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 scamâand below are some of the most common onesâseniors are particularly at risk.
âOlder Americans are more vulnerable for many reasons,â 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. âOne big one is that millions of senior citizens live alone, it makes them easier preyâ 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. âThey have money,â Snyder says, âand crooks go where the money is.â
NAPSA lists no less than nine tricks that crooks use to separate seniors from their moneyâsometimes even taking the roof over their heads:
â˘Theft: When assetsâcash, valuables or other belongings are taken without knowledge or consent.
â˘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.
â˘Real estate: When property is sold or transferred to another party without knowledge or consent.
â˘Contractor: When a home contractor or handyman is paid for work that was never competedâor even started.
â˘Lottery scams: When someone is asked to pay a third party to collect a âprizeâ from lotteries or sweepstakes.
â˘Electronic: When someone is tricked by email into unwittingly surrendering account numbers or passwords for bank or brokerage accounts (commonly called âphishingâ).
â˘Mortgage: When victims fall for financial products that are bogus and/or unaffordable; this can include loans issued against property by unauthorized parties.
â˘Investment: This can include investments made without the account holderâs knowledge or consent. It can include the purchase of high-fee investment products or excessive trading activity designed to generate commissions for financial advisers.
â˘Insurance: This involves sales of inappropriate products, such as a thirty-year annuity for a very elderly personâor 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. âTheir tentacles are everywhere,â Snyder warns, âthey know the latest tricks and always seem to stay a step ahead of law enforcement.â
OK, so what to do about it? First, itâs importantâcritically importantâto 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 âthree Fs and a Câ problem: Friends, family, fiduciary and caretakersâthose are the primary perpetrators.â
Both NAPSAâs Snyder and Wells Fargoâs Long offer the same advice: Seniors should have conversationsâdifficult and awkward though they may beâwith 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. âThe family conversation just has to happen more.â
A good lawyer is helpful with such matters, of course, but if you canât afford one, check out AARPâs resource page on low-cost or free legal advice. Itâs a mistakeâpotentially a very costly oneâto think you donât need advice here.
Meantime, financial firms have begun offering duplicate statements that can be sent to a trusted person for reviewâtypically a childâso that person can ensure that everything is fine. If youâre a senior and arenât doing this now you may want to consider doing so.
Long calls this the âtrusted contact conceptâ 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. âThe concept of a second look is a good one,â 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. âIf Mom does anything up to $500, thatâs perfectly fine,â Long says, âbut beyond that, weâll reach out, usually with an emailâ 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.