How Seniors Can Avoid Financial Scams
The FTC has determined that in 2023, consumers lost more than $10 billion to fraud with $3.4 billion to consumers over age 60. The average loss was $34,000.
Increasingly, older adults are the prime targets of scammers. There are two main reasons for this trend. First, seniors tend to be the most vulnerable demographic and second, they are more likely to have the financial means to meet the demands of the scammers.
These scams come in many forms. A caller may identify themself as a government official from the IRS, Social Security or Medicare claiming the individual has unpaid bills and threatening arrest or cutting off benefits if the person doesn’t provide personal information. Most often, they demand a specific form of payment such as a prepaid debit card, cash or wire transfer. Never respond to a phone call demanding immediate action. A government agency will not contact you by phone if there is a problem. If you are contacted in this manner, simply ignore the caller’s request.
The flip side of a phone scam that demands payment is a call that informs you that you have won a sweepstakes or lottery but requires you to send money, cash or gift cards to pay supposed taxes. Obviously, this approach appeals to the euphoria from “winning” in the hope you will let your guard down and reveal personal information.
We are inundated by robocalls that may claim that a warranty is expiring on a car or electronic device. Sometimes the purpose of the call is to record your voice to authorize charges on a stolen credit card. Other calls threaten an impending lawsuit which requires payment of a fine by a certain deadline or the person will be sued or arrested for a fictitious offence.
Another common scam is a pop up on your computer screen informing the user that the device has been compromised and requires fixing. Scammers will ask for remote access to the computer and demand that a fee be paid to repair it. It should be noted that no legitimate tech support will ever proactively seek you out to fix a “problem”.
Perhaps the most widely known tactic on seniors is the grandparent scam where a caller pretending to be a grandchild asks for funds to resolve an urgent financial problem such as an arrest, overdue rent or car repairs. Sometimes the scam is taken to another level when the caller claims to be an arresting officer, lawyer or doctor. In all cases, the caller asks to be paid with gift cards or a money transfer.
Other scams include romantic overtures, inflated promises of lofty investment returns and phony business opportunities. Another prevalent scam is a text from a large bank such as Bank of America, Chase, etc. “informing” you that your account has been compromised and to immediately call a number provided on the text to resolve the issue. If you call the number provided and they request information such as your account number or social security number, you can be certain it is bogus since the bank already has this information.
There are simple steps that an individual can take to identify and avoid these scams: never act too quickly, avoid odd payment types, take note of threatening behavior, be suspicious of fake caller ids, be cautious of impersonations, never reveal personal information and avoid suspicious links.
Unfortunately, with the advancement of AI, more sophisticated methods will likely evolve in the future. It appears that voice replication may represent the next phase. In an increasingly sinister world, red flags should be raised if you are contacted with an unusual and alarming alert requiring payment to resolve a “problem”.
Sincerely,
Clifford L. Caplan, CFP®, AIF®
CLC/nc