June is elder abuse awareness month, and I recently watched a presentation from Schwab’s fraud & risk management team on the growing trend of scams against the elderly. It was insightful, and a little scary, knowing how pervasive and sophisticated these fraudsters have become.
According to the presenters, money lost through a scam usually cannot be recovered because the account owner is authorizing the distribution of funds. They do their best to try and spot suspicious patterns in advance. The sooner custodians like Schwab and Fidelity are made aware of a scam occurring, the better the chance to recover some portion of the funds, if possible.
Below is an overview of the most common types of scams and best practices to try and avoid them.
Romance Scams – these are one of the most common scams used. The popular Netflix documentary “The Tinder Swindler” showed that this can impact individuals both young and old. Fraudsters tend to target women over age 50. They create fake dating profiles or reach out through social media. They come on strong early, to build trust and companionship. They will reach out needing money for emergencies such as traveling abroad or having their wallet stolen. They may also pretend to introduce their targets to a “great investment.” Never send funds to someone you have not met in person or recently met online. If things seem too good to be true, they probably are.
Tech Support Scams – these scams attempt to convince individuals that their electronic devices have been compromised. They will create spoof emails that appear to look legitimate. They may include a phone number or ask to remotely connect to your device. They may also include links in the emails on how to resolve the issue. They create a sense of urgency to act quickly and catch people off guard. They may also say that accounts have been frozen. However, companies such as Microsoft do not proactively reach out on issues such as these. If you do have concerns that your device has been compromised, it is recommended that you shut it down and take it to a reputable tech repair business. Never click on these suspicious links, as they often install malware to get access to your device.
Real Estate Scams – these have become more common with the surge in real estate activity over the last few years. The fraudsters may impersonate the lender or title company. They will change the account number to have funds wired to the scammers. These can lead to devastating financial losses. There has also been an increase in Mexican time-share scams. These appear as “investors” who need to liquidate time-shares at low prices. They also may offer a “great deal” to purchase a time-share at a lower cost, along with a sense of urgency to act swiftly. Be sure to do your due diligence if considering such a purchase and only work with reputable companies.
Impersonation Scams – these scams involve an attempt to impersonate a person or company. Fraudsters may comb through your social media profiles. They are looking for your emotional triggers – friends, family, etc. They create a narrative on why you need to send them money. For example, they will pretend to be a long-lost friend who needs financial assistance. They’ll ask for your discretion and not tell your family members, along with a promise of repayment (which never happens). Scammers also impersonate reputable companies like Amazon or FedEx. Go to these websites directly to see if there are legitimate issues. Don’t click links.
Lottery & Prize Scams – these are attempts to convince a person that they’ve won a large prize. The scammer will request money for fees or taxes. They rarely offer any details on where prizes come from. They may ask for payments sent to them in the form of gift cards or cryptocurrencies. Be skeptical of anything requesting upfront payment. Also – and it sounds obvious – be sure that you actually purchased a lottery ticket recently or enrolled in a contest.
IRS/Government Scams – these are very common scams directed toward the elderly. Scammers impersonate a government or IRS worker. They claim you owe money and threaten legal action against you. They create a sense of urgency saying that your Social Security income may be garnished or you could face jail time. They may even claim to get the authorities like the FBI involved to intimidate you into submitting payment. It is important to understand that government agencies and the IRS do not call or email about these matters. The IRS only communicates through letters in the mail.
These are just a handful of scam attempts that are directed toward the elderly. Seniors typically have more money and tend to be more trusting. Fraudsters like to exploit this. Many individuals who fall victim to a scam often do not report it. This may be out of embarrassment or making family members think they cannot take care of themselves, and they worry about losing independence.
What I found especially chilling is that many fraudsters create a “suckers list” of individuals who have fallen for these scams. They may attempt a different scam against the same individual in the future, or may sell the list to other criminals.
There are measures you can take to be better prepared and identify possible scam attempts:
- Have a trusted contact person list with your custodian. This gives permission for Schwab or Fidelity to discuss account-related matters with a close friend or family member. They can also reach out to these individuals if they detect irregular or erratic account activity. These trusted contacts do not have any transactional authority.
- Make sure your estate plan documents are updated. It may be useful to have a durable power of attorney who can step in to help manage financial decisions if a friend or family member is incapacitated.
- Keep financial information organized and updated so trusted contacts and/or family member can access if needed.
- If a loved one is showing signs of diminished capacity, it is important for family members to notify trusted advisors so they are aware (attorneys, CPAs, or financial advisors like us).
- Scams increase around tax deadlines, holidays, and disasters/current events. Be extra cautious during these times.
- You can elect to freeze your credit with the major credit bureaus to prevent scammers from opening bank accounts, credit cards, etc. in your name.
These scams will only continue to grow in the future. It is important to be aware of the techniques used and how to identify potentially fraudulent behavior. Custodians like Schwab and Fidelity do their best, as do we, to spot these occurrences. If you have questions or would like additional resources, please feel free to contact us.