What is Elder Fraud?
Elder Fraud is the exploitation, abuse or misappropriation of an elder’s finances by a person in a position of trust. This type of fraud specifically targets senior citizens: people 60 years old or older. The defrauder can be someone the elder knows, such as a family member or caregiver, or can be a stranger.
Why are Seniors Targeted?
In a 2019 Consumer Financial Protection Bureau Report, financial institutions reported $1.7 billion in suspicious activities, including actual losses and attempts to steal seniors’ funds. Because these incidents are widely underreported, this number likely represents only a fraction of elder fraud. A study by Comparitech estimates that the real number of cases of elder fraud that occur each year is closer to 5 million, resulting in $27.4 billion in losses. Here are some reasons why scammers seek out and prey on seniors:
- More assets, more problems: Older people have lived longer, and therefore have had time to accumulate more assets. People between the age of 55 and 65 have six times more cash than those in their twenties and are more likely to own their own home. These reasons alone make seniors an attractive target.
- A New Era: People who grew up between the 1930’s- 1950’s were raised before the advent of the internet and the ease of virtual deception. Elders are known for being more trusting and polite, making them more vulnerable to scams. Seniors are more likely to trust fake offers and are less likely to say “no” or hang up the phone when a scammer calls.
- Scammers know their Audience: Most seniors have similar concerns- retirement, medication, health care, insurance, etc. Scammers exploit these concerns with emails and calls offering opportunities to save or make money to fund these often costly necessities.
10 Common Types of Fraud to Watch Out For
According to the Office of Financial Protection for Older Americans, over half of all cases of elder fraud, the fraud is committed by a stranger by mail, email, telephone, or other form of telecommunication. Here are the most common types of Elder Fraud:
Scammers targeting seniors will offer discounted vacation sprees and cheap health care products that promise anti-cancer properties, vitality, and so on. Sometimes, the scammer will tell the victim that they won a huge prize, but they need to pay a smaller fee to claim it. Convinced by these enticing offers, some seniors willingly hand over personal information. Any situation where a person hands over personal information to a stranger can lead to identity theft, as the scammer can use it to access existing accounts, open new accounts, apply for credit cards… the possibilities are dangerously endless.
2. Email Scams
A scammer will send out emails posing as a real company or government entity asking the recipient to verify personal information. Similar to telemarketing scams, the recipient of these communications are conned into handing out personal information.
3. Medicare Scams
Because every US resident over 65 qualifies for Medicare, scammers use this to their advantage. The scammer will call and pretend to be a Medicare representative and ask the individual for private information.
4. Investment Scams
Fraudsters posing as investors seek to take seniors’ money by guaranteeing a greater return in the end. Seniors are more desirable targets of these types of scams because they often have more savings and fixed incomes. Short-term investments are especially appealing to seniors who believe that they will reap rewards in a few months if they just invest some cash up front.
5. Insurance Embezzlement
Some scammers convince seniors to invest money that will help their family after they themselves have passed. This scam is extremely common, as it appeals to good-natured seniors who want to provide for their loved ones. Even licensed insurance agents can commit fraud. Recently, insurance agent David Picket was arrested for embezzling money from seniors for the third time!
6. Grandparent Scams
Arguably the most egregious of the Elder Fraud scams is the Grandparent Scam. Here, the scammers calls a senior, pretending to be his or her grandchild in trouble. The scammer convinces the senior there is an emergency and to send money immediately.
Often the victim is so panicked that he or she does not have time to be suspicious, and dutifully sends funds to the imposter. One conman who perfected the Grandparent scam reported, “You can make $10,000 sometimes in a day if you do it properly.” He claimed that about one out of every 50 seniors he called fell for his scam. Recently, a con artist called a woman posing as a police officer, and scammed her out of $20,000 she thought was going toward bailing her “grandson” out of jail.
7. Social Security Scams
This is the number one type of fraud reported to the FTC. In 2018 alone, over 35,000 people reported the scam, which account for a total loss of $10 million. The scammer will call posing as the Social Security Administration, claim there is a problem with your Social Security number or benefits, and then demand payment to avoid arrest or legal action. Click here to hear what one of these scam calls sounds like.
8. Fake Pharmacies
According to the National Association of Boards of Pharmacy (NABP), 96% of online pharmacies were found to be substandard or operating illegally. There is no way to be sure if these sites pedaling prescriptions are legitimate. Some sites have been found selling counterfeit drugs, expired drugs or drugs that have not approved by the FDA. The FDA has investigated about 20 cases of counterfeit drug scams a year since 2000.
9. IRS Scam
This type of scam is extremely common, resulting in millions of dollars in losses for thousands of people over the years. A scammer will use the phone, mail, or email to pose as the IRS and threaten jail time if the recipient does not pay their debt to the IRS immediately.
10. Gift Card Scams
Gift cards are the most popular form of payment requested by scammers. These cards are extremely difficult to trace, which makes it easy for these criminals. Recently, an 80-year old victim was called by a scammer and told that her social security benefits would be cut unless she bought gift cards and read the bar code to the caller. She complied and lost $80,000 of her personal savings.
In another case, a woman was contacted by a scammer posing as a sweepstakes program. She believed she won $750,000 in cash, but in order to collect her prize, she needed to pay $2,500 upfront in gift cards to “cover the taxes”.
5 Ways to Protect Yourself Against Fraud
- Be Aware: Now that you know the signs of some common scam schemes, you have a better idea what to look out for and what to avoid. Being skeptical of unsolicited offers and anyone asking for personal information or money is your best defense against these criminals. Unfortunately, many cases of elder fraud are committed by caregivers and family members, so always be careful who you trust or give information to.
- Keep Private Information Private: Never give out personal information like your full name, birthday, social security number, bank account numbers, or credit card numbers over the phone, by email, or any other form of communication to someone you do not know. If anyone asks you to send them money, this is a huge red flag. There is no reason to send money to anyone requesting it- by mail, email, phone or otherwise.
- Talk to someone you trust: Consult a trusted family member, financial advisor, or attorney before giving away personal information or money to anyone.
- Reduce your Risk: Many scammers get their victims’ phone numbers from telemarketing lists. Signing up for the National Do Not Call registry will reduce scammers’ access to you. This registry is a free service provided by the Federal Trade Commission. Call 888-382-1222 to sign up or register here: https://www.donotcall.gov/.
- Report: 1 out of every 10 seniors in the U.S. fall victim to elder fraud. These numbers may be even higher, as most seniors don’t report most cases out of embarrassment. However, there is no reason to feel embarrassed. Millions of people every year, not just seniors, fall prey to these scam artists every year. If you fall victim to fraud, it is not your fault, and you are definitely not the only one who it has happened to. Reporting fraud not only gives you a better chance of recovering any losses, it may help others from becoming victims of the scammer in the future. You can report fraud directly to the authorities or to the National Adult Protective Services Association.