5 Financial Scams That Seniors Often Face
Con-artists are always creating new ways to dupe their victims out of hard-earned cash. These criminals often target the fastest-growing demographic in the United States – the elderly.
A 2010 survey from Investor Protection Trust shows that one in every five Americans over the age of 65 has experienced financial abuse; this abuse has cost seniors nearly $2.9 billion in 2010. According to the Federal Trade Commission, Americans over the age of 60 accounted for 26% of all fraud complaints – a 16% increase from 2008.
It is a popular notion to assume that retirees’ bank accounts are filled to the brim, and that — along with their trusting natures and deteriorating mental health – often makes them the targets of fraudsters. Luckily, recognizing fraud is the first step to prevention.
These are the common types of scams facing seniors…
1. The Grandchild Scam
Fraudsters often use their targets’ good nature to pull off the grandchild scam. The con-artist calls under the guise of being the victim’s grandchild who is in some sort of trouble, like being robbed while vacationing outside of the country; the criminal then proceeds to ask for money, which is usually transferred electronically. Often, the “grandchild” will ask the grandparent to keep it a secret between the two of them.
The scam is often initiated with a simple question: “Hi, Grandma! Do you know who this is?” The scammer then goes along with whatever name the victim uses. Sometimes the con-artist does research on the target’s family, usually via social media sites like Facebook – which means that the scammer may be familiar with specific details of the victim’s family.
This scheme uses emotion to achieve its goal. The scammer makes the victim emotionally invested by sounding extremely desperate and saying things like, “I love you grandma! I just want to be home.” The thought of a loved-one in trouble creates an emotional response that often foregoes rational thinking.
The best defense against these scams is to say that you will call back. Double-checking the facts with other relatives is the sure way to know whether you’ve been talking to an imposter. Keeping in-touch with family members on the regular basis is also a good way to avoid falling prey to this con. Avoiding answering phone calls from unknown numbers is another way to avoid falling prey to this scheme.
2. The Telemarketing Scam
The telemarketing scam, much like the grandchild scam, uses the phone and the victim’s trusting nature to succeed, the difference being in the approach — the grandchild scam uses fear for the safety of a family member, while the telemarketing scam works like a sales pitch. This con comes in various forms: it may be a notification of a lottery win; or, it may be an offer of discounted vitamins or miracle drugs; or, it may be a charity asking for donations (which often happens after natural disasters).
The con-artist will use buzz-phrases, like, “this is a limited time offer”, or, “you’ve won a free prize but you have to pay for shipping and handling”. Usually whatever is being offered – be it cheap prescription drugs, new miracle cures, or a fancy prize – sounds too good to be true.
The charity scam preys on the victim’s conscience to achieve its end.
These scams leave no paper trails because they’re done over the phone, which makes them much harder to trace. Scammers who succeed pass on the names of their victims to other scammers.
There’s one thing to remember with these (and other) cons: if it sounds too good to be true, then it is. Winning a prize without participating in a contest does not happen. Miracle cures or anti-aging products bought over the phone may contain unsafe substances that, in the end, will make the victim pay with more than just money.
When it comes to charities, use the same tactic as with the grandchild scam – hang up the phone, saying that you will call back, and double-check the information. When it comes to charities, research is first and foremost. You can always call them yourself.
3. The E-mail Scam
The e-mail scam is essentially the internet version of the telemarking scam. One of the most notorious examples of an email scam is the Nigerian prince scam – the victim receives an email from a Nigerian prince who is willing to share his immense fortune, but only with financial assistance from the victim.
Generally, e-mail scams will come in form of prize winnings, or limited time offers on products. Sometimes the e-mail may be from a financial institution, like a bank, stating that there is a problem with account; such e-mails provide link to sites where the victims log in to their account. The purpose of this scam is obtain the victim’s passwords and personal information.
Never go to the links provided in such e-mails.
It is best to simply delete such emails. If you receive an e-mail from your bank telling you that there is a problem with your account, it is best to call the bank, or to go to the bank directly.
Fraudulent websites can look exactly like the websites they imitate.
4. The Healthcare Scam
This scheme targets seniors especially since most people over the age of 65 qualify for medical insurance. It is similar to other scams because it can be done over the phone.
The con-artist pretends to be an insurance company representative, the goal being to obtain the victim’s personal information. Sometimes, the fraudster offers services at a makeshift clinic.
This scam revolves around the criminals using their victims’ personal information to bill the insurance companies. Some versions of this scam include the con-man offering to provide new medical equipment, or to provide fake tests at various public places.
You should not make any medicine-related transactions with door-to-door salesmen, nor should you ever sign blank insurance forms. Knowing your insurance policy is also another step in being prepared against fraud.
Keep copies of your medical records and do not share your insurance information with anyone except your doctor.
5. The Investment Scam
The investment scam also uses the too-good-to-be true methods. The premise is simple: the scammer approaches the victim with an investment opportunity that promises great returns. The victim takes the bait, but never sees those promised returns.
The above-mentioned Nigerian prince scheme is an investment scheme of sorts.
The pyramid scheme is a popular form of the investment scam that targets seniors. It functions as a hierarchy where the earlier investors at the top recruit new investors who will finance the operation. The only way that new investors can make the ‘returns’ is by recruiting new investors under them. Eventually, the victims do not see any actual returns on their investments, and the whole scheme collapses.
Too often, investment scams are conducted by friends or family of the victims, which, of course, makes the victims more trusting of the schemes.
A way to protect yourself and your family form such schemes is to fully understand the proposed investments, and to generally stay away from anything that promises high financial yields. As with the other scams, having another party verify the validity of the scheme is essential to prevention.
Don’t Be Afraid To Talk About It
Seniors often fail to talk about being scammed. In part, they feel embarrassed for falling into a trap; they may also feel that they will lose their financial independence if they disclose the issue to their children and grandchildren.
It is essential to notify the authorities if you or someone you know have been scammed.
Scams targeting seniors go beyond the five mentioned above. The keys to protecting yourself and your family from financial scams are similar in all cases: do not give away your personal information; double-check the information or contract you are offered before committing; take time to think; control your emotions; and, above all, don’t be afraid to talk about it.