Six Common Financial Scams Targeting Seniors
Seniors are among the most vulnerable to scams, financial exploitation, and identity theft. As scammers become increasingly sophisticated, seniors need to be aware of the common scams targeted at them and how to protect themselves. Seniors and their caregivers must be aware of the most common ways seniors are targeted for financial scams. In this regard, there are six more frequently occurring financial scams perpetrated against seniors:
- Medicare and health insurance fraud
- Fake lotteries or sweepstakes
- Investment fraud
- Homeowner or reverse mortgage scams
- Grandparent scam
Statistics Regarding Incidence of Elder Financial Abuse in the United States
Before discussing specific types of elder financial abuse, we spend a moment discussing the incidence of this type of illicit conduct in the United States at this juncture in time. Elder financial abuse is an often underreported yet tragically widespread form of elder abuse. Thousands of older adults are victims of fraud, theft, or other scams that target their finances every year. These scams can strip away the life savings of people who have worked hard and put aside what they could to ensure a secure retirement. While most people think of elder abuse as physical mistreatment or neglect, financial abuse is just as real and can be devastating for the elderly person and their family.
Financial exploitation of seniors can take many forms, including identity theft and telemarketing fraud. Over $36 billion annually is estimated to be lost due to elder financial abuse in the United States alone. Unfortunately, this amount may even be underestimated due to the reluctance of many elders to report these occurrences due to shame or embarrassment that they were taken advantage of.
Scam artists often target seniors because they may not be as tech-savvy as younger generations and may not recognize common warning signs, such as requests for personal information or payment before delivery. Additionally, older adults may live more solitary lives than younger generations. They can be more vulnerable to offers made through mailings or phone calls from strangers claiming to offer help with finances or legal matters. While anyone can fall victim to a scam artist, studies have shown that those aged 60 and over are much more likely to be targeted for financial exploitation than any other age group.
Further compounding the problem is that even when scams are recognized early enough, it can still take months before a victim’s funds are recovered – if they ever are at all. This often means that elderly victims have had some portion of their life savings stolen while they wait for a resolution. This issue can have devastating consequences on the retiree’s quality of life during what should be their golden years.
Medicare and Health Insurance Fraud
Scammers use deceptive tactics to obtain personal information or money from seniors by misrepresenting a Medicare or health insurance program. They may pose as health care providers offering free services or apply for benefits they aren’t eligible for to receive reimbursement checks. In addition, they may sell fake medical equipment and services, false file claims, and even prescribe medications without a license.
These automated calls can range from telemarketing offers to financial frauds, such as debt elimination schemes or credit card interest rate reduction scams. They also include Social Security scams with callers falsely claiming that the senior’s social security number has been compromised or suspended due to suspicious activity.
Fake Lotteries or Sweepstakes
Scammers often tell seniors that they have won a foreign lottery or sweepstakes but must pay taxes—or other fees— to receive their prize money. Of course, these fees only add up over time. The victim never gets any winnings back in return despite having paid out hundreds if not thousands of dollars in fees trying to collect their non-existent prize money after being told they had already won.
Senior investors are often targeted by scammers who offer investments with unusually high returns while taking advantage of the investor’s lack of knowledge about investing and its risks. Some scammers will even provide fake documentation, such as false legal opinions, to make the deal seem legitimate when it is a scam designed solely to steal money from unsuspecting victims.
Homeowner or Reverse Mortgage Scams
Reverse mortgage scams involve convincing elderly homeowners that they can benefit greatly by using the equity in their homes through reverse mortgages when in reality, this is just another way for scammers to get easy access to seniors’ assets without providing any real value in exchange for them doing so. Other home loan schemes involve falsifying documents, charging excessive fees, and selling unaffordable mortgages with predatory terms, like balloon payments or prepayment penalties which could put the senior homeowner at risk of losing their home.
This scam involves a criminal pretending to be a grandchild who needs help with some emergency situation requiring immediate funds transfer—usually involving large sums of money given immediately—which usually leads to more requests for additional funds wired across borders soon afterward.
How to Protect Your Senior Parent From Becoming a Victim of Elder Financial Abuse
Elder financial abuse is becoming increasingly common, with many seniors falling victim to fraudulent schemes by unscrupulous predators. It’s important to take steps to protect your elderly parent or loved one from this form of exploitation. We present tips for keeping your senior safe from elder financial abuse for your consideration in this article.
First and foremost, make sure you have open and honest conversations with them about their finances. Seniors often don’t discuss their financial situation openly, making it easier for scammers to exploit them. Talk through all the details of their finances and familiarize yourself with where they keep their money, whom they trust with it, and how they manage it. Ask if they are ever approached by people offering advice or assistance in managing money; if so, be sure to get more information before moving forward with any transaction.
Reviewing your senior’s estate plan regularly is also a good idea. Ensure all beneficiaries are up-to-date and any changes made over time are reflected accurately in the documents. Additionally, be aware of changes in the power of attorney status or other legal documents related to their finances; these could indicate that someone else may be taking advantage of your senior’s financial situation without consent.
You should also check credit reports regularly for suspicious activity, such as unauthorized accounts opening in the senior’s name. This can alert you to those trying to steal funds or obtain assets in the elderly person’s name without authorization. If suspicious activity is spotted, immediately contact the bank or institution holding the account and notify law enforcement authorities immediately if necessary.
Finally, consider ways to provide extra protection, such as establishing an ongoing automatic payment plan or setting up a third-party notification service that requires two signatures on all checks going out of their bank account(s). You may also consider setting up an online trust fund where funds can still be accessible but require additional approvals before release. This will reduce opportunities for someone to take advantage of your senior’s finances without proper authorization from multiple parties involved in overseeing the account(s).
Protecting elderly family members from elder financial abuse is essential for ensuring their safety and well-being. Open conversations about finances should become a regular part of family discussions as part of a broader strategy for monitoring transactions involving seniors’ assets, liabilities, and income sources over time. Regularly reviewing estate plans, credit reports, and other documents related to seniors’ finances will help ensure that everyone involved is acting appropriately when it comes to handling valuable resources like money or property owned by a senior citizen — and ultimately help protect vulnerable family members from potential harm due to elder abuse and exploitation.