The Nice Guy Doesn’t Always Win: Avoid Scams
The vast majority of people are worthy of our trust. Particularly those with whom we most often come in contact because they’re likely to be part of the same community, have common friends, and adhere to similar values. But it is absolutely true that there are people who should never be trusted. As unfortunate as that reality may be, we do ourselves a great disservice if we don’t keep it tucked away in the back of our minds when approached by someone asking us for money, personal information, or access to our residence.
Financial Scams Often Target Seniors
Regrettably, seniors are a popular target of financial scams. It is estimated that seniors are duped out of a total of $1+ billion every year, although we’ve seen estimates as high as $4+ billion. And even those estimates are widely believed to be low because most financial losses are assumed to go unreported.
Why are seniors such common targets? Well, for a few reasons: they tend to have above average amounts of accumulated wealth; some are lonely and fall victim to those projecting friendliness; a high proportion of the elderly — particularly widows — may not be accustomed to managing household finances; seniors tend not to be familiar with modern financial systems; and there are some with diminished mental capabilities.
The Impact of the Internet and Cell Phones
For most young people, it’s difficult to imagine a world without the Internet, that seemingly endless sea of instant information and entertainment that’s almost always right at our fingertips. But the Internet didn’t really hit mainstream America until about 1995. That means that for many of us, it simply wasn’t a part of our childhood and young adult years. For that reason, the Internet is relatively new territory for those of us born before, say, 1970. And new territory almost always comes with both opportunity and risk. As it relates to the topic of scams, the Internet allows swindlers to reach large numbers of people with relative ease; convincingly impersonate friends, relatives, and/or companies; operate in obscurity, frequently from outside the United States; and accommodate the transfer of money electronically. Yet, for many seniors, the Internet is an easy way to maintain contact with the outside world, so their exposure to online scammers may be significant.
Cell phones are also a relatively new entry into our daily lives, yet have become nearly ubiquitous. Much like the Internet, cell phones can be abused for illicit financial gain at high volume. Robo-calls — which are phone calls made by a computerized autodialer that deliver a pre-recorded message — can target thousands of people with ease. If only a small percentage of people fall for a deceptive message delivered to tens of thousands, the rewards to the scammers can be significant. Adding to the effectiveness, these phone calls and/or delivered messages often catch the recipient off guard and may assume a tone of urgency. Seniors may act in haste and divulge sensitive information before properly assessing the request.
In summary, the Internet and cell phones carry an implied sense of credibility for many seniors because they represent such impressive technological advances, yet the dishonest can leverage that assumed credibility to enhance their chances of deception. Additionally, Internet and cell phone scams have the advantages of high volume and anonymity.
Other Forms of Scams
Not all scams occur online or by phone. Any interaction between a senior and a “trusted” advisor is an opportunity for a less-than-virtuous person to take financial advantage of the situation. And in some cases, the abuse may not be illegal, but it could meet the definition of a scam in the sense that it is a scheme to wrest an inappropriate sum of money from someone. Below are some all-too-real examples of how seniors fall victim to the dishonest:
- Funeral Homes — Preying on grieving widows and widowers, unscrupulous funeral home and cemetery operators can easily dupe seniors into paying excessive amounts for some services, or selling entirely unnecessary services. For example, persuading the surviving spouse to purchase an expensive casket even though a direct cremation is to be performed.
- Financial Advisors — These trusted “fiduciaries” often have unfettered access to a person’s financial affairs, including sensitive personal information and bank accounts. There are cases where financial advisors have been able to transfer significant amounts of money from the clients’ accounts into accounts under the advisor’s control.
- Home Repair — Seniors who choose to remain in their longtime residences are often faced with needed repairs that they’re no longer able to make themselves. This literally “opens the door” to contractors who may overcharge for needed services, recommend unneeded services, or fail to complete the repairs properly. There are also cases where unsolicited services are pitched to seniors.
Common Financial Scams
There is a near endless range of opportunities to defraud, but it’s worth reviewing a few of the more common approaches to both prepare for these specific schemes and to develop a pattern of thinking that could protect against other types of fraud.
- Health Insurance Fraud — With most seniors on Medicare, impersonating a Medicare representative has a high percentage chance of reaching the desired target. The “representatives” can often gain access to personal information, including Medicare account credentials, allowing the scammer to bill Medicare for fraudulent services or even access the victim’s bank account.
- Prescription Drugs — It’s no secret that medication costs are painfully high for many seniors, which makes older adults susceptible to those “companies” promoting drugs at attractively low prices. Regrettably, these drugs — often promoted online — may be counterfeit. Beyond losing money for a drug that won’t provide the needed benefits, some of these drugs may actually be harmful.
- Telemarketing — According to some reports, seniors make twice as many purchases by phone than the average person. This makes them comfortable with the process and, therefore, easy targets for telemarketers selling products. Sometimes the products are simply unneeded and/or overpriced, and in some instances they are never delivered.
- Phone Scams — Solicitations for fake charities (particularly after a newsworthy natural disaster); people posing as friends of loved ones who urgently request money on behalf of that loved one who is, purportedly, in the hospital or other needy predicament; and the promise of a large sum of money that has unexpectedly been directed to the victim, are all common approaches take by phone scammers.
- Internet “Phishing” — These are often emails that are sent under the false guise of a well-known, trusted source with the intention of soliciting money and/or sensitive information for malicious purposes. These emails may insist that the recipient must update or verify personal information — including account numbers, usernames, and passwords — that can then be used to gain access to credit cards and bank accounts. The impersonated source could be the IRS, Amazon, FedEx, eBay, PayPal, VISA, or other known entities.
- Sweepstakes and Lottery Scams — In this scam, the victim is told they’ve won a sweepstakes or lottery and is given a check for deposit into their account. The check, however, is fake. During the days that it takes for the bank to reject the deposit, the perpetrators meanwhile collect taxes and other fees related to the winnings.
- The Grandparent Ruse — “Hello Grandma! Do you know who this is?” Any guess from Grandma just provided the scammer with an identity through which can be requested money to help with “overdue rent”, “car repairs”, or some other unexpected financial setback. And, of course, “please don’t tell my parents, they’d be so disappointed in me”.
- Cryptocurrency — As old as the “Grandparent” scam may be, the cryptocurrency scam is equally as new. Riding the wave of news and hysteria over the instant fortunes made in cryptocurrency, online ads or social media posts are drawing money from a growing number of naive “investors”. While seniors tend not to be particularly prone to cryptocurrency pitches, the ones that do fall victim to crypto scams tend to lose far more money than average.
There are certain commonalities to most financial scams that can be used to detect possible threats. These include the following:
- Longer life
- Impersonating a friend, family member, or well-known entity
- Requesting confidential information that could be used to access financial resources
- The offer of unexpected and significant financial gain
- Feigned urgency and the need for confidentiality
If you’re hit with an email, letter, phone call, sales call, or any solicitation that contains one or more of the above, take a moment to consider if the action being requested of you could put your finances at exposure to risk.
If you sense the possibility of a scam, stop and think before you act. Rarely is immediate action required for a legitimate offer, opportunity, or even a “crisis”. When in doubt, ask for contact information and tell them you’ll be in touch with an answer after you’ve had time to think. (If they refuse to provide it, you probably jus avoided a scam). Then research the entity by other means. Consider contacting someone you can trust to help assess the situation. You may even want to do some online research to see if others have fallen victim to the same pitch. In almost all cases, never provide confidential information such as account numbers, usernames, or passwords.
On the Bright Side
Fortunately, the vast majority of those interacting with seniors or providing services on their behalf are motivated by all the right reasons and can be trusted to the fullest extent. And most seniors are surely able to detect a con artist when one approaches. So the above information is not meant to create an unhealthy sense of paranoia or mistrust, it’s meant to simply raise everyone’s awareness level and, possibly, promote some discussion about ways to spot scams and protect oneself from them.
CiminoCare’s trained staff members are on the lookout for situations that may present the opportunity for financial abuse or outright fraud. If we hear residents speak of suspicious solicitations, stories of unexpected financial windfalls, or discussion of distant relatives in urgent need of financial assistance, these are red flags that may warrant sharing with management and that resident’s family members.
But the best defense is prevention at the point of contact. We encourage families to discuss the prevalence of financial scams so that all ages can be on-guard against fraud; this is not a crime restricted to our older loved ones. With just a bit of extra awareness and diligence, scams are easily avoided.