Ten thousand Americans turn 65 each day, and will, projections show, until at least 2030. For financial scammers, that means 10,000 potential new victims every 24 hours. Talk about a target-rich environment: Some studies put losses to seniors at up to $36.5 billion a year.
While anyone, anywhere, at anytime can be a victim of a financial scam—and below are some of the most common ones—seniors are particularly at risk.
“Older Americans are more vulnerable for many reasons,” says Joe Snyder of the National Adult Protective Services Association (NAPSA), a Washington, D.C.-based nonprofit that works with the financial industry, seniors groups and others to reduce rip-offs. “One big one is that millions of senior citizens live alone, it makes them easier prey” for scammers.
Seniors are also targets because with age comes a gradual decline in cognitive abilities. Then there is this: Lots of seniors are well off. “They have money,” Snyder says, “and crooks go where the money is.”
NAPSA lists no less than nine tricks that crooks use to separate seniors from their money—sometimes even taking the roof over their heads:
•Theft: When assets—cash, valuables or other belongings are taken without knowledge or consent.
•Fraud: Someone entrusted to manage assets instead uses them inappropriately for unintended uses. This can include falsification of records, forgeries, unauthorized check-writing, and pyramid schemes.
•Real estate: When property is sold or transferred to another party without knowledge or consent.
•Contractor: When a home contractor or handyman is paid for work that was never competed—or even started.
•Lottery scams: When someone is asked to pay a third party to collect a “prize” from lotteries or sweepstakes.
•Electronic: When someone is tricked by email into unwittingly surrendering account numbers or passwords for bank or brokerage accounts (commonly called “phishing”).
•Mortgage: When victims fall for financial products that are bogus and/or unaffordable; this can include loans issued against property by unauthorized parties.
•Investment: This can include investments made without the account holder’s knowledge or consent. It can include the purchase of high-fee investment products or excessive trading activity designed to generate commissions for financial advisers.
•Insurance: This involves sales of inappropriate products, such as a thirty-year annuity for a very elderly person—or the unauthorized trading of life insurance policies.
To keep burglars from breaking in to your home, you have a lock on your door. You might have a guard dog, or live in a gated community. But financial scammers will get you on the phone, through the mail and on your computer. “Their tentacles are everywhere,” Snyder warns, “they know the latest tricks and always seem to stay a step ahead of law enforcement.”
OK, so what to do about it? First, it’s important—critically important—to remember this: The bad guy is actually likely to be someone you know, someone who is already close to you. Ron Long, a senior vice president at Wells Fargo Advisors and director of a new division that focuses on protecting elder clients from financial abuse, estimates this is the case about two-thirds of the time. He calls it the “three Fs and a C” problem: Friends, family, fiduciary and caretakers—those are the primary perpetrators.”
Both NAPSA’s Snyder and Wells Fargo’s Long offer the same advice: Seniors should have conversations—difficult and awkward though they may be—with family members about financial matters (and health care and end of life issues too) and lay everything out, so everyone is prepared and on the same page. And the sooner these discussions occur, Long says, the better. “The family conversation just has to happen more.”
A good lawyer is helpful with such matters, of course, but if you can’t afford one, check out AARP’s resource page on low-cost or free legal advice. It’s a mistake—potentially a very costly one—to think you don’t need advice here.
Meantime, financial firms have begun offering duplicate statements that can be sent to a trusted person for review—typically a child—so that person can ensure that everything is fine. If you’re a senior and aren’t doing this now you may want to consider doing so.
Long calls this the “trusted contact concept” and says Wells is asking, but not requiring, clients to give the name and contact information for that person, so the bank can contact them if it senses that anything is amiss. “The concept of a second look is a good one,” he says.
Financial institutions are increasingly becoming more proactive in this process, by contacting that second person if a primary account holder is trying, say, to write an unusually big check, or engage in behavior that falls beyond patterns of prior behavior. “If Mom does anything up to $500, that’s perfectly fine,” Long says, “but beyond that, we’ll reach out, usually with an email” to alert their trusted contact. He adds that would happen only if a preliminary chat with the primary account holder proved unsatisfactory for any reason.