Seniors and Financial Fraud: How To Spot & Prevent Scams
December 22, 2016
Financial scammers see the country’s aging population as a target-rich environment: at least 20% of seniors over 65 have been victims. Information technology and social media give con artists new ways to run old cons. The results are the same: victims lose. Federal and state authorities are considering legislation targeting seniors and financial fraud, but family members are the first line of defense.
Talk with parents and grandparents about this issue and help them protect themselves.
Why Fraudsters Target Seniors
Most seniors have liquid assets and regular cash flow each month. They’re also just too darn nice and willing to open their doors to strangers and chat with telemarketers. Unfortunately, criminals are adept at using seniors’ kind impulses against them.
Age itself also plays a part. Memory problems and cognitive decline makes it harder for some seniors to spot fraud. After they’ve been victimized, many don’t want to admit it to family members and police. In some cases, they may not even notice the fraud for weeks or months. By that time, the trail has grown cold.
Six Common Financial Fraud Scams
Fraud schemes run the gamut from selling bogus products and investments to identity theft schemes.
1. Investment Scams
Seniors worry about running out of money during retirement, and unscrupulous salespeople know it. A favorite tactic is to offer “free” financial seminars for surefire investments that offer high returns. Once a senior shows interest, he’ll be bombarded with phone calls and even personal visits from friendly salespeople who know just what to say to gain trust and money.
Money is often a hard thing for people to discuss, and your relatives might resent any implication that they aren’t capable of handling their own affairs. A tough conversation is uncomfortable, but better than watching your parents lose their life savings and/or home. Consider asking a reputable financial professional to talk with your family member about investments and protecting themselves.
2. Email & Internet Fraud
You wouldn’t help Nigerian prince move money out of the country, but plenty of people have been scammed by this and other Internet schemes. Seniors are no exceptions, so make sure your relative is protected by anti-virus and malware software and email spam filters. Discuss the danger of buying cut-rate prescription drugs online and opening attachments on spam emails.
3. In-Person Fraud
Seniors are often the targets of what law enforcement calls “distraction burglaries.” Working in teams, one criminal will distract the resident while another steals valuables and/or personal data. Many specifically look for bank account numbers, social security numbers, and other personal information to use to steal even more.
Talk to your relative about these types of scams and signs that a burglar may be casing their house. Make them understand that asking for identification and verifying identity isn’t rude: it’s a way to stay safe.
4. Fake Charities
The last few months of the year are called “the giving season” because that’s when people give the most to charities. Not surprisingly, many people are inundated with appeals that arrive online, by phone, and by mail. Most look legitimate, but not all are.
If your relative is using the Internet, show him/her how to look up a charity’s non-profit status to learn how much it spends on programming compared to fundraising and overhead. Charity Navigator is a great place to start. Encourage seniors to take their time before making donations. They shouldn’t share to share credit card or bank account numbers with telemarketers.
5. Home Improvement Scams
Seniors are prime targets because many own their homes and can draw on equity or other assets for repairs. Also, many older homes do need some repairs. When a smooth-talking contractor shows up, the owner is happy to get a good deal.
While popular, home improvement fraud is also the easiest to detect. Contractors should be licensed and members of the Better Business Bureau and/or professional organizations. Verify that before agreeing to any work. Never pay in advance, and never be pressured into a snap decision.
6. “Help Me, Grandma!” Fraud
“Family emergency” fraud schemes prey on the loyalty and concern we feel for family and friends. Someone posing as a relative will call with a story of a lost or stolen wallet, need for bail money, or other emergency and beg you to wire money immediately. Social media makes it easy to find out so much about someone: employer, educational background, travel plans, names of friends and family, and more. This information makes the story that much more convincing.
Always verify the situation, even if sweet Susan begs you to not call her parents or tell anyone. Of course, a thief doesn’t want anyone else involved! Never wire money until you’re sure of the situation because there’s no way to recover it.
Knowledge is the best way to prevent this scam: make sure your relative knows how it works and never responds without checking the facts.
Communication is Key to Preventing Financial Fraud
It can be a delicate balancing act for family members. You want to help, but not humiliate or anger those you care about. People hate giving up control over their own lives, but at some point, we’ll all need help.
Help your relative understand that scammers target seniors, and financial fraud is a huge problem. You don’t have to be old to be a victim, but seniors are preferred targets. It just makes sense to protect yourself and your family.