How Seniors Can Avoid Financial Scams and Fraud

Financial abuse inflicted upon older people is a problem that’s growing in scope and severity rather than improving. This trend is likely to maintain as the population of the U.S. ages.

Many studies have looked at the specific reasons older adults are more likely to be vulnerable to financial abuse and scams than younger people. There was one study with 26 subjects that found 13 had been the target of financial scams leading to loss of money.

Then, of those study participants, behavioral tests were administered looking at different areas of brain function like memory, personality, attention span, and mood.

Researchers also did MRIs on each study participant.

There were differences uncovered in the study participants who’d been the victim of financial scams and those who hadn’t.

For example, the MRI scans found differences in areas of the brain that could shed light on why some people are more vulnerable to financial scams as they age than others.

The following are things to know whether you’re an older adult or you’re concerned about your loved one being the victim of a financial scam or abuse.

Know the Different Types of Scams

Having an understanding of some of the different types of scams that may target seniors is a good starting point to protect yourself or your loved one.

A few examples include:

• Medical or health insurance scams may have a criminal posing as a representative of Medicare or a health insurance company to get someone’s personal information.
• Funeral and cemetery scams may take advantage of a grieving person who’s just lost their spouse. One example of these scams might involve claiming the deceased person had an outstanding debt that needs to be paid.
• Investment schemes often target older people who are planning for retirement and want strategies to best manage their savings. There are scams like the pyramid scheme perpetrated by Bernie Madoff, but there are others as well.
• Phishing emails don’t just target seniors—these scams are unfortunately very successful and pervasive. In a phishing email scam, you might be asked to verify personal information, and the email can look extremely legitimate. For example, the email might appear to be from the IRS. Then you provide your personal information which is stolen.
• Reverse mortgage scams or other scams targeted at homeowners seek to take advantage of most people’s largest asset, which is their home.

Older adults lose an estimated $36 billion each year to fraud and scams.

Beyond the overtly financial scams listed above, many scammers will try to take advantage of some of those things that can come with age, including loneliness. For example, romantic scams are increasingly common.

An older person might meet someone online, and that person might ask them for money to cover things like medical emergencies.

A topic that’s especially relevant right now is scammers pretending to be the government and asking for personal or account information so they can send out economic relief or stimulus checks. The government won’t ask you for personal information in those cases.

There is something called a grandparent scam in which criminals pretend to be the grandchild of the victim, and they claim that the child needs money right away to help with an emergency. Then, the idea is that the grandparent would wire money to help their grandchild.

Who Commits Elder Financial Abuse?

There are criminals who target older adults with scams, but perhaps even scarier than that is the fact that around two-thirds of financial crimes directed at older adults are carried out by people they trust including caretakers, family members, friends, and attorneys.

How Can Seniors Protect Themselves?

Having a social network is one of the best ways to protect yourself or to help your loved one stay protected from financial scams.

Everyone needs a social network they can rely on, but especially older people. The more isolated an older person is, the more likely it is that someone will take advantage of them.

When seniors stay socially engaged they have people to talk about different financial topics with, and that can then provide them with feedback that may help them recognize a scam.

If you’re an older person, before you ever come to a point where you need it, you should go ahead and have a few people or at least one person that you do trust to help you with your finances when the time comes that you need that help.

You can create a power of attorney for the person, or set them as the successor trustee of your living trust.

When you have a team of people already in place that you trust, it leaves fewer opportunities for someone to take advantage of you.

Other tips to protect yourself against financial scams or help your loved one do so include:

• Be aware of the risk from strangers, but also the people closest to you.
• Don’t isolate yourself and stay involved with the community.
• Never buy something from a company or organization you aren’t familiar with. If someone calls you and attempts to sell you something, ask them to send you information in writing.
• You can visit the Do Not Call site to stop telemarketers from being able to contact you.
• Be careful about the mail you receive. If you have a habit of letting mail sit in your mailbox, someone can steal it and use it to get your personal information in other ways.
• Use direct deposit for your benefit checks, so they aren’t stolen if they come in the mail.
• Don’t ever provide your personal information including banking, credit card, Medicare, or Social Security information over the phone unless you’re the one who made the call and you know you’re speaking to the right organization.

Finally, if you’re concerned about your loved one being the victim of financial scams, look for warning signs such as unpaid bills, or changes in the person’s accounts like sudden use of a credit card.