The Most Common Financial Scams Taking Advantage of Older Americans
Every year, 5 million older Americans are targeted by financial scammers Bloomberg report on how criminals target elderly financially. Opens in new window. Financial scams and fraud cost over $36.5 billion a year, possibly more given that estimates indicate only one out of every 44 cases is reported to the authorities.
Why do con artists prey on older people? Because they’re easy targets likely to have a nest egg that’s ripe for the picking. Additionally, they’re more susceptible to scams that promise longer, healthier lives. Finally, they’re among the least likely to report the crimes. The lack of reporting may be for a variety of reason including that it can take longer to realize they’ve been scammed, they may not know how to report it, they may feel embarrassed, or they may worry that their family will think they can no longer manage their financial affairs.
Here are some common scams to help your aging parents watch out for:
The Grandparent Scam
The scammer calls the senior pretending to be a grandchild and asks some version of the question “Do you know who this is?” After grandparent guesses a name, the caller asks the senior to send money through Western Union or MoneyGram to pay for an emergency expense, like a hospital bill, overdue rent, or car repairs. The scammer also asks the grandparent not to tell the grandchild’s parents
Requests for Immediate Payment
Callers may pose as IRS collectors who claim there is an unpaid tax debt or as a fake car warranty company offering a deal on the purchase of an extended warranty. Those posing as the IRS may up the ante by threatening your parents with arrest if they don’t pay up.
Tech Support Scam
Callers may assume the role of a tech support representative and tell your parents that there’s a problem with their computer. They may say that they need remote access to solve the problem and ask your parents to confirm their identity. With this information in hand, they may threaten your parents on the computer’s webcam, install a virus, change their computer’s settings, steal information stored locally on their computer, or demand that your parents pay for their technical assistance.
Medicare and Health Insurance Scams
Scammers may pose as Medicare representatives and ask your parents for their personal information in exchange for sending free or discounted equipment or supplies through the mail. They then submit claims to insurers for products that were unnecessary or never delivered. Some may provide “free” or otherwise fake services through mobile clinics at retirement homes or shopping malls and then bill Medicare for the service.
Counterfeit Prescription Drugs and Fraudulent Products
These scammers sell counterfeit drugs on the internet to seniors, leaving seniors with drugs that don’t work or that can even jeopardize their health. Others may offer medications, treatments, or other remedies that promise the fountain of youth yet do nothing.
Funeral and Cemetery Fraud
Fraudsters may read obituaries, learn the family’s details, and use this opportunity to take advantage of a grieving spouse. They may ask the spouse to settle the deceased’s fake debt.
Seniors make twice as many phone purchases as any other demographic group. Telemarketing scams are hard to trace and can often lead to repeat offenders who prey on easy targets. Here are some common examples:
- The pigeon drop: The caller, often accompanied by a second con artist posing as a professional like a lawyer or banker, promises to share a large sum of money if the senior makes a good faith down payment.
- The injury scam: The caller claims to be calling the senior on behalf of a relative who is in the hospital and needs money.
- The charity scam: The caller solicits money for a fake charity. These calls are popular after natural disasters and around the holidays.
According to the FBI report on telemarketing fraud. Opens in new window, here are some lines to watch out for.
- “You must act now, or the offer won’t be good.”
- “You’ve won a free gift, vacation, or prize,” but you have to pay for “postage and handling” or other charges.
- “You must send money, give a credit card or bank account number, or have a check picked up by courier.”
- “You don’t need to check out the company with anyone,” including your family, lawyer, accountant, local Better Business Bureau, or consumer protection agency.
- “You don’t need any written information about the company or its references.”
- “You can’t afford to miss this high-profit, no-risk offer.”
Older people generally aren’t as internet savvy as their younger counterparts and may not recognize online scams. Here are some typical approaches your parents should be aware of.
- Virus scan scam: A pop-up window promising to scan the computer for viruses does the opposite: it downloads viruses that steal personal information. Or it might download fake antivirus software and demand a high subscription payment.
- Email/phishing scams: A scammer posing as the IRS, a bank, or another seemingly legitimate organization sends an email to your parents asking them to update or verify their personal information. Alternatively, the scammer may mimic a relative or friend’s email address and for money to be wired for various reasons.
Seniors may fall victim to frauds including pyramid schemes, advance fee schemes, and even letter scams from distant countries. These fraudulent schemes typically offer a low- or no-risk investment that sounds too good to be true because it is.
Homeowner/Reverse Mortgage Scams
Reverse mortgage scams target the equity in your parents’ property. These scams typically propose investment opportunities, offer foreclosure or refinance assistance, and sometimes even offer free homes. They may also attempt to use your parents as straw buyers (a fraudulent loan applicant) in property flipping scams.
Sweepstakes and Lottery Scams
The scammer tells your parents that they’ve won a lottery or sweepstakes prize but must pay taxes or another fee to collect it. Sometimes the scammer sends a check in the mail that will later bounce. In other instances, the scammer may threaten to report your parents to the IRS if they don’t comply.
People may go door-to-door pretending to be a service provider, like a cable TV salesman, utility repairman, or a security system provider. These in-person scammers talk their way into the house and ask for payment of a deposit in exchange for a promise to render services that are never delivered.
What You Can Do to Prevent Fraud
You can’t stop scammers from calling, but you can arm your parents with the knowledge they need to counter these threats. Read 5 Steps to Protect Aging Parents From Financial Scams and Fraud for suggestions on how to keep your parents from falling victim to these crimes.
Next Steps: Plan for Long Term Care