Financial scams targeting seniors have become so prevalent that they’re now considered “the crime of the 21st century.” Why? Because seniors are thought to have a significant amount of money sitting in their accounts.
Financial scams also often go unreported or can be difficult to prosecute, so they’re considered a “low-risk” crime. However, they’re devastating to many older adults and can leave them in a very vulnerable position with little time to recoup their losses.
It’s not just wealthy seniors who are targeted. Low-income older adults are also at risk of financial abuse. And it’s not always strangers who perpetrate these crimes. Over 90% of all reported elder abuse is committed by an older person’s own family members, most often their adult children, followed by grandchildren, nieces and nephews, and others.
Review our list below, so you can identify a potential scam.
1. Medicare/health insurance scams
Every U.S. citizen or permanent resident over age 65 qualifies for Medicare, so there is rarely any need for a scam artist to research what private health insurance company older people have in order to scam them out of some money.
In these types of scams, perpetrators may pose as a Medicare representative to get older people to give them their personal information, or they will provide bogus services for elderly people at makeshift mobile clinics, then use the personal information they provide to bill Medicare and pocket the money.
2. Counterfeit prescription drugs
Most commonly, counterfeit drug scams operate on the Internet, where seniors increasingly go to find better prices on specialized medications. This scam is growing in popularity—since 2000, the FDA has investigated an average of 20 such cases per year, up from five a year in the 1990s.
The danger is that besides paying money for something that will not help a person’s medical condition, victims may purchase unsafe substances that can inflict even more harm. This scam can be as hard on the body as it is on the wallet.
3. Funeral & cemetery scams
The FBI warns about two types of funeral and cemetery fraud perpetrated on seniors.
In one approach, scammers read obituaries and call or attend the funeral service of a complete stranger to take advantage of the grieving widow or widower. Claiming the deceased had an outstanding debt with them, scammers will try to extort money from relatives to settle the fake debts.
Another tactic of disreputable funeral homes is to capitalize on family members’ unfamiliarity with the considerable cost of funeral services to add unnecessary charges to the bill. In one common scam of this type, funeral directors will insist that a casket, usually one of the most expensive parts of funeral services, is necessary even when performing a direct cremation, which can be accomplished with a cardboard casket rather than an expensive display or burial casket.
4. Fraudulent anti-aging products
In a society bombarded with images of the young and beautiful, it’s not surprising that some older people feel the need to conceal their age in order to participate more fully in social circles and the workplace. After all, 60 is the new 40, right?
It is in this spirit that many older Americans seek out new treatments and medications to maintain a youthful appearance, putting them at risk of scammers. Whether it’s fake Botox like the one in Arizona that netted its distributors (who were convicted and jailed in 2006) $1.5 million in barely a year, or completely bogus homeopathic remedies that do absolutely nothing, there is money in the anti-aging business.
Botox scams are particularly unsettling, as renegade labs creating versions of the real thing may still be working with the root ingredient, botulism neurotoxin, which is one of the most toxic substances known to science. A bad batch can have health consequences far beyond wrinkles or drooping neck muscles.
5. Telemarketing/phone scams
Perhaps the most common scheme is when scammers use fake telemarketing calls to prey on older people, who as a group make twice as many purchases over the phone than the national average. While the image of the lonely senior citizen with nobody to talk to may have something to do with this, it is far more likely that older people are more familiar with shopping over the phone, and therefore might not be fully aware of the risk.
With no face-to-face interaction, and no paper trail, these scams are incredibly hard to trace. Also, once a successful deal has been made, the buyer’s name is then shared with similar schemers looking for easy targets, sometimes defrauding the same person repeatedly.
Examples of telemarketing fraud include:
The pigeon drop
The con artist tells the individual that he/she has found a large sum of money and is willing to split it if the person will make a “good faith” payment by withdrawing funds from his/her bank account. Often, a second con artist is involved, posing as a lawyer, banker, or some other trustworthy stranger.
The fake accident ploy
The con artist gets the victim to wire or send money on the pretext that the person’s child or another relative is in the hospital and needs the money.
Money is solicited for fake charities. This often occurs after natural disasters.
6. Internet fraud
While using the Internet is a great skill at any age, the slower speed of adoption among some older people makes them easier targets for automated Internet scams that are ubiquitous on the web and email programs. Pop-up browser windows simulating virus-scanning software will fool victims into either downloading a fake anti-virus program (at a substantial cost) or an actual virus that will open up whatever information is on the user’s computer to scammers.
Their unfamiliarity with the less visible aspects of browsing the web (firewalls and built-in virus protection, for example) make seniors especially susceptible to such traps. One example includes:
A senior receives email messages that appear to be from a legitimate company or institution, asking them to “update” or “verify” their personal information. A senior receives emails that appear to be from the IRS about a tax refund.
7. Investment schemes
Because many seniors find themselves planning for retirement and managing their savings once they finish working, a number of investment schemes have been targeted at seniors looking to safeguard their cash for their later years. From pyramid schemes like Bernie Madoff’s (which counted a number of senior citizens among its victims) to fables of a Nigerian prince looking for a partner to claim inheritance money to complex financial products that many economists don’t even understand, investment schemes have long been a successful way to take advantage of older people.
8. Homeowner/reverse mortgage scams
Scammers like to take advantage of the fact that many people above a certain age own their homes, a valuable asset that increases the potential dollar value of a certain scam.
A particularly elaborate property tax scam in San Diego saw fraudsters sending personalized letters to different properties apparently on behalf of the County Assessor’s Office. The letter, made to look official but displaying only public information, would identify the property’s assessed value and offer the homeowner, for a fee of course, to arrange for a reassessment of the property’s value and therefore the tax burden associated with it.
Closely related, there is the potential for a reverse mortgage borrower to be scammed. Scammers can take advantage of older adults who have recently unlocked equity in their homes. Those considering reverse mortgages should be cognizant of people in their lives pressuring them to obtain a reverse mortgage, or those that stand to benefit from the borrower accessing equity, such as home repair companies who approach the older adult directly.
9. Sweepstakes & lottery scams
This simple scam is one that many are familiar with, and it capitalizes on the notion that “there’s no such thing as a free lunch.” Here, scammers inform their mark that they have won a lottery or sweepstakes of some kind and need to make some sort of payment to unlock the supposed prize. Often, seniors will be sent a check that they can deposit in their bank account, knowing that while it shows up in their account immediately, it will take a few days before the (fake) check is rejected. During that time, the criminals will quickly collect money for supposed fees or taxes on the prize, which they pocket while the victim has the “prize money” removed from his or her account as soon as the check bounces.
10. The grandparent scam
The grandparent scam is so simple and so devious because it uses one of older adults’ most reliable assets, their hearts.
Scammers will place a call to an older person and when the mark picks up, they will say something along the lines of: “Hi Grandma, do you know who this is?” When the unsuspecting grandparent guesses the name of the grandchild the scammer most sounds like, the scammer has established a fake identity without having done a lick of background research.
Once “in,” the fake grandchild will usually ask for money to solve some unexpected financial problem (overdue rent, payment for car repairs, etc.), to be paid via Western Union or MoneyGram, which don’t always require identification to collect. At the same time, the scam artist will beg the grandparent “please don’t tell my parents, they would kill me.”
While the sums from such a scam are likely to be in the hundreds, the very fact that no research is needed makes this a scam that can be perpetrated over and over at very little cost to the scammer.
If you suspect you’ve been the victim of a scam…
Don’t be afraid or embarrassed to talk about it with someone you trust. You are not alone, and there are people who can help. Doing nothing could only make it worse. Keep handy the phone numbers and resources you can turn to, including the local police, your bank (if money has been taken from your accounts), and Adult Protective Services. To obtain the contact information for Adult Protective Services in your area, call the Eldercare Locator, a government sponsored national resource line, at: 1-800-677-1116, or visit their website at: www.eldercare.gov.
Also be sure to check out our 8 tips to protect yourself from scams.
Elder Financial Exploitation
Financial exploitation is a fast-growing form of abuse of seniors and adults with disabilities. Situations of financial exploitation commonly involve trusted persons in the life of the vulnerable adult, such as:
- Family members
- Friends and acquaintances
- Bank employees
- Doctors or nurses
APS programs report that the number and complexity of reports involving financial abuse of vulnerable and older adults has grown significantly over the past decade. Recent research has found that elder financial exploitation is widespread, expensive, even deadly.
- One in nine seniors reported being abused, neglected or exploited in the past twelve months; the rate of financial exploitation is extremely high, with 1 in 20 older adults indicating some form of perceived financial mistreatment occurring in the recent past
- Elder abuse is vastly under-reported; only one in 44 cases of financial abuse is ever reported
- Abused seniors are three times more likely to die and elder abuse victims are four times more likely to go into a nursing home
- 90% of abusers are family members or trusted others
- Almost one in ten financial abuse victims will turn to Medicaid as a direct result of their own monies being stolen from them
- Cognitive impairment and the need for help with activities of daily living make victims more vulnerable to financial abuse
Financial exploitation takes many forms. While the vast majority of reports to APS involve perpetrators who are related to, or in a trusting relationship with, the victim, scams and frauds by strangers are also very common.
Common Scams by Strangers
- Lottery & sweepstakes scams “You’ve already won! Just send $2,500 to cover your taxes”
- Home repair/traveling con men “We’re in your area and can coat your driveway / roof really cheaply”
- Grandparent scam: You’re called and told your grandson is in jail and needs you to send money immediately
- Charity scams: falsely soliciting funds for good causes; very common after disasters
- I’m from the utility company; I need you to come outside with me for a minute (while accomplice steals valuables)
- Roof repair, yard work, home repair scams
- Telemarketing scams and accompanying threats
- Money sent via telegraphs to people claiming lottery winnings
Common Scams by “Professionals”
- Predatory Lending – seniors pressured into taking out inappropriate reverse mortgages or other loans
- Annuity sales – the senior may be pressured into using the equity realized from a reverse mortgage (or other liquid assets) to buy an expensive annuity which may not mature until the person is well into their 90’s or over 100
- Investment/securities schemes – pyramid schemes; unrealistic returns promised; dealer is not licensed
- Internet phishing – false emails about bank accounts
- Identity theft – credit cards opened fraudulently, etc.
- Medicare scams – these are the costliest in terms of the dollar amounts
Common Ways Family Members and Trusted Others Exploit Vulnerable Adults
- Using a Power of Attorney, given by the victim to allow another person to handle his/her finances, as a license to steal the victim’s monies for the perpetrator’s own use
- Taking advantage of joint bank accounts in the same way
- Using ATM cards and stealing checks to withdraw monies from the victim’s accounts
- Threatening to abandon, hit or otherwise harm the victim unless he or she gives the perpetrator what he/she wants
- Refusing to obtain needed care and medical services for the victim in order to keep the person’s assets available for the abuser
- In-home care providers charging for services; keeping change from errands, paying bills which don’t belong to the vulnerable adult, asking the vulnerable adult to sign falsified time sheets, spending their work time on the phone and not doing what they are paid to do
Reports of financial exploitation of vulnerable adults often involve allegations of abuse and neglect as well. APS investigates all the reported types of abuse, assesses the victim’s cognitive capacity, and takes appropriate steps to stop or mitigate the abuse to the extent possible.
The effects of financial exploitation on a vulnerable adult are devastating. The individual frequently experiences:
- Loss of trust in others
- Loss of security
- Feelings of fear, shame, guilt, anger, self-doubt, remorse, worthlessness
- Financial destitution
- Inability to replace lost assets through employment
- Inability to hire attorney to pursue legal protections and remedies
- Becoming reliant on government ‘safety net’ programs
- Inability to provide long term care needs
- Loss of primary residence
Interventions to address financial abuse include closing joint bank accounts, having the victim revoke the power of attorney; putting in place a responsible person or agency to assist with managing the victim’s funds; and restarting utilities if they’ve been shut off.
APS often works to reduce the isolation of the victim, through putting in services, etc., which reduces his/her risk of continued abuse. In many situations, APS refers cases to law enforcement for investigation and prosecution.
Effective ways to address financial abuse include:
- Working through multi-disciplinary teams with law enforcement, banks and others [link to FAST teams description]
- Working closely with banks to recognize, report and investigate financial abuse [link to BITS, Philadelphia, PA and Utah programs]
In 2010, NAPSA held the first National Summit on Elder Financial Exploitation in San Diego, California, to focus attention on this growing problem [link to program]. The Summit examined numerous types of financial abuse and featured innovative programs to address them.
In 2011, NAPSA created a National Elder Financial Exploitation Advisory Board, with diverse expertise from the following organizations and experts, to increase awareness and to develop new strategies to address the growing problem of elder financial exploitation:
- Better Business Bureau Education Foundation
- California Advocates for Nursing Home Reform
- California Bankers Association
- Consumer Federation of America
- Global Consumer & Agent
- Protection Program of Western Union
- Investor Protection Trust
- Investor Protection Institute
- Levine Management Corporation
- MetLife Mature Market Institute
- National Consumers League
- The Financial Services Roundtable / BITS
- Women’s Institute for a Secure Retirement
The Advisory Board sponsored the 2nd National Summit on Elder Financial Exploitation in Buffalo, New York in 2011. In 2012, the Advisory Board presented the 5th National Summit in Portland, Oregon, on October 31, 2014. The 6th Summit will be in Orlando, Florida on October 2, 2015.
In addition to the Advisory Board member, NAPSA also partners with the North American Securities Administrators Association (NASAA) to raise awareness about securities fraud as it affects seniors.
For the mandatory reporting laws in each state, see: Mandatory Reporting Laws by State September, 2013
The Federal Trade Commission protects consumers from unfair and fraudulent business practices, ID theft, phone scams and more:
The FTC also compiles fraud reports at their Consumer Sentinel Network for national metropolitan statistical areas; scam prevalence by region; reports of fraud complaints from persons age 50 and older.
Federal Crimes Enforcement Division (FinCEn)
National Institute of Justice site with research findings on elder financial abuse.
Securities and Exchange Commission (SEC) investigates securities frauds.
Postal Inspection Service which investigates frauds using the US Mail.
BITS (A division of the Financial Services Roundtable)
BITS Fraud Protection Toolkit: Protecting the Elderly and Vulnerable from Financial Fraud and Exploitation
Information about securities fraud and educates consumers how to detect elder financial abuse
Provides free annual credit report for consumers with their credit reports
National Center on Elder Abuse
Information and state resources, including helplines and hotlines
Tips on protecting yourself from fraud, with interactive games to learn concepts and be a smarter consumer on issues of spyware, lottery scams, etc.
Tips on preventing fraud through wire transfers of funds
Information for women on planning for a secure retirement