You can’t always protect your loved ones from unpleasant experiences, but you can reduce the likelihood that they will become victims of a scam. Remember, if an offer seems to good to be true, it probably is. Although it may feel wrong to be suspicious of a local business or charitable organization, it’s always in your best interest to verify their identity and legitimacy first. According to the Federal Trade Commission, about 27 percent of consumer fraud complaints filed in 2013 were by those above the age of 60. However, instances of fraud often go unreported by senior citizens because they don’t know where to report it or they are too embarrassed.
Advance Fee Loans
In this ploy, scam artists trick you into paying money to qualify for a loan. Scam artists may “guarantee” a line of credit or promise to deposit money in your bank account once you pay an initial fee. Despite these claims, however, you likely will not receive any money. You should never pay money to qualify for a loan.
Credit Repair Scams
These scams advertise on the Internet, on TV and even on telephone poles that bad credit can be erased and debts can be consolidated. Many of them charge hundreds or thousands of dollars but do little or nothing to improve your credit. The reality is that these companies cannot erase accurate negative information from your credit report. With certain exceptions, negative information can remain on your credit report for up to seven years. If you want to improve your credit, contact a credit reporting agency or your creditor directly. You may be able to arrange a payment plan yourself — for no cost.
Fake Check Scams
Someone sends you a check or money order. He asks you to deposit it in your account and then wire-transfer him the money, minus a nice bonus for you, a “thank you” for helping out. Regardless of the pitch, the result is the same: the check or money order you receive will be a counterfeit. It will be returned to your bank unpaid, and the full amount will be deducted from your account. Never send money to a stranger.
Foreclosure Rescue Scams
These scams target homeowners who are having trouble making their mortgage payments. A phony foreclosure rescue company might contact you and promise to negotiate with your mortgage lender. You pay thousands of dollars, but the company makes little or no contact with your lender. A phony “investor” offers to buy your house and lease it back to you until you can afford your mortgage payments. The investor takes your money but does not transfer the mortgage loan or pay your lender. As a result, you risk losing your equity and your home.
In this scam, con artists pose as grandchildren. They may call and say, “Hi Grandma” or “Hi Grandpa,” then make up a story explaining that they are stuck in another country and need you to send money via wire transfer. Of course, any money you send will go to the scammer, not to your real grandchild. When in doubt, ask the caller a question only your family members would know how to answer.
Home Improvement Fraud
This occurs when contractors or companies do not complete the work they were paid to do. These scams often involve door-to-door contractors who offer to repair your roof, paint your house or fix your furnace. After you pay, however, the contractor disappears without doing any work or doing a poor job on the repairs. Home improvement scam artists say that they will give you a model home discount, free furnace inspection, or have leftover supplies from repairing another house in the neighborhood. These false promises are tricks to steal your money. To avoid scams, research reputable contractors, don’t make large down payments, and avoid paying in cash, as credit cards offer stronger protection if something goes wrong.
Doing Unsolicited Home Repair Work
Typically working in teams of two or more, scammers scour neighborhoods with a high concentration of older residents, or even track recent widows and widowers through obituaries and death notices, then appear on their doorsteps claiming to spot something in need of fixing — a hole in the roof or clogged drainpipe, for example. The scammers demand payment up front, and then often claim that their initial investigation reveals a more serious problem, with a more expensive solution. The “work” they do is unlicensed and often shoddy, such as applying paint to a roof to make it appear as if it has been tangibly fixed. In a twist on this scam, one alleged worker might distract the elder while another enters the house to steal money and other valuables.
This occurs when a criminal uses someone else’s personal information, such as a credit card number, bank account number, insurance information, or Social Security number, to purchase goods or services fraudulently. Often, criminals commit identity theft by opening new accounts in a consumer’s name, purchasing products, and then leaving the consumer to pay the bill. To help prevent identity theft, never give personal information to anyone you don’t know or trust.
Living Trust Scams
A living trust is a legal arrangement where assets are transferred into a trust while the consumer is still alive, which keeps the assets from going through probate court when the consumer dies. Trusts can be useful estate planning devices, but scam artists have been known to make exaggerated or false claims about probate costs or about the tax advantages of living trusts. These scams usually target lower income consumers, whose limited estates likely would incur minimal probate costs, by using high-pressure sales tactics. If you or someone you know is considering buying a living trust, consider all your estate planning options and be wary of “onesize-fits-all” offers. Contact an attorney directly for individual advice before signing any contracts or making any purchases. There are also legal aid programs that offer free help for seniors. Never buy legal services from door-to-door salespeople or telemarketers.
A scammer might offer you a “risk-free” investment only to steal your money. For example, some scam artists convince consumers to invest in coins and precious metals, such as gold. Remember, all investments involve risk. Consult with trusted family members or friends before making important financial decisions.
You receive a call or letter asking you to make a charitable donation from someone who is only pretending to represent a charity. Always ask how much of your donation would actually go to the charity.
Customers get into loans they cannot afford. For example, you might sign a loan for a new house thinking you are getting a good deal. Periodically, however, your mortgage payments increase, and you realize you owe more than you can pay. Signs of predatory lending include: repeated refinancing, balloon payments, inflated appraisals, misrepresented interest rates and fees, loans that do not benefit the consumer, and loans that a consumer cannot repay.
Someone may fictitiously claim that you have won the lottery, a contest or other prize. In order to collect your winnings, however, you’ll be asked to pay a fee. Often, you’ll be instructed to send money via wire transfer or money order, possibly to a foreign country. They’ll tell you to expect your winnings once you pay, but the prize never arrives. Remember that legitimate sweepstakes are free and require no purchases.
Reverse Mortgage Abuse
This is not a scam; it is a loan that allows older consumers to convert home equity into cash. However, some unscrupulous salespeople might pressure you into taking out a reverse mortgage that has very high fees. Others tempt you to use money from the loan to buy annuities or investments that may not benefit you. Do not take out a reverse mortgage unless you fully understand all the costs, terms and conditions. Keep in mind that as interest charges are added to your loan, the total amount you owe will grow over time.
This happens when scammers will often try to take advantage of senior citizens who have recently lost someone close to them, like their spouse. Scammers will look to obituaries for research, then call the widower and tell them they have outstanding debts.
Sale of Annuities
Consumers who buy a living trust should be wary of salespeople who come back and offer additional services such as an annuity. When you buy an annuity, you give a large sum of money to an insurance company, and it pays you back on a regular basis, usually for as long as you live or for a specific period of time. There are many different kinds of annuities and buyers should clearly understand which type of annuity they are buying, how much money it will cost them, when the company will be paying the money back, and any risk factors involved. Dishonest, high pressure salespeople will charge high fees and sell deferred annuities that often are not suitable for the consumer’s current age and financial situation. Read all the terms and conditions and seek advice from people you trust before making a major financial investment.
Work-at-Home and Business Opportunity Ploys
These scams use sales pitches claiming that you can make good money working from home or getting involved in a business opportunity. You will be urged to pay up-front for materials or start-up costs. Ultimately, the only people who will profit are the scam artists. Beware of seminars that promise money making advice but deliver only high-pressure sales pitches.
Where to Report Suspected Abuse:
There are now a number of individuals and groups dedicated to investigating suspected financial abuse, and finding and stopping perpetrators. Here are some options for taking action.
Notify bank personnel. Depending on the type and extent of financial abuse involved, giving a heads up to the bank tellers and officers who commonly handle the elder’s accounts may be enough to stop the wrongdoing. Bank employees are often in a good position to note suspicious activity, such as a sudden withdrawal of large sums of money or use of an ATM card by an elder who is housebound.
The laws in most states encourage or require bank officials to report suspected elder financial abuse. And a federal law requires financial institutions to file a Suspicious Activity Report with the federal government when they suspect elder financial abuse.
Get help from a senior services group. While the services offered — from counseling to legal assistance — vary widely depending on the locale, the Eldercare Locator, at 800-677-1116 directs callers to local programs and services that help prevent financial elder abuse. And INFO LINK at 800-394-2255 helps arrange and coordinate assistance with crimes.
Contact Adult Protective Services. Adult Protective Services (APS) is the government-affiliated agency charged with investigating reports of elder financial abuse and offering assistance to victims. To find your state APS office, visit the National Center on Elder Abuse’s website at www.ncea.aoa.gov (click on “Find State Resources”).
Alert law enforcement. The police or local prosecutor’s office will often intervene when there is good evidence that a crime is being committed.
You may also be interested in contacting the following agencies:
1-800-222-4444, option 2
Better Business Bureau
Consumer Financial Protection Bureau
Federal Trade Commission (FTC)
FTC Do Not Call Registry
Internet Crime Complaint Center
The Internet Crime Complaint Center (IC3) is a partnership between the Federal Bureau of Investigation (FBI) and the National White Collar Crime Center (NW3C).
Major Credit Bureaus
Free annual credit report: 1-877-322-8228 or http://www.annualcreditreport.com
National Association of Insurance Commissioners
State Attorney General
National Association of Attorneys General
State Securities Regulator
North American Securities Administrators Association
Social Security Administration
U.S. Postal Service Office of Inspector General