For many tax-paying citizens and older adults, working hard every day to earn a living and provide for themselves and their families is a way to provide financial security long-term.
The last thing anyone wants is to become a victim of financial scams that can leave you in debt or allow criminals to engage in identity theft or steal a large chunk of our nest egg. Unfortunately, money scams and financial abuse are all around us, and they can happen to anyone regardless of their age, profession, or investment experience. However, many scam artists choose to gravitate to older victims who may be more likely to give in to their demands or fall for their investment schemes.
In this blog post, we’ll discuss some of the most common money scams to watch out for, how to protect elderly from scams, and how to protect your finances.
Understand common scams and frauds
What are Common Scams and Frauds?
Although some money scams are easy to spot, others are much more sophisticated and have become increasingly prevalent today.
Here is a brief list of common scams being perpetrated on unsuspecting individuals today.
Tax Scams
Tax scams often come in the form of messages or phone calls claiming to be from the Internal Revenue Service (IRS) or another government agency. In this instance, scammers typically ask for personal or financial information and threaten legal action if not provided. Remember, the IRS will never call or email only to either demand payment or immediate payment or ask for personal information such as a social security number or bank account details. If you receive a suspicious message or call, contact the IRS directly.
Investment Scams
These types of scams are becoming more sophisticated and harder to detect, even for the experienced investor. These scams often involve promises of high returns with little to no risk, unrealistic timetables, or insider tips. They may also involve Ponzi schemes, where older investors are paid off with the money of newer investors.
This is especially true now, in the age of a largely unregulated cryptocurrency market, where an unsuspecting investor or older adults may put money into scams targeting a “honeypot,” which is a cryptocurrency that will prevent investors from withdrawing their funds, or a “rug pull,” where the cryptocurrency development team closes down the blockchain and makes off with everyone’s money. To avoid investment scams, always conduct research on the company or individual offering the investment opportunity, ask for written materials, check federal trade commission compliance, and consult with a financial advisor before investing.
Prize, Sweepstakes, or Lottery Scams
With a prize, sweepstake, or lottery scam, there are often messages or calls claiming you have won a prize or lottery. The catch? You must pay a fee or provide personal information to claim it. Or they may ask you to pay additional money to increase your odds of winning the grand prize. In a true sweepstakes, prize, or lottery, they would never ask for financial information or ask you to pay more to increase your odds of winning.
The Federal Trade Commission offers resources on the signs to look for if you think you or a family member may be a victim of this type of scam and the steps you or other family members may need to take to report this suspicious behavior. With that said, always take time to verify the legitimacy of the prize or sweepstakes before providing any personal or financial information.
Romance scams are a common form of phishing scams
Online Shopping Scams
As online shopping continues to grow in popularity, so do online shopping scams. These scams may involve fake websites, counterfeit products, or phishing emails that ask for personal or financial information. To avoid online shopping scams, only shop from reputable websites and check that the web address for any site you patronize starts with an “https” prefix.
Phishing Scams
These are perhaps becoming the most prominent form of scams. Phishing scams refer to fraudulent emails that appear to come from reliable sources, such as a bank, a governmental institution, a vendor you know, or perhaps even a coworker or your boss at your place of business. They may even come in the form of romance scams, where a suitor tries first to gain your trust.
The emails aim to trick individuals and older adults into providing sensitive information such as usernames, passwords, and credit card numbers, or they try to convince you to wire transfer money. Always remember to double-check the sender’s email address by hovering over it with your mouse to verify the true origin and avoid clicking the links provided in the email.
Tech Support Scams
Tech support fraud involves a scammer posing as a technical support agent. A scammer may call claiming they have detected a virus on your computer, and only they can help you rectify the issue. The scammer then installs malware on your computer via a fake anti-virus program or asks for upfront payment for their bogus services. Always verify the legitimacy of the technical support company before granting remote access to your computer.
Grandparent Scams
With a grandparent scam, a scammer specifically targets the elderly. Using phone scams, they prey on their victim’s emotions and gullibility and fool victims into believing they are a fake grandchild, one of the adult children, or a friend. They will then ask for money via phone or email, claiming a dire financial or medical emergency. The reasons vary from being in the hospital, in jail, having been robbed, or having lost their passport or ticket abroad.
The caller then asks the victim to wire money or send prepaid debit cards or gift cards. Be wary of out-of-the-blue calls or emails requesting money and before you agree to send money, do your due diligence and verify the information. Ask personal questions, and speak with someone else in the family or a trusted friend to confirm the details.
What is elder fraud?
Elder Fraud vs. Senior Scams: What’s the difference?
Elders and senior citizens are often targeted by fraudsters, who exploit their vulnerability to scam them out of their hard-earned money. However, fraud and scam are not interchangeable terms. Elder fraud encompasses a vast array of illegal activities that manipulate or deceive older adults, including identity theft, Medicare fraud, and financial exploitation.
In contrast, senior scams typically involve fraudulent schemes that lure elderly individuals into buying goods or investing in fake ventures. It’s important to understand the distinction between these two types of crimes to protect your loved ones from becoming victims. By staying informed and vigilant, you can help keep elderly family members safe from these insidious acts.
Protecting Yourself, Older Adults, and Loved Ones From Money Scams
Now that you have a basic understanding of some of the most common scams, here are some simple rules to protect yourself from financial fraudsters.
Take Your Time
Be cautious of individuals or agencies pressuring you to make financial commitments quickly. A legitimate business opportunity is unlikely to disappear overnight. Do proper research. Don’t let greed or fear of missing out on an opportunity cloud your judgment. When you take time to evaluate any financial investment before committing any funds, you can lessen your risk of being a victim of a scam.
Safeguard Private Information
Never share your private information, such as your bank account, Social Security number, or passport, with anyone claiming to be offering financial investment opportunities, demanding payments, or pretending to be a government institution. Should you o accidentally share your information, immediately call your bank, credit card companies, or any online accounts to report fraud. You’ll also want to, if necessary, contact the local police.
Seek Professional Advice
If you’re considering a new or to-good-to-be-true investment, think about consulting a professional, like a lawyer or financial advisor. There are benefits to working with a financial advisor who has a fiduciary duty as they can help protect your personal information and will explain investment terms, conditions, or any potential risks attached.
The Bottom Line
There is no doubt scammers are becoming more sophisticated and harder to detect. However, staying informed about common money scams is the key to avoiding them, and by being vigilant, you can protect yourself, your elderly loved ones, friends, as well as your financial well-being.
Keep in mind if something seems too good to be true, it probably is. Always do your research before providing personal information or investing money.
Remember, as a member of Planning Made Simple, you’ll have access to beneficial and helpful resources like this one. You’ll also have access to a dedicated Planning Made Simple Coach who can answer your financial questions and concerns. Not a member of Planning Made Simple? Signup today.