Types of Elder Fraud
We are all susceptible to fraud. Scammers often prey on emotions, the potential for a “nest egg” and reduced memory skills as we age. Seniors may be even more vulnerable to fraud when experiencing life changes. To help you understand the risks for fraud, we’ve developed this guide to help you understand the different types of elder fraud, and ways to protect yourself from it.
Financial exploitation can occur when businesses, individuals, or charities use pressure tactics, misleading language, or images that cause seniors to make financial mistakes. Examples of this type of exploitation include:
Criminal Fraud – This happens when thieves steal your identity and information or con you into sending money or sharing personal information.
Identity Theft – Identity theft occurs when a thief pretends to be you to fraudulently obtain money or other items. It often occurs when a fraudster steals and uses your credit card or bank account number.
Abuse of Trust – This can occur when family, friends, or even paid helpers take advantage of the trusting relationship they have with you to swindle you out of money.
Familiarity Fraud – This can occur when a fraudster uses information about you or your habits to scam you, even potentially following your family online to see what their activities and routines are, to find out more about you.
Stranger Fraud – This type of fraud is committed by strangers who have just enough of your personal information to trick you into thinking they have some type of relationship with you.
Health Scams – This type of fraud occurs by preying on your desire to remain healthy as you age. Unfortunately, a popular scam includes online sales of vitamins or drugs where there can be a lack of accountability for these items. Because of this, government and industry organizations alike warn against purchasing drugs online because there is no reasonable way to ensure the drugs you receive are correct, the recommended dosages are correct, the drug has not expired, or that the drugs will even be shipped to you.
Telemarketing Scams – This occurs when a telemarketer attempts to sell you bogus products and services by phone, such as free prizes and offers, low-cost vitamins, drugs or healthcare products, and inexpensive vacations. If you are age 60 or older—and especially if you are an older woman living alone—you may be a particular target. A good rule of thumb is that if it sounds too good to be true, it probably is.
Types of Stranger Fraud
Popular types of stranger fraud include impersonation or promise scams. Examples include:
Email Phishing – Phishing occurs when a thief sends you an email that appears to be from a legitimate source or company that you do business with. The good news is these emails often offer clues that they are fake, including poor grammar, odd-looking link addresses, or unusual requests for sensitive information like passwords, account numbers, and social security numbers.
Bankcard Skimmers – Data can be “skimmed” from any machine with an unauthorized skimmer attached to the mechanism where you insert your bank or credit card.
IRS Impersonation – In this scam, a thief may call claiming to be an official IRS agent, sometimes even reciting a fake badge number. The con artist usually claims you or a loved one have unpaid taxes or mistakes on a tax return. They often demand immediate payment, with threats of arrest, deportation, or other legal action.
Charitable Donations – When you donate money to a new charity, your name often appears on lists of those known to donate. These lists are often purchased and because of this, a senior might receive multiple calls a day asking for money from fraudsters claiming to be associated with a charitable organization that seems legitimate.
Investment or Insurance – This scam usually promises a short-term return on investment and involves an advertisement or salesman who persuades you to invest in an unusual asset, such as commemorative gold coins, a pet rescue farm, or even penny stocks.
Lottery or Sweepstake Scams – These scams generally involve informing you that you’ve won a large prize of some kind. They often require a small amount of money to be paid to collect the prize.
Home Improvement – This type of fraud typically involves a contractor who insists on being paid upfront for work that he or she never intends to complete. Other variations of the scam might include a contractor who overcharges or charges you multiple times for the same work.
Types of Familiarity Fraud
With familiarity fraud, scams can be perpetrated by someone the victim knows, or by someone who appears to be familiar. Examples include:
Misappropriation of Income or Assets – This usually involves someone close that is exploiting or exceeding the authority they’ve been given over your finances. For Social Security, this can be someone who becomes a “representative payee” of benefits, who improperly accesses your Social Security income. A representative payee is similar to becoming an agent under a power of attorney.
Other examples might involve adding a name to a bank account under false pretenses, abusing power of attorney, or transferring a title to or re-encumbering real property.
Powers of Attorney – Fraud can happen when powers are granted to the wrong individuals.
Obituary Scam – This can occur when a scam artist calls a widow or widower to inform them that their deceased spouse owes thousands of dollars in unpaid debt. They often threaten financial ruin if you don’t pay quickly. Often, a steeply discounted “settlement offer” is proposed.
Grandparent – In this scenario, the individual receives a call, seemingly from a grandchild claiming to have been arrested, hurt, or in some other financial jam while on vacation. The fraudster may even search for the grandkids online so they can use actual names, making the con seem more believable. In this scam, the “grandchild” needs money and doesn’t want their parents to know because they will get angry. These calls often happen late at night, when you are groggy and confused.
Sweetheart Con – This type of scam involves a younger man or woman who develops a close relationship with a senior—typically someone who is lonely or who has become isolated. Their goal in this relationship is to be written into the will or to receive gifts.
Vigilance may be the most effective tool against financial fraud. Here are a few strategies that could help you prevent becoming an unwitting victim:
You might think women, older seniors, those living far from relatives, or those who have lost a partner are more vulnerable to fraud, but that notion may be deceiving. Fraud victims can include those who are:
As a senior, you should be alert to the life changes that may leave you vulnerable and can affect financial judgment. Examples include:
POA abuse is a legitimate concern because fraud can happen when powers are granted to the wrong individuals. It’s important to use care by:
Remember, you can limit the powers you give agents. For example, you can spell out that the agent can’t change your wealth transfer strategies or apply for credit on your behalf.
The following guidelines are recommended by the US Health and Human Services Administration on Aging:
Your financial advisor should be vigilant when it comes to keeping seniors safe. Ask them how they might handle potential issues.