Top Financial Scams Targeting Seniors and How to Avoid Them

50 Plus Hub Research Team

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Scammers relentlessly target seniors using sneaky tactics and schemes to steal money and personal information. Financial scams aim to access savings, investment accounts, and properties that seniors have accumulated over decades of hard work.

Recognizing common predatory scams empowers seniors to protect themselves. Being aware of the deceitful ways criminals operate allows you to spot red flags early and avoid falling victim.

This guide exposes the most prevalent financial scams used on older adults along with expert tips to identify and prevent them. Keeping your guard up ensures you can live comfortably without sacrificing security.

Why Seniors Get Targeted

Seniors face increased risk for financial scams for several reasons:

Retirement Savings and Home Equity – Seniors have spent a lifetime building assets and have more money than other age groups. This makes them enticing targets.[1]

Social Isolation – Loneliness and lack of family connections can make seniors more trusting of strangers who contact them. [2]

Cognitive Decline – Impaired executive functioning makes it harder to detect complex scams. Dementia amplifies vulnerability. [3]

Tech Challenges – Less experience with internet transactions creates naivety about online schemes. Only 44% of seniors use smartphones. [4]

Fear of Family Worry – Seniors may hide problems to avoid concerning loved ones which prevents getting help. [5]

Generation Values – Respect for authority makes seniors less likely to question or push back on questionable advice. [6]

Greater wealth coupled with other factors prime seniors for scammers. Awareness of common tactics used counteracts risk factors.

Top 12 Financial Scams Used Against Seniors

Here are the most prevalent scams that target older adults specifically:

  1. Medicare Fraud

Scammers bill Medicare for services or equipment that was never provided or needed. Tactics include:

  • Falsely billing for medical services like cancer screenings or lab tests. [7]
  • Selling unneeded equipment like power scooters or orthotics. [8]
  • Stealing Medicare numbers to submit fake claims.
  • Tricking seniors into providing Medicare information.

This scammed taxpayers out of $52 billion in 2020 alone. [9]

  1. Health Insurance Fraud

Scammers sell fake health insurance plans to seniors or provide misleading details about real Medicare plans. Tactics include:

  • Selling useless supplemental plans during open enrollment periods. [10]
  • Charging premiums for sham policies with no actual coverage.
  • High-pressuring seniors into providing personal information under the guise of “verifying their plan”.
  • Claiming to represent Medicare and falsifying plan details or options. [11]

This scam costs victims an average of $15,000 in premiums and unpaid medical bills. [12]

  1. Social Security Fraud

Scammers contact seniors claiming problems with their Social Security account as a ploy to steal personal data. Some tactics are:

  • Saying the senior’s Social Security number was compromised and they need to verify information to reactivate it. [13]
  • Falsely stating Social Security benefits are ending and account information must be updated to continue them.
  • Charging fees to access Social Security funds early or increase benefits.
  • Having the senior wire money to unlock their Social Security account.

This scam has quadrupled over the past year with average losses around $10,000. [14]

  1. Sweepstakes and Lottery Scams

Scammers inform seniors they won a sweepstakes or lottery prize. But they must pay fees like taxes or processing charges before collecting winnings. There are no actual prizes.

Variations include:

  • Letters claiming the senior is already a winner and only needs to pay a fee to access winnings. [15]
  • Calls saying the senior won a lottery drawing they never entered. Again, they must send money before getting prizes.
  • Fake checks mailed to seniors for overpayment requiring deposit. Banks later deduct losses.

Seniors lose $1,400 on average from these false promises of instant riches. [16]

  1. Tech Support Fraud

Scammers pretend to be tech support reps from Microsoft, Apple, or internet providers. They say viruses were detected on the senior’s computer and offer to fix it remotely for a fee. Tactics include:

  • Directing victims to a website that lets scammers remotely access and control their computer. [17]
  • Installing malware that steals personal information.
  • Overcharging for unnecessary services or software.

This scam has surged during the pandemic, costing over $2 billion with individual losses around $500 to $3,000. [18]

  1. Grandparent Scam

Scammers pretend to be a relative like a grandchild who is in legal trouble and needs money immediately. They plead with grandparents to wire funds to pay bail, lawyer fees, hospital bills, etc.

Scammers learn personal details for authenticity. They keep demanding more money for fake emergencies. Average losses exceed $9,000 per person. [19]

  1. Charity Scams

Scammers solicit donations for fake charities or steal from real charities. Tactics include:

  • Pretending to collect for medical causes, veterans groups, relief efforts, children’s needs, or other victim groups to exploit sympathy. [20]
  • Sending fake forms disguised as normal donation requests.
  • Diverting gifts intended for real charities into their own pockets.

These scams often thrive after natural disasters or during the holidays. [21]

  1. Home Repair Scams

Scammers show up unsolicited and pressure seniors into agreeing to unnecessary repairs or overcharge for services. Examples include:

  • Paving over driveways with substandard materials that quickly deteriorate. [22]
  • Misrepresenting roof or chimney damage needing expensive repairs.
  • Pretending to check HVAC systems but actually disabling them temporarily to sell costly replacements.
  • Demanding full payment upfront then abandoning the job or doing shoddy work.

Property theft and physical intimidation also occur with this scam costing seniors $32,000 on average. [23]

  1. Reverse Mortgage Scams

Scammers persuade seniors to sign over the deed to their home for far less than the value or take out reverse mortgages under false pretenses. Tactics include:

  • Luring seniors into scams like foreclosure rescues where they transfer ownership but can remain living in the home as renters until the lender later forecloses. [24]
  • Marketing reverse mortgages as a way to enjoy retirement with no mention of risks like losing equity and facing foreclosure after the loan matures. [25]
  • Charging astronomical appraisal or origination fees causing the senior to lose equity.

This scam has cost victims $45 billion just within the past year. [26]

  1. Investment Fraud

From Ponzi schemes to pump-and-dump stock scams, scammers peddle fraudulent investment opportunities aiming to grow seniors’ retirement savings through lies and false promises. Tactics include:

  • Free meal seminars at restaurants that turn into high-pressure sales pitches for fraudulent investments, often targeting church or senior center groups. [27]
  • Overpromising unrealistically high returns and downplaying risks of financial products like annuities, stocks, precious metals, cryptocurrency, promissory notes, or IPOs. [28]
  • Bogus mutual funds and real estate investment trusts that pocket investment money.

Losses from these scams average around $17,000 per investor swindled. [29]

  1. Banking and Credit Card Fraud

Scammers gather seniors’ account information and make unauthorized transactions. They also exploit vulnerabilities like poor credit to open fraudulent credit cards. Some examples are:

  • Skimming debit card information at ATMs, gas pumps, and retail counters with devices that steal account data. [30]
  • Pretending to call from the senior’s bank fraud department and asking for account verification details that are then used to access funds or open new credit cards.
  • Hacking into or installing malware on seniors’ devices to obtain account usernames, passwords, and emails used for identity theft.

These schemes resulted in over $16 billion in losses last year for people over 70. [31]

  1. Robocalls and Phone Scams

Scammers use autodialing technology to deliver recorded scams over phone. Calls often show misleading ID information to trick seniors. Scams include:

  • Claiming to offer health insurance, medical devices, warranty extensions, technical support, public surveys, prizes, threats from the IRS, or other lies to obtain money or data. [32]
  • Calls claiming to be from charities soliciting donations when no charity exists.
  • High volume calls hoping to reach a live victim who takes action.

Robocalls resulted in $29.8 billion in losses with seniors losing an average of $1500 each.[33]

Protect yourself by learning to recognize these predatory schemes aimed at defrauding older adults.

How Scammers Manipulate and Deceive

Scammers use psychological tactics to manipulate emotions and cloud judgement. Understanding common tricks helps identify and resist scams.

Establishing Trust and Authority

Scammers gain trust by:

  • Pretending to be from legitimate companies like Microsoft or AARP.
  • Claiming to work for government entities like Social Security or law enforcement.
  • Citing professional designations like lawyer, banker, advisor, or doctor.

Creating Strong Emotions

Scammers know powerful feelings impede critical thinking. They elicit:

  • Fear of financial ruin, health problems, or legal consequences.
  • Urgency to act immediately to avoid threats.
  • Excitement over promised prizes, investment gains, or miracle cures.
  • Compassion by posing as accident victims needing help.

Demanding Secrecy

Scammers keep schemes going by saying:

  • Don’t tell family who might interfere or judge.
  • This opportunity is exclusive for you only.
  • We will deny everything if you talk.
  • Trust us over skeptical family members.

Refusing Independent Advice

Scammers block victims from guidance saying:

  • Act immediately or the opportunity is gone.
  • Family or advisors don’t understand this complex situation.
  • Third party input will sabotage everything.

Sowing Confusion

Scammers overwhelm victims with:

  • Technical or legal jargon that sounds legitimate but masks lies.
  • Rushed conversations allowing no time to assess details.
  • Bad logic that resonates if you are lonely or eager for money.

See through scammers by learning their psychological tactics.

Warning Signs of a Financial Scam

Recognizing red flags early allows seniors to avoid being swindled. Top signs a money-related offer is a scam:

  • You must act immediately or lose out – scammers create false urgency to short circuit thinking.
  • Guaranteed high returns with no risk – No real investment offers big profits with zero risk.
  • Requests for banking details or money upfront – Real businesses never demand these without providing services.
  • Vague details when questioned – Scammers get dodgy or defensive when pressed for specifics.
  • Requests for untraceable payment like gift cards, wiring money, cryptocurrency. – These forms make recovery impossible.
  • Says not to tell friends or family – Scammers know wise advisors will identify the fraud.
  • Unexpected calls or visitors – Scammers cold contact victims since no one seeks out their scams.
  • Threatens dire consequences – Scare tactics distract from illogical claims.

Stay alert to these red flags to keep from being scammed.

Expert Tips to Avoid Financial Scams

Equip yourself with knowledge of scammer strategies. Then implement these expert recommendations to avoid cons and protect your assets.

Understand You Are Never Required to Act Right Away

Deadlines given are false. Take time to evaluate any offer requiring money or sensitive personal information. Do independent research before providing anything.

Do Not Trust Caller ID Information

Scammers use internet phone services to spoof accurate names and phone numbers on caller ID. Verify the identity of any unexpected caller before engaging.

Confirm Direct Requests for Information

If someone contacts you claiming to be from your bank, insurance company, or any financial account, hang up. Call the entity directly yourself using a known number to inquire.

Talk Openly with Family About Your Finances

Isolation enables scams. Keep loved ones aware of income sources, debts, assets, challenges, and any requests for money so they can help assess risks.

Limit Personal Information Shared

Keep Social Security numbers, account details, and access codes private unless initiated by you with trusted entities. Say you never provide personal details when asked.

Prioritize In-Person Financial Discussions

Refuse to make financial decisions over the phone or computer. Insist on in-person meetings with advisors to read body language and have family present.

Read All Documents Thoroughly Before Signing

Never let anyone pressure you into signing anything without reading it first. Take paperwork home to review before signing. Ask someone trusted to review it also.

Protect Computer, Tablet and Phone with Passwords

Use passcodes or biometrics on all devices to limit access in case of theft. These contain financial account access that scammers leverage.

Shred All Financial Documents and Statements

Shred credit card offers, bank statements, unused checks, tax documents and anything containing your name and financial details before disposal to prevent identity theft.

Stay vigilant. Let wisdom guide money matters. Seek guidance when unsure.

Safely Managing Finances as You Age

As seniors eventually become less able to independently manage finances, risks increase for financial mistakes, fraud, and caregiver abuse. Planning ahead helps you control your money even if abilities decline. Consider these tips to guide future financial management:

Designate a Trustworthy Agent

Authorize a family member or friend to make financial decisions via power of attorney if needed – but choose wisely and only someone scrupulously honest.

Streamline Accounts

Consolidate bank and investment accounts to simplify management. Close unused credit cards and accounts making you vulnerable to fraud.

Automate Income Sources

Set up direct deposit for retirement and Social Security funds into a secure bank account. Automating income reduces reliance on cash transactions.

Arrange Automatic Bill Pay

Have utilities, mortgage, insurance and other recurring costs automatically paid from your bank account to ensure continuity.

Purchase Annuity

These insurance products provide set income for life to cover basic living expenses and reduce risks of poor money management.

Discuss Plans with Family

Tell loved ones about your financial access plans if you become unable to manage money. Involve them in assessing agents named.

Monitor All Accounts Closely

Review monthly statements and financial reports even if someone else is assisting you. Watch for questionable charges or activity.

Seek Professional Fiduciaries if Needed

If no trusted person is able to assist with finances, independent professional fiduciaries manage finances fully.

Planning ahead and vigilance reduces fraud risk in case abilities decline. You worked hard for that money. Protect it.

Beware of Scams Posing as Fraud Protection Services

Ironically, scammers are now posing as fraud protection services and advisors offering to help seniors avoid financial scams. Examples include:

Fraud Protection Forms – Fake liability waivers circulated claiming that signing protects assets from fraud but actually grant access.

Sham Trust Advisors – Unqualified advisors provide unsuitable recommendations to place money into shady trusts under pretense of safety.

Vault Deeds – Scammers convince seniors to sign over deed to home promising it protects assets then steal the home equity.

Unnecessary Services – Bad actors pretend to provide financial management help but charge outrageous fees without truly protecting assets.

Apply the same precautions used to avoid scams if approached with offers for fraud protection. Vet providers thoroughly, get agreements reviewed legally, and don’t allow urgency or fear to override your common sense.

Reporting Financial Scams

If you discover money stolen by a scam, report it immediately to stop losses and help prevent others being victimized. Contact:

  • Your bank if the scam relates to your accounts, credit or debit cards. Close accounts immediately.
  • The FBI through the Internet Crime Complaint Center at www.ic3.gov for cyber crimes or exploitation impacting finances.
  • Your state attorney general or the FTC to report scams or unfair business practices at www.ftc.gov.
  • Local police or sheriff departments for in-person scams or elder financial abuse depending on amount stolen.
  • The U.S. Postal Inspection Service for mail fraud at 1-877-876-2455 or uspis.gov.
  • The Social Security Administration Office of Inspector General for Social Security scams at 1-800-772-1213.
  • AARP’s Fraud Watch team to report and track fraud trends at 1-877-908-3360 or aarp.org/fraudwatchnetwork.

Reporting helps authorities recover losses, trace criminals, shut down scams, and prevent further victim

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