Beware of Financial Scams

Millions of older adults are victim of fraud every year. Financial scams targeting seniors are so common, they are considered “the crime of the 21st century.” Why? Because scammers believe seniors have significant amounts of money just sitting in their accounts. Financial scams also often go unreported and can be difficult to prosecute. Because of this, they are considered a “low-risk” crime. However, they are devastating to the many older adults that fall victim to their scams. It can leave them in a very vulnerable position with little time to recoup the money. It’s not just wealthy seniors who are targeted. Low-income older adults are at risk as well.

Con artists use a wide variety of tactics to get older people to fall for their schemes.

  • Being friendly, approachable, and sympathetic, so victims feel like the solicitor is on their side.
  • Instilling fear or giving a sense of urgency, so people don’t have time to think or act rationally.
  • Appearing to be helpful to gain someone’s trust and make that person feel inclined to return a favor later on.
  • Using emotions to skew proper judgement. Researcher from Stanford found that when elderly individuals are in a state of high emotions, they become more interested in buying things that are falsely advertised.
  • Pretending to be associated with a credible company, government agency, or charity to fake legitimacy.
  • Being ambiguous about the subject or changing it throughout a conversation to distract the victim.

Unfortunately, it’s not always strangers who perpetrate these crimes. Over 90% of all reported elder abuse is committed by an older person’s family members, most often their adult children, followed by grandchildren, nieces and nephews, and others close to them.

Most Common Scams on Seniors

Every U.S citizen or permanent resident over age 65 qualifies for Medicare. Because of this, there is rarely any need for a scam artist to research what private health insurance company older people have in order to scam them out of some money.

In these types of scams, perpetrators may pose as a Medicare representative to get older people to give them their personal information, or they will provide bogus services for elderly people at makeshift mobile clinics, then use the personal information they provide to bill Medicare and pocket the money. 

Examples:

  • Tell a senior that he or she needs a new Medicare card, and to be issued one, they would need to provide Social Security Number
  • Ask an elderly person to contribute a fee to help navigate the new health care landscape
  • Tell an older adult that he or she needs new supplemental policies
  • Gather personal information provided to bill Medicare and take the money for themselves

Most commonly, counterfeit drug scams operate on the Internet, where seniors increasingly go to find better prices on specialized mediations. This scam is growing in popularity. Since 2000, the FDA has investigated an average of 20 cases per year, up from the five a year in the 1990s. The danger is that besides paying money for something that will not help a person’s medical conditions, victims may purchase unsafe substances that can inflict even more harm. 

The FBI warns about two types of funeral and cemetery frauds perpetrated on seniors.
 
In one approach, scammers read obituaries and call or attend the funeral service of a complete stranger to take advantage of the grieving widow or widower. Claiming the deceased had and outstanding debt with them, scammers will try to extort money from relatives to settle the fake debts. 
 
Another tactic is of disreputable funeral homes who capitalize on family members’ unfamiliarity with the considerable cost of funeral services. They add unnecessary charges to the bill. One common scam of this type, the funeral director will insist that a casket, usually one of the most expensive parts of a funeral service, is necessary even when performing a direct cremation, which can be accomplished with a cardboard casket rather than an expensive display or burial casket. 

Fake anti-aging products are another big focus of scammers who target seniors. The NCOA states that seniors often feel pressured to look younger in order to keep up in social circles or to fill a void in their lives. This results in them seeking out new treatments, medications, and products that will help them achieve “youth.” Perpetrators prey on this and capitalize on this demand. The scam can be executed in different ways such as offering costly treatments that turn out to be either harmful or simply homeopathic remedies that do nothing but cost money.

 Botox scams are particularly unsettling, as renegade labs creating version of the real thing may still be working with the root ingredient – botulism neurotoxin. This is one of the most toxic substances known to science. A bad batch can have health consequences far beyond wrinkles or drooping neck muscles. 

Possibly the most common scheme is when scammers use fake telemarketing calls to prey on older people. As a group, seniors make twice as many purchases over the phone than the national average. This makes older people more likely to not notice the risk, since they are more familiar with shopping over the phone. With no face-to-face interaction, and no paper trail, these scams are incredibly hard to trace. One of the worst parts of a telemarketing scam is that if it is successful on someone, the victim’s name will likely be passed on to other con artists as an easy target to prey on.

Scammers hook seniors by pretending to offer: free trials, extended warranties, can’t miss investment opportunities, the chance to travel for cheap or free, incredible prizes, and advance loans.

Scammers may also get seniors’ money by representing themselves as: IRS agents, investors, bank officials, and family members.

Examples of telemarketing fraud include:

The Pigeon Drop – Basically a pigeon drop is when a “suspect offers a larger sum of money to the victim in exchange for a smaller sum of money”. There is usually a second or third person in on the scam to act as a lawyer or ‘innocent bystander’ to make the scam more convincing. These are often done in person at tourist spots, but they also occur over the phone.

If someone contacts you saying that he or she recently inherited money from an uncle but needs a smaller amount of money from you to transfer the inheritance, this could be an example of a pigeon drop. You would be promised something like half of the inheritance.

The Fake Accident – Scammers will call saying that someone related to or known by the victim has been injured and is currently in the hospital requiring money to be sent immediately. The scammer often pressures the victim to send the money before verifying the validity of the injury and relation to the person who is injured. Another con artist is often involved to act as the police officer, doctor, or lawyer at the scene of the “accident.”‘

Robocalls – A scam that grew popular in 2017 uses pre-recorded robocalls to get the victim to say, “Yes.” Questions such as, “Are you there?” tend to prompt this answer, and scammers who have someone’s “yes” reply recorded may be able to use that voice signature to put charges on credit cards and the like.

Charity scams – These scams are unfortunate as they prey on the goodwill of others. Scammers either call or approach an elderly individual in person, saying they are looking for donations to a worthy cause. In reality, the perpetrators have nothing to do with the charity or cause and are looking to take the victim’s money for their own gain. Sometimes the goal is to steal the victim’s identity as well. Charity scams tend to happen most after natural disasters on the international level like a major hurricane or on a local level like helping to fund local firefighters.

One of the most common scams is when someone pretends to be an IRS agent. This can happen over email, mail, phone and in person.

So-called IRS agents say that you owe taxes and demand that you pay immediately or face consequences, such as jail time or hefty fines. In many cases, they say that the IRS has contacted you via mail or email already and never heard back, hence the need for dire measures now.

In some cases, they’ll say you are owed a tax refund. In both scenarios, the goal is to get your credit card numbers, bank account numbers, or other financial information, and sometimes, money transfers.

If this happens via phone, hang up. If you feel the contact could be valid, call the IRS at 1-800-829-1040 to ensure you are speaking with someone legitimate. Signs of an IRS scam include:

  • Arrest threats
  • Rude language
  • Requests for credit card or debit card payments over the phone
  • Requests to pay with gift cards or prepaid cards
  • “Agents” refusing to give badge numbers and other ways to identify their legitimacy
  • Demands for payments right away

The internet has been filled with scams targeting the elderly since its inception. Examples include: fake-virus popups to trick the victims into paying money, real viruses that may hold victims hostage until they make a payment, phishing scams and attempts to steal identities through fake websites and emails.

Phishing Scams via Email – Phishing is the main internet method scammers use to get personal information from unsuspecting people through email. The scammer creates an email address and template that looks like an official email from a bank, business, or other website that a person visits frequently. The email looks legitimate and claims that your password, banking number, and/or other personal identifying information is needed to fix an issue.

No bank or other business will ever ask for any personal information through an email. If you are concerned about your account, you can go to the website directly (don’t click on any links in a suspected phishing email), and check your account information there, or call your bank/business directly.

Because many seniors find themselves planning for retirement and managing their savings once they finish working, a number of investment schemes have been targeted at seniors looking to safeguard their cash for their later years. From pyramid schemes to stories of a Nigerian prince looking for a partner to claim inheritance money to complex financial products that many economists don’t even understand, investment schemes have long been a successful way to take advantage of older people. 

Another type of investment scheme entails the scammer taking advantage of the senior citizen’s religious affiliation or other essential part of his or her identity. For example, for just $500, the senior citizen could invest in an illustrated Bible for children and earn part of the royalties.

Investment schemes can also be about property and timeshare deals. They often use a sense of urgency and/or the promise of free gifts. If you have only a few hours to make an investment decision and can’t call anyone about it, it’s probably a scam.

Scammers like to take advantage of the fact that many people above a certain age own their homes. This increases the potential dollar value of certain scams. 

An example of a particularly elaborate property tax scam in San Diego saw scammers sending personalized letters to different properties apparently on behalf of the County Assessor’s Office. The letter was made to look official, but only displayed public information. It would identify the property’s assessed value and offer the homeowner, for a fee, to arrange for a reassessment of the property’s value and therefore the tax burden associated with it. 

Closely related, there is the potential for a reverse mortgage borrower to be scammed. Scammers can take advantage of older adults who have recently unlocked equity in their homes. Those considering reverse mortgages should be cognizant of people in their lives pressuring them to obtain a reverse mortgage, or those that stand to benefit from the borrower accessing equity, such as home repair companies who approach the older adult directly.

Thousands of seniors are tricked into believing that they won a large sum of money but are told that they have to wire money in “taxes and fees” or to free the grand prize up from customs officials. After going through with this and receiving a check that doesn’t clear, the victim realizes that he or she has been scammed.

Unfortunately, once people fall for this scam, they are at higher risk for getting more lottery and fake-prize scam calls, emails and offers. Astonishingly, a scammer may even call the victims and claim to be a police officer or detective investigating possible lottery and fake-prize scamming. In order to investigate, the detective needs to know the victim’s financial information. According to the U.S. Attorney General and the Solicitor General of Canada, this mass-marketing fraud takes about $1 billion a year!

Scammers will place a call to an older person and when the mark picks up, they will say something along the line of:” Hi Grandma, do you know who this is.” When the unsuspecting grandparent guesses that name of the grandchild the scammer most sounds like, the scammer has established a fake identity without having done any background research. 

Once “in,” the fake grandchild will usually ask for money to solve some unexpected financial problem (overdue rent, payment for car repairs, etc.), to be paid via Western Union or MoneyGram, which don’t always require identification to collect. At the same time, the scammer will beg the grandparent not to tell “their parents.” 

While the sums from such scams are likely to be in the hundreds, the very fact that no research is needed makes this a scam that can be perpetrated over and over at very little cost to the scammer. 

Variations on this scheme have scammers contacting seniors through online dating sites or social media platforms such as Facebook. A senior has a legitimate profile or account and engages in correspondence with a scammer who builds trust and perhaps romantic interest. When the request for money comes after an “emergency,” the senior is all too happy to indulge. Sometimes, scammers may even pretend to be lonely U.S. soldiers serving overseas.

Tech or computer support scams tend to be the most successful. In some versions, senior citizens get a call from someone who promises to do tech support on their computers/devices or to clear their computers of viruses, malware and the like. To give incentive, scammers may offer this “service” at a senior-citizen discount. Later, the scammers do rudimentary work such as installing free security programs, and it is possible that seniors never realize they have been scammed. In other versions, scammers use internet ads to entice senior citizens to contact them for help.

The primary aim of many scammers doing tech or computer support schemes is to get access to bank account passwords and other sensitive financial information. Because they pose as tech support personnel, they may get permission to link their computer with the victim’s. Sometimes, the scam turns mean immediately when a scammer locks the victim out of his or her computer until a fee is paid. Disengaging from the scammer and restarting your computer may solve the issue sometimes.

Tips to help you protect yourself against abuse and financial scams

Visit Do Not Call to stop telemarketers from contacting you. 

Be careful with your mail. Do not let incoming mail sit in your mailbox for a long time. When sending out sensitive mail, consider dropping it off at a secure collection box or directly at the post office. You also can regularly monitor your credit ratings and check on any unusual or incorrect information at AnnualCreditReport.com.

To get more information on protecting yourself from fraud, visit On Guard Online. This website has interactive games to help you be a smarter consumer on issues related to spyware, lottery scams, and other frauds. 

Using direct deposit ensures that checks go right into your accounts and are protected. Clever scammers or even scrupulous loved ones have been known to steal benefits checks right our of mailboxes or from seniors’ homes if they are laying around. 

Misuse of Medicare dollars is one of the largest scams involving seniors. Common schemes include billing for services never delivered and selling unneeded devices or service to beneficiaries. Protect your Medicare number as you do your credit card, banking, and Social Security number and do not allow anyone else to use it. Be wary of salespeople trying to sell you something they claim will be paid for by Medicare. 

Review your Medicare statements to be sure you have in fact received the service billed, and report suspicious activities to 1-800-MEDICARE. 

  • Never sign blank insurance claim forms.
  • Never give blanket permission to a medical provider to bill for services rendered.
  • Ask your medical providers what they will charge and what you will be expected to pay out-of-pocket.
  • Carefully review your insurer’s explanation of the benefits statement. Call your insurer and provider if you have any questions.
  • Do not do business with door-to-door or telephone salespeople who tell you that services of medial equipment are free.
  • Give your insurance/Medicare identification only to those who have provided you with medical services.  
  • Keep accurate records of all health care appointments.
  • Know if your physician ordered equipment for you.

Don’t buy from an unfamiliar company and always ask for, and wait until you receive, written material about any offer or charity. Neighborhood children you know who are selling Girl Scout cookies or school fundraising items may be an exception, but a good rule of thumb is to never donate if it requires you to write your credit card information on any forms. 

  • Don’t buy from an unfamiliar company
  • Always ask for and wait until you receive written material about any offer or charity
  • Obtain a salesperson’s name, business identity, telephone number, street address, mailing address, and business license number before you transact business
  • Always take your time in making a decision
  • If you have information about a fraud, report it to local, state, or federal law enforcement agencies. 

Don’t buy from an unfamiliar company and always ask for and wait until you receive written material about any offer or charity. Neighborhood children you know who are selling Girl Scout cookies or school fundraising items may be an exception, but a good rule of thumb is to never donate if it requires you to write your credit card information on any forms. 

Isolation is a huge risk factor for elder abuse. Most family violence only occurs behind closed doors, and elder abuse is no exception. Some older people self-isolate by withdrawing from the larger community. Other are isolated because they lose the ability to drive, see, or walk about on their own. Some seniors fear being victimized by muggings if they venture out. Visit Eldercare Locator to find services nearby that can help you stay active. Or contact your local senior center to get involved. 

Identity theft is a huge business. To protect yourself, invest in and use a paper shredder. Monitor your bank and credit card statements and never give out personal information over the phone to someone who initiates the contact with you. 

Be an informed consumer. Take the time to call and shop around before making a purchase. Take a friend with you who may offer some perspective to help you make difficult decisions.

Also,  carefully read all contracts and purchasing agreements before signing and make certain that all of your requirements have been put in writing. Understand all contract cancellations and refund terms, As a general rule governing all of your interactions as a consumer, do not allow yourself to be pressured into making purchases, signing contracts, or committing funds. These decisions are yours and yours alone. 

  • Never sign blank insurance claim forms.
  • Never give blanket permission to a medical provider to bill for services rendered.
  • Ask your medical providers what they will charge and what you will be expected to pay out-of-pocket.
  • Carefully review your insurer’s explanation of the benefits statement. Call your insurer and provider if you have any questions.
  • Do not do business with door-to-door or telephone salespeople who tell you that services of medial equipment are free.
  • Give your insurance/Medicare identification only to those who have provided you with medical services.  
  • Keep accurate records of all health care appointments.
  • Know if your physician ordered equipment for you.
  • Protect your Medicare number as you do your credit card numbers and do not allow anyone else to use it.
  • Be wary of salespeople trying to sell you something they claim will be paid for by Medicare.
  • Review your Medicare statements to be sure you have in fact received the services billed.
  • Report suspicious activities to 1-800-MEDICARE

Signs to Look for

If you know or care for an older adult, here are some additional warning signs that may indicate they are the victim of financial abuse:
  • There are unusual recent changes in the person’s accounts, including atypical withdrawals, new person(s) added, or sudden use of a senior’s ATM or credit card.
  • The senior suddenly appears confused, unkempt, and afraid.
  • Utility, rent, mortgage, medical, or other essential bills are unpaid despite adequate income.
  • A caregiver will not allow others access to the senior.
  • There are piled up sweepstake mailings, magazine subscriptions, or “free gifts”, which means they may be on “sucker lists.”
Every state operates an Adult Protection Services (APS) program, which is responsible for receiving and investigating reports of elder abuse, neglect, and exploitation, and in most states, the abuse of younger adults with severe disabilities. APS is the “911” for elder abuse. Anyone who suspects elder abuse, neglect, or exploitation should make a report. The reporter’s identity is protected. APS services are confidential, so the reporter may not be able to learn the outcome of the case. APS respects the right of older persons to make their own decisions and to live their lives on their own terms. In cases of cognitive impairment, however, APS will take steps to protect the older person to the degree possible.

Steps to take if you’re a victim of a scam

If you think you’ve been scammed, don’t be afraid or embarrassed to talk about it. Waiting could only makes matters worse. Immediately:

  • Call your bank and/or credit card company.
  • Cancel any debit or credit cards linked to the stolen account
  • Reset your personal identification numbers

Also, contact legal services and Adult Protection Services if warranted. To find your local offices, visit the Eldercare Locator or call them at 1-800-677-1116 weekdays 9 a.m. – 8 p.m. ET.

Source: National Council on Aging