What is Financial Fraud?
If you think financial fraud only happens to wealthy people who are targeted by elaborate con schemes, think again. The truth is that financial fraud is often more common and far more widespread than we realize. Most scams are designed to steal someone’s personal information and use it to either drain their financial accounts, steal their identity or sell their information to the highest bidder.
Unfortunately, elderly people are often targeted by financial fraud and scam artists because:
● More of their assets are liquid in savings and retirement accounts.
● They can access more of their home’s equity or are drawing funds from a reverse mortgage.
● They may be dealing with memory or cognitive issues that affect their judgment.
● If they’ve recently lost a spouse or are socially isolated, they may be more easily manipulated
● They may be less tech-savvy.
Some of the most common scams that are used to target seniors are:
Scammers pose as Medicare or health insurance representatives and request personal information in exchange for discounted medical supplies, tests or equipment. The scammer then submits claims to Medicare or the insurance company in the elderly person’s name.
Counterfeit Prescription Drugs
Scammers take advantage of elderly persons who buy medication online by setting up fake websites that look legitimate. They use the site to steal their personal information or send them fake drugs in place of the drugs they need. In some cases, they exploit fear of pandemics and outbreaks to sell fake cures or vaccines.
Scammers use the obituary pages to target vulnerable seniors who have just lost a spouse. They may attend the funeral and later try to extort the grieving widow or widower by claiming that they are owed money or are a relative in need of assistance.
Scammers call seniors to inform them that they have won a contest. The senior is then asked for personal information or asked to pay a service charge to unlock the prize.
Many elderly worry about money, or they want to leave something behind. Scammers target that need by promoting fake business opportunities, charging exorbitant fees for secret investment strategies, selling opportunities to start a business through a multi-level marketing program, or offering seminars on how to invest in real estate. Usually the scammer never delivers, or they continue to string their target along with more elaborate sales pitches.
Scammers take care of our desire to help others by creating a fake charity or pretending to represent a legitimate one. They then solicit personal information or request a donation. These scams are especially prevalent during times of crisis.
For many seniors, their home is their single most valuable asset. This makes them a target for:
● Property tax scammers offering property reassessments for a fee.
● Home repair scammers, who either do shoddy work or demand upfront payment and then
never show up to do the work.
● Reverse mortgage scams targeting seniors who have recently unlocked equity in their
Email and Phishing Scams
Scammers use fake email or text messages from trusted companies to trick the elderly into giving them personal information. They may also leave behind malware, which can embed itself on a computer and steal more personal information or send more phishing emails to the elderly person’s contact list.
Recognize the Warning Signs of Fraud
Scammers have become increasingly more sophisticated and have learned how to take advantage of technology to make themselves seem more credible and avoid detection. The Federal Deposit Insurance Corporation (FDIC) highlights these “red flags” that are signs of a scam:
● An unsolicited phone call, e-mail, or mailed request demanding you pay a large amount of
money before receiving certain items or services.
● An unexpected e-mail or call requesting your bank account number, checking account routing
number, credit card information, account passwords, or other personal information.
● A too-good-to-be-true “investment” opportunity.
● Contact from anyone expressing a new or unusual interest in your finances.
● Pressure to send funds quickly by wire transfer (even if this person claims to be a relative or
● A request to keep the conversation and transaction a secret.
A good rule of thumb is this: If anyone asks you for any personal information like checking or credit account numbers, your Social Security number or account passwords, just say no. Even if an offer seems legitimate, don’t share any information until you check with a family member or trusted advisor. If the person is legitimate, they’ll wait. If they’re a scammer, you probably won’t hear from them again.
What to Do if You Think You’ve Been Scammed
Even when they realize they’ve been scammed, the elderly may not report it because they feel ashamed or worry that they will lose their independence. The fallout from these scams can be especially devastating for the elderly because it can lead to the collapse of a lifetime of work and retirement planning.
That’s why it’s important to address the problem as soon as you detect it. Here’s what to do:
- Start by talking to someone you trust, like a family member, friend or financial advisor.
- Contact your credit card company or financial institution if your account has been compromised.
- Call your local police department (not 911) if your loss is significant.
- Report known or suspected scams at ftc.gov/complaint.
- Contact your state attorney general’s office, local and state consumer protection agencies (searchable on usa.gov), the Better Business Bureau, or even the FBI’s Internet Crime Complaint Center, depending on the severity of the scam.
Unfortunately, some of these scammers are tough to track down and prosecute. But reporting these incidents helps others and reduces the chance the scammer can strike again.
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