Beware of these Financial Scams Targeting the Elderly
The following is presented for informational purposes only.
A sobering truth is that older adults are oftentimes the target of costly scams. It makes perfect sense: they tend to have a more robust nest egg. What’s more, they might not know how to go about reporting such a crime, or might be embarrassed to be the target of a fraudster. In turn, they aren’t as likely to report it.
Scams targeting the elderly are rampant and come in many shapes and sizes. Here are just a few of the most popular examples, with tips on how to avoid falling victim.
The “Help Your Friend in an Emergency” Scam
In this scam, also known as the grandparent scam, the con artist will pretend to be somebody you know. They’ll usually reach out to you by email or on social media asking for money, explains Justin Pritchard, a CFP® and founder of Approach Financial. “They might say they’re being held in jail without justification, that they just got robbed and need cash to continue with their trip, or that they need help with emergency expenses,” says Pritchard. Bottom line: They’re in a bind, and need money.
How to Prevent: It’s best to reach out to the person who the con artist claims to be directly, and through a different mode of communication, advises Pritchard. For example, if the scammer send you an email, try calling their phone even though they say they’re out of the country or in jail. “If they answer, you know it’s a scam,” says Pritchard.
If you can’t get a hold of the person, contact other friends and relatives to ask if the story sounds legitimate. Presumably, somebody close to them would know if the person is actually traveling. “If all else fails, start asking questions,” says Pritchard. “Either ask for details, or ask them to verify something that only the two of you know. Whatever you do, don’t offer to send them any money before you reach out to your grandchild, relative, or friend directly and verify their identity.”
IRS Phone Call
In this scam, you’ll get a call with urgent news that you owe taxes. The caller is oftentimes hostile and will toss a litany of threats: jail time or revoking your driver’s license, says AnnaMarie Mock, a CFP® of Highland Financial Advisors. “They might know the last four digits of your Social Security Number, and might even mimic the IRS toll free number on the caller ID,” says Mock.
How To Prevent: The Internal Revenue Service (IRS) will never initiate contact with taxpayers by email, text, phone, or social media, explains Mock. The IRS only sends written notifications through the mail and will never ask for credit card, debit card, or prepaid card information over the telephone. Mock suggests reporting the incident to the Treasury Inspector General for Tax Administration at 800.366.4484 or through the IRS phishing reporting page.
You’ve Won the Lottery
You might receive false notification that you’ve won a lottery prize or sweepstakes. You might receive notice via email, text, or a phone call. You’ll be congratulated, but advised that in order to receive your prize, you’ll need to send money for taxes or a processing fee or taxes.
In some cases, the scam many even continue after you realize you’ve been taken. “Once the individual realizes there’s no reward, a cohort of the original scammer calls, pretending to be an attorney that requires an upfront fee.” In the end, you could possibly be victimized by the same scam twice.
How To Prevent: Don’t be duped. If you haven’t entered a sweepstakes, you probably haven’t won a sweepstakes. Unearned high value prizes are often a sign of a scam. Avoid the “pay to play” sweepstakes, says Mock. If it’s too good to be true, it’s probably not true.
Internet fraud is on the rise. In 2018, phishing scams accounted for almost 14 percent of all reported scams, followed by 11 percent from harassment and life threats.
“Phishing scams involve an authentic-looking email, text message, or website that will request financial information like account numbers or credit card numbers,” says Mock. “Scammers can design resources to appear like a legitimate business - or even an institution you have a relationship with already such as your banking institution.”
How to Prevent: Never email sensitive information as it’s not a secure method, advises Mock. And don’t open attachments or click links from unknown senders, as they can contain viruses or malware.
In this scenario, fraudsters will contact the victims about non-existent debt. The scammers will ask for a method of payment where they can remain anonymous, like prepaid debit cards or a wire transfer.
“The collectors might have some personal information that appears to be legitimate, but will refuse to answer specific questions related to the debt,” says Mock. “They’ll ask for sensitive personal information and will refuse to provide a phone number or mailing address of the agency.”
How to Prevent: Ask for the caller to verify their name, company, address, and phone number, recommends Mock. “You can even request a written explanation of the debt including all information about the amount, charges, and creditor,” she says. “If you cannot verify, do not provide them with any sensitive personal information.”
Report Financial Elder Abuse and Fraud
Unfortunately, financial elder abuse is widespread and the victims are often not in the best position to protect themselves or get the assistance they need. If you feel that an elderly friend or family member is being taken advantage of, report the situation to the Adult Protective Services agency in your area. You can use eldercare.acl.gov or call 800.677.1116 to connect with the appropriate resources in your community. If you suspect you’ve been a victim of identity theft, contact the local police department or the Federal Trade Commission (FTC) at 877.438.4338.
If you're approaching or have previously entered retirement and need advice and solutions for debt and budgeting issues, Money Management International (MMI) is here to help. Our team of financial counselors can provide information and resources to help you make the most of your senior years..