The elderly often fall victim to financial scams, because many older people are looking for (easy) opportunities to get more money – which creates incentives for scammers to defraud older people. In fact, the Consumer Protection Bureau estimates that con artists steal over three billion dollars a year from older Americans.
Therefore, the elderly must learn how to spot the most common financial scams to avoid getting ripped off.
Many elderly people live in homes that could use some repairs. That’s because it’s harder for older people to make those repairs themselves. Unfortunately, this creates an opportunity for scammers to pretend they are home contractors – charging elderly customers upfront – and leaving before finishing the work.
Therefore, you should always verify that someone is a legit contractor before paying any money. You should research potential contractors with the Better Business Bureau and online. You should also only hire contractors that are bonded (insured) to protect you from any losses.
A common telephone scam is to tell an elderly person that a family member is in trouble and needs money. For example, the con artist might pretend that a family member is in the hospital and needs money sent to pay for medical expenses. Therefore, you should never send money to any stranger that claims to speak for a family member in trouble.
Instead, contact the family member – or another close family member to verify the situation.
The elderly also fall victim to ransom scams. For example, a caller will claim to be holding a family member hostage. The scammer will then demand the victim pay a ransom before releasing the family member. You should contact law enforcement immediately if someone demands a ransom from you. Never agree to pay a ransom without consulting with law enforcement first.
Phone scams can also target elderly consumers with fake goods or services. For example, a scammer will call an elderly person posing as a salesperson with a good sales pitch. The con artist will then try to convince the elderly person to pay upfront for the phony product or service – and then not deliver anything after getting the money.
Medicare fraud is a common form of identity theft targeting the elderly. Identity thieves will steal information from a Medicare card – and use it to file false medical claims under the victim’s name. That’s why you must safeguard your Medicare card and all of your medical information. If your Medicare card is ever lost or stolen, contact the Social Security Administration to replace it.
Con artists also target the elderly with phony contests. For example, a con artist will contact an elderly person about winning a prize. The scammer will then claim the winner must pay fees (or taxes) before collecting any prize. Unfortunately, this is often a scam, and the victim ends up losing money. However, if you do win a prize, you will pay taxes directly to the state and federal government – not to a third-party.
There is another variation of the phony contest scam. A stranger will contact an elderly person claiming to have come into some money. The scammer will usually say something like they need help paying their taxes on the money. The scammer will then offer to share the money with the victim if the victim agrees to pay the taxes. Unfortunately, the victim never receives any money.
Final expenses are often on the mind of the elderly. That’s because many older people struggle with how to pay for final expenses. Unfortunately, this sets up many elderly consumers to fall victim to funeral and burial scams. For example, a con artist might sell you a fake burial plot or a phony insurance policy. That’s why you should only deal directly with funeral homes and insurance companies.
Many older Americans struggle to pay for bills and medical expenses. Homeowners over the age of 62 can use their home’s equity to generate cash through a reverse mortgage. Unfortunately, there are many reverse mortgage scams–scams that end up taking your home without paying you much (if anything) for it. Therefore, you should only take out a reverse mortgage from a reputable financial company.
Finally, the elderly can often fall victim to investment scams. For example, retirees can get scammed into buying fake investment products from scammers like Bernie Madoff. Another investment scam is an annuity with really high fees-fees that end up eating the entire cash flow from the annuity.
Unfortunately, getting out of an annuity agreement (even a fake annuity) is difficult. Therefore, the elderly should always consult with reputable financial planners before making retirement decisions.
In short, the elderly must carefully think carefully and guard their money to avoid financial scams. Never pay upfront for any work on your house – and make sure that any contractor you hire has insurance. If you get a phone call from a stranger asking for money, hang up the phone.
If the caller continues to threaten you to give them money, contact your local law enforcement. Also, don’t pay anyone that claims you have won a prize or that offers to share money with you. When it comes to final expenses, home mortgages, and investments, only do business with reputable companies after researching them.
Remember, if an offer sounds too good to be true, then it probably isn’t true.