Scamming seniors is big business. Scammers took an estimated $1 billion from elder Americans last year, according to the Federal Trade Commission.
Further, the Certified Financial Planner Board of Standards found that senior citizens who become victims of financial abuse lose $140,500 apiece, on average.
Here are some of the most common scams, followed by ways you can protect yourself.
The Grandson-in-Trouble Scam
Scammers may hack loved ones’ e-mail accounts and contact you claiming to be a grandchild who needs money. Often, they will claim to be in a foreign country and in urgent need of money to make bail, clear customs or deal with a medical emergency.
The thieves may pressure you to wire or transfer money overseas. If you do, your chances of recovering anything you send are almost nil.
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The Lottery Scam
In this variation, scammers will call or send an e-mail or letter telling you that you have won a great deal of money. All they need you to do is prepay a processing fee or put a percentage of the money in escrow.
As in the grandson-in-trouble scam, you may be pressured to wire or transfer money abroad. Don’t expect to get any of it back if you do.
The Medicare Replacement Card Scam
Scammers have been calling Medicare beneficiaries and telling them they must get a new replacement card, for $50 or $100. But, Medicare will not call you to demand money or other sensitive information in order for you to receive your card. If you receive such a call, you can bet it’s a scam.
Improper Financial Advice
The vast majority of financial services professionals are legitimate, but some bad apples may solicit business even though they have no insurance or securities license. Or they may attempt to convince you to make unsuitable transactions that generate commissions and fees but don’t benefit you at all — a practice known as “churning.”
In one known scam, unscrupulous annuity agents may set up an annuity contract so that any unused funds at death go to the insurance agent instead of to your heirs.
The Pyramid Scheme
This common scam typically starts with someone trying to sell you an investment — often with impossibly high returns, or with nebulous guarantees. But the scammer is always paying off earlier investors with later investors’ money. Eventually, the plan always collapses – leaving investors holding the bag.
Ways to protect yourselfHere are some steps you can take to protect your finances:
- Always verify loved ones’ identities and locations with a phone call before sending money.
- Be suspicious of anyone contacting you to ask you to wire money overseas for any reason.
- Don’t fall for too-good-to-be-true promises from investment salespeople. Be skeptical of any claims that your investment is “guaranteed” to make money or not to lose money.
- Verify insurance and securities license numbers with your state’s department of financial services. Look for any history of discipline or misconduct.
- Make checks out to the investment company or the insurance agency. Never to the advisor or agent, personally.
- Use your state’s “free look” period to thoroughly read over any annuity contracts or life insurance policies.
- If others are helping you with your finances, or if you have a power of attorney in place, consider setting up some checks and balances.
- Never give out your Social Security number or other personally identifying information to someone calling or e-mailing you out of the blue.
If you think you’ve been a victim of a scam or want to report one to the Federal Trade Commission, you can do so here.