If you’ve ever been a victim of fraud, you’re not alone. An estimated 7 million Americans aged 65+ are targeted each year by scammers, fraudsters, and opportunists.¹ This estimate is very likely on the low side, however. According to data collected by Adult Protective Services, only 2.2% of elderly fraud victims actually report the scam to authorities, making it difficult to assess the true damage caused by the financial exploitation of seniors.² A recent study by professional fraud researchers states that seniors lose over $36 billion every year to financial abuse.³
Over the past few years, numerous government agencies and non-profit organizations have begun taking steps to push this crisis into the spotlight. But while we wait for widespread policy change, it’s critical to understand what types of schemes to watch out for and how to protect yourself against them.
Financial exploitation: These abusers operate openly, asserting that their victims have consented to the scheme. These schemes are technically legal but are ethically heinous. This category includes: 1) bogus anti-aging or weight loss products; 2) misleading financial advice from professionals; and 3) work-from-home schemes (also called “multi-level marketing” or “MLM” schemes).
Examples: A funeral director may insist that you include an expensive casket in your funeral contract, despite the fact that you only want a simple cremation. A friend may try to get you to start a side business selling Avon or Mary Kay, promising nigh unattainable rewards like cruises and six-figure salaries. What isn’t mentioned, however, is the fact that only 1% of people selling MLM products make any kind of profit at all.⁴
How to protect yourself: The best weapon you have against these types of schemes is knowledge.
- Use the internet to search for reviews on companies, products, and professionals – Google and Yelp are great places to start your search. If using the internet is not an area of your expertise, ask a trusted person to help you research things.
- You may also consider taking a trusted person with you to meetings with professionals to help you look for any red flags.
Criminal fraud: Unlike financial exploitation, criminal fraudsters employ devious and illegal schemes. Criminal fraud includes reprehensible tactics such as: 1) identity theft; 2) “Nigerian prince” emails; 3) the “grandparent scam” and sweetheart scams; 4) phishing; and 5) IRS and Medicare fraud.
Examples: “Phishing” is an attempt to obtain your personal information via email by pretending to be a legitimate source (such as Apple or Yahoo) and claiming there is an issue with your account. However, the email will direct you to a fake log-in screen. Once you submit your password, the scammers now have access to all personal and financial information in your emails. The “grandparent scam” is an attempt to steal your money by pretending to be a loved one in trouble and desperate for cash (for a plane ticket, medical expenses, etc.). One of the most well-known examples of criminal fraud is the IRS scam. Someone pretending to be from the IRS will call you and inform you that you owe back taxes. Similar scams exist as well, but the caller will claim to be from Medicare.
How to protect yourself: There are many ways to prevent financial loss from fraud of a criminal nature, including:
- Invest in a small paper shredder and destroy any bank statements, credit card offers, and other such documents before throwing them away.
- Avoid ordering products over the telephone.
- Carefully read all emails from unfamiliar senders and do not click any links until you’re positive it’s from a legitimate sender. When in doubt, contact the company the email claims to be from and ask if there is truly an issue with your account.
- The IRS will never contact you by phone. The IRS only initiates contact via letters sent to the address listed on your tax returns.
If you fall victim to a senior financial scheme despite taking all necessary precautions, the most important thing you can then do is report the scam to the proper authorities. People often feel embarrassed to admit that they have been scammed, however predators who make a living by financially exploiting the elderly rely on your silence to be successful.
Stay safe, trust your instincts, and don’t be afraid to ask for help.
Read more in our series on Senior Scams.