people using a form of prestige, which I think at this point in society I think military or even retired military is, any other little tells that you picked up along the way in some of your interrogations that people can just watch for within their circle, within their sphere? Maybe it’s employees, vendors, customers, those kinds of things, one last little tip.
Mary Kelly: You’re the queen, of course, of the body language, and you know that when people shift their eyes left and right, all those other things that you teach all the time.
Traci Brown: Yea, a shift in behavior, like a shift in general behavior.
Mary Kelly: A shift in general behavior or a change in the pattern of behavior. Somebody is suddenly showing up late all the time, drastically unfocused, that’s a sign of perhaps some kind of dependency, and dependency is going to drive desperation, and we all know that. Watch for signs with your people. I’m talking people mostly around you to make sure that those people feel as though you care about them, as you do, but also look for signs of that desperation that’s morphed into something else.
I will tell you that in one of my cases I was walking through work and I saw one of my young people, and they seemed a little bit off. What we do in the military is we, “Chief,” and that’s your senior enlisted person, “go find out what is going on with that person.” I said, “It looks to me like there’s a drug issue” just because the eyes are glazed over. They were moving a little bit slower. They weren’t responsive. They seemed unfocused. It may not be what you think. Again, from a chief of police background, sometimes we think, oh, it must be drugs. Well, it kind of was, but not in a way you might think. This young person had decided that they needed to get control of their life and they were working out a lot, but they were also triplicating the amount of weight loss medication they were taking.
Traci Brown: Oh.
Mary Kelly: It was creating hallucinations. That could have morphed into all kinds of other things. There were some other behaviors that wound up happening, and we had to step in. But normal people during desperate times, sometimes resort to desperate things. This is where we, as leaders, really have to step up. Sometimes it is not intended to be criminal, but we have to be alert to any small changes in people around us so that we can be there to be supportive.
Traci Brown: I love that. I love that. That’s going to help everyone in the end. It really is. Mary, is there anything I haven’t asked you that is one final parting comment that just going to blow people away?
Mary Kelly: The economy is made up of our GDP which is our consumer expenditures, plus our business expenditures, plus government expenditures, plus our exports minus our imports. In a time of crisis, we’re all holed up in our house, our consumer expenditures have gone down. Our business investment has gone down. But our government expenditures are going up. Even as we speak, they’re trying to discuss how this is going to work. Our exports are going down. Our imports are going down, which means our GDP, our gross domestic product for the year is going down. If you are in a position to spend more money right now, do that. Go out and spend some money. Keep the economy humming. Don’t be afraid if you know you’ve got continued income to spend that money because in the end that’s going to help all of us. Continue to build your business. Continue to make smart decisions. Reach out to your friends. Support your friends. Let’s get through this together.
Traci Brown: I love it. Mary, you are fantastic. Thank you so much. Again, it’s ProductiveLeaders.com/free to get all of Mary’s tools. She is an amazing resource. Make sure you reach out to her. She’s also a great speaker. When you need an economist who’s not boring, call Mary. Tell us about your latest release, the whole thing. How can people get it? What would it do for them? Give us the whole spiel.
Mary Kelly: On an economic level, we know that before this whole crisis happened about 10,000 baby boomers a day were retiring. Now with the stock market way down, a lot of those people are not retiring, but we are seeing more and more transitions. About a year and a half ago, Meridith Elliott Powell, who you also know, who’s also amazing . . .
Traci Brown: Love her!
Mary Kelly: She’s great. We got together and wrote this book called Who Comes Next? Leadership Succession Planning Made Easy. What’s exciting to me about this is, Traci, you know I love forms and checklists and templates and things like that.
Traci Brown: I know.
Mary Kelly: The book, Who Comes Next? is on Amazon, but we also put together a tools library. These are the actual tools that we use, the forms and everything like that. When we go into corporations and we work with their teams on creating a succession plan, those are the exact things we use. That is also available to folks. Right now, just for your people, if they decide they do want that book on Amazon, I will send them the e-version of the workbook for free. Just send me the receipt, and I will send you the e-version that retails for $30.00. I will send it to your folks for free.
Traci Brown: Oh, that’s super cool, a really good offer. Mary, you’ve got us just coming and going with everything we need to be doing here. Thank you again for joining us.
Mary Kelly: Hey, it’s my pleasure, Traci. You’re doing a great service for so many people. Let’s keep people fraud free.
Traci Brown: We will. We will.