Numerous types of scams ranging in complexity from simple deceptions to elaborate Ponzi schemes are conducted every day. Unfortunately, these frequently are directed at senior citizens, perhaps the one segment of society that has the least opportunity to recoup their losses should they fall victim to a scam.
While the various types of scams are too numerous to list here, the following is a look at some of the more common ones, along with tips on how to avoid them. Remember, becoming aware is half the battle.
The troubled relative scam – These involve phone calls claiming a relative is in custody, the hospital or otherwise in dire need of financial assistance. The callers make their claims believable by somehow knowing or by getting seniors to divulge the names of their loved ones. The callers can get away with thousands of dollars by insisting funds be wired immediately. By the time victims realize they have been scammed, it is too late to stop the transactions.
The best defense against this type of scam is education. If you have an elderly relative you fear could fall victim to this type of scheme, caution him or her to be wary of phone calls requesting money. Advise them to:
• Gather as much information as possible by asking questions;
• Avoid acting in haste or making on-the-spot decisions;
• Report all instances of deception immediately to his or her local police department or to the FBI by going to their website (www.fbi.giv/scams-safety/fraud/seniors/seniors) for directions.(1)
Pension Scams – Certain investment companies will offer cash advances in exchange for the assignment of pension benefits. Repayment of these advances is subject to long-term contracts with no early payback options, effectively resulting in exorbitantly high interest rates. Although federal law makes it illegal to sell or assign military or federal pensions, retired military personnel, along with police, firefighters, teachers and other public employees are frequently the targets of this particular scam. Perpetrators get around the law by requiring retirees to deposit their pensions or a large portion of it into bank accounts controlled by the investment companies. These companies also manage to skirt truth-in-lending laws by claiming they are not banks.
Being aware of the law prohibiting the assignment of certain pensions can help potential victims avoid this particular scam. Other steps to take include:
• Never give anyone including creditors access to or information regarding the bank account into which your pension is deposited, and
• Take time to figure out just how much you would be paying back over time for the cash advance.(2)
Medical identity theft – This is a growing problem whereby a person’s insurance and personal information is compromised and used to obtain medications or treatments or to submit false billings. Some 250,000 people fall victim to medical identity theft each year according to recent government statistics, making it one of the fastest growing forms of identity theft in this country. Victims often face out-of-pocket expenses, loss of health insurance or the need to pay much higher premiums to restore their coverage. Last year about 36% of medical identity theft victims incurred out-of-pocket expenses averaging nearly $19,000. What’s more, these victims can receive incorrect medical care as a result of their medical identities having been stolen.
One of the best ways to protect against medical identity theft is to protect your insurance information as you would your credit card information. Seniors should avoid carrying their Medicare card on them as these cards contain Social Security numbers. Instead, make a copy, blacking out certain digits to thwart theft of the information. If your medical information has been lost or stolen, report it immediately, beginning with a complaint to the Federal Trade Commission.(3)
Fake funeral invitations – There is a new trend, according to the AARP Bulletin (July-August 2014, Vol. 55, No. 6), whereby thieves send emails announcing fake funeral notifications. While these emails contain the name and logo of actual funeral homes, they also contain links that, if clicked on, unleash malware designed to obtain files and sensitive information, such as passwords, which can, in turn, be used to steal the identity of the targeted victim.
The easiest way to recognize fake funeral announcements is through their vague subject lines. Legitimate announcements would include the deceased’s name.(4)
(4) AARP Bulletin; July-August 2014, Vol. 55, No. 6