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How Retirees Can Protect Themselves from Financial Scams Thumbnail

How Retirees Can Protect Themselves from Financial Scams

Want to know a great way to ruin a night of sleep? Take a late-night frantic phone call from your grandmother.

Apparently, someone called my grandma to say I was in jail and I needed bail money (I wasn’t, for the record). The caller even knew I worked in Fort Lauderdale! After my grandma astutely pressed for more details, the caller ran out of online information and hung up. Still, out of an abundance of caution, my grandma called to make sure I was alright. Outside of losing a night of sleep, I was A-OK.

Financial scams can happen to anyone. Sadly, retirees are at higher risk of targeted attacks on their financial and personal information. By staying informed and involved, you can feel secure and protect your wealth.

Preventative Measures

  • Be aware of risks from all angles. Constant vigilance needs to be the name of the game. Unfortunately, 90 percent of elder abuse is committed by the family of the victim. Common approaches include draining a joint bank account, promising but not delivering cash for property, and outright theft.
  • Isolated seniors are more at risk for financial fraud, so stay involved! While it’s easy to withdraw from your community at large, for fear of reduced mobility or physical assault, organizations like the Eldercare Locator can help you find the resources you need to stay active and involved.
  • Never buy on the fly. Simply tell solicitors that you don’t buy from anyone who calls or visits unannounced, and that you would like to see the offer in writing. It’s also a good idea to get relevant information about the salesperson and the company, like their company address, phone number, and business license number. And, of course, fight the feeling of being pressured into an on-the-spot sale. You can take your time before buying anything.
  • Save or shred copies of important documents. Financial institutions try to minimize the amount of personal information displayed on paper correspondence, but including information like phone numbers, account numbers, and balances are unavoidable. Make sure you save or shred all paper copies of important documents.
  • Signing up for the Do Not Call list. Signing up for the Do Not Call list is an easy step to reduce the number of solicitations. Further, remove yourself from extraneous mailing lists to reduce the chances of your information ending up in the wrong hands.
  • Opt for direct deposit versus mailed checks when transacting. Sadly, it’s a common tactic to scour mailboxes for benefit checks if they stay in the mailbox for too long.
  • Protect your Medicare number. Medicare fraud, discussed in more detail below, is another common type of scam against seniors. Behavior to watch out for includes billing for services never delivered and selling unneeded devices or services to beneficiaries. You should protect your Medicare number just as you do your credit card, banking, and Social Security numbers. Do not allow anyone else to use it without your authorization.

Common Scams and What to Do

Despite taking the preventative measures laid out above, it’s nearly impossible to completely ringfence your financial life from fraud. Here are some common scams and how to avoid these coordinated attacks.

The Grandparent Scam

This is the aforementioned scam my grandmother was able to avoid. The fraudster claims a family member needs money to get out of a jam and sends instructions, typically via Western Union or Moneygram, to help them out. The scammers often mine social media data and other online info to corroborate personal details about the family member.

Never send money to anyone unless you have 100 percent proof that the information and issue is correct. Verify that the person is indeed in trouble by reaching out to them directly, as opposed to relying on the unsolicited outreach by an unknown third party. You can also compile a list of questions and answers, similar to a website’s security questions, to verify identities during an emergency.

“You Won!” Scam

You just won a giant check for tens of thousands of dollars! All we need is a small fee up-front to send you your prize money. Sounds great, outside of that seemingly innocuous fee. If you are confronted with this situation, don’t give out any financial information over the phone or over email. Also, be skeptical of any messages about winning random prizes. Unless you have specifically entered a contest, you likely aren’t going to win prizes out of the blue.

Medicare Scam

The ubiquity of Medicare, a wonderful program, also provides additional “at bats” for scammers. Many times, someone will pose as a Medicare representative and tell the unsuspecting senior that they need a new Medicare card, and that to get this new card, they need to tell the “representative” their Social Security number. Further, the “representative” may ask for a fee on the spot to ensure the senior continues to receive their benefits.

Do not give out any information to anyone who you haven’t personally verified as a representative of Medicare. Actual Medicare employees should have your information on file, so you can ask the rep questions to verify it’s legitimate.

Home Repair Scam

This scam is also known as the “woodchuck” scam. Scam artists will claim to be contractors and will complete house projects if seniors agree to let them. The scammers will gain seniors’ trust and eventually come up with a variety of fake repairs that need to be done, such as a roof repair.

To avoid this scam, make sure the person doing your home repairs is a professional. Find out what company they work for and call and verify they are indeed a legitimate contractor.

Mortgage Scam

Are you afraid your money won’t last in retirement? Would you like to know how much home equity you have, and the best ways to access this to make sure you don’t run out of money? Fantastic questions, and indeed this strategy is a valid approach to supporting your income needs in retirement.

However, scammers know this and will offer a property assessment to seniors, telling them they can determine the value of their home. The scam artists make the process look legitimate by finding the home’s information online and sending seniors an official letter detailing all of the found information. The scammers do this because it is an easy way to con seniors into paying a fee for the requested information.

I Might’ve Been Scammed — What Do I Do Now?

In 2018, the Federal Trade Commission (FTC) received over 3 million complaints of financial scams. Further, a report released by the Senate Special Committee on Aging showed that elder Americans lose $3 billion each year to scams.

If you think you’ve fallen victim to a scam, don’t be afraid or embarrassed to talk about it with someone you trust. You are certainly not alone and doing nothing will only compound the problem.

There are several important steps to take. First, report the suspected scammer to the FTC, the FBI, or your state attorney general. You can also report the incident to Adult Protective Services.

After you’ve reported the scam to the authorities, be sure to reach out to your financial institutions. They can help stem the tide of any illicit transactions or money movements. You also will likely want to cancel and reissue your credit or debit cards.

If your personal and financial information has been compromised, your online logins are at risk, too. Reset your passwords and PINs. This may seem tedious but it’s an important step to limit the peripheral damage from identity or financial theft. You can find more resources to combat these issues through ElderAbuse.org.

Financial Security with Harbor Crest Wealth Advisors

By following the tips laid out in this article, you may be able to avoid some common scams and protect your personal and financial information. These steps won’t make you completely immune, however, and retirees are at higher risk of targeted attacks. By staying informed and involved, you can feel secure and protect your wealth.

If you would like to learn more tips on how to protect your finances, sign up for our newsletter.