ELDER FRAUD: IDENTIFYING IT, REFUSING IT AND REPORTING IT
By Mary Lynne Dahl, CFP
Unfortunately, fraud schemes that target our senior citizens are becoming very common. They represent a serious risk to a retired person, especially one who lives alone or has begun to suffer from any kind of mental or physical decline, which may ultimately be all of us. Therefore, this has the potential to threaten the security and well-being of everyone, so pay attention to the facts I will present in this column and take action if it is necessary to protect yourself, a loved one or a friend.
Here are some facts, and they are disturbing. According to David Bowden, acting deputy director of the FBI, elder fraud is a serious and growing threat to Americans. The FBI is involved in a cooperative effort with other law enforcement agencies across the country to identify and prosecute the crooks who target elderly Americans. The FBI has opened more than 200 cases of financial crimes against elderly individuals during last year alone. According to a report by CNBC, older Americans lose $36.5 billion per year as a result of being victims of financial scams, fraud, exploitation and outright theft. Financial fraud statistics in almost every state indicate that the trend is growing, despite efforts by law enforcement to catch and prosecute the perpetrators of elder fraud.
Why is this so widespread and what can you do about it? The answers are complex, but basically, criminals have figured out that the older generation of Americans is a perfect target for their scams and crimes. Many older citizens in the US have saved and invested their money for their entire lives and therefore have accumulated large amounts of cash, investments and assets. That is tempting to a criminal mind. In addition, older Americans tend to be somewhat more trusting than younger people, making it easier to convince them to part with some of this wealth, usually with some scheme or “deal” that sounds pretty attractive. Thirdly, as people age, a percentage will develop varying degrees of cognitive dysfunction, making them more vulnerable to criminals who recognize this and take advantage of it. As a combination, these facts make older Americans an easy target too tempting for criminals to ignore.
A key to not being victimized with elder fraud is to become educated about this problem. That means to know it exists, identify it when it happens, take action to refuse to be a victim and report it to law enforcement. We already know it exists, so let’s start with being able to recognize and identify it when it happens. What does financial fraud, exploitation, scams and financial theft generally look like? How can you and your loved ones recognize it?
Financial exploitation often involves a family member, friend or close associate who assumes a role of caregiver or control person. Once in this role, it is not hard to forge checks, use credit cards, withdraw cash, sell investments or other assets and syphon off the wealth of an older person who is unaware of this kind of abuse. Sometimes the abuser has legal control, such as with a power of attorney, sometimes not. If so, it is difficult to catch this kind of abuse unless there are other family members who ask questions and request information. For example, if an older person has 4 children, one of which is in control of the finances, the other 3 children should request a family meeting annually or more often to review the finances of the older parent. An informal audit of the bank accounts, bills, investments, real estate, health and living conditions of the older parent should be routine. Unfortunately, in many families, the family members are separate, do not communicate and have abdicated their place in the family unit, becoming unaware and perhaps unconcerned about this issue. When that happens, elder fraud is easy to perpetrate and hard to spot.
A common situation is when an elderly person becomes widowed and suddenly finds himself or herself overwhelmed with financial paperwork, bill paying, unfamiliar household tasks, health issues, social isolation and loneliness. This combination of issues makes it easy for a stranger to befriend a widowed person and work towards a position of unhealthy influence, sometimes resulting in exploitation or financial crimes. Family members and longtime friends who genuinely care about an older individual in this situation should be alert to the influence of a stranger in the life of a widowed older American. Asking questions and speaking out is not rude; it is the right thing to do when protecting an aging, vulnerable person. According to Mike Rothman, North American Securities Administrator Association quoted in a CNBC report, “It is easier to try to exploit a senior citizen with cognitive or other impairments in financial issues, who is alone, than it is to rob a bank. So they are targets.” In both of the cases mentioned above, a team of ethical, caring supporters can spot and eliminate abuse, fraud and scams aimed at the elderly.
Organized scams are a little different from the two situations just described. These are criminal schemes designed to target senior citizens specifically. According to the National Council on Aging, the top 10 financial scams targeting seniors are:
1. Medicare and health insurance scams
2. Counterfeit prescription drug scams
3. Funeral and cemetery scams
4. Fraudulent anti-aging products
5. Telemarketing and phone scams
6. Internet fraud
7. Investment scams
8. Real estate and mortgage scams
9. Sweepstake and lottery scams
10. The grandparent scam
Let’s look at each in a little bit of detail.
Medicare and health insurance scams often involve criminals who pose as Medicare agents who convince the senior citizen to provide personal information. Sometimes these scammers set up mobile clinics, offer exams and bill Medicare for “services” that they are not authorized to provide.
Counterfeit prescription drugs are usually sold on the Internet. The problem is that the prices appear lower, so the drugs seem to be a bargain, but not only do most of the drugs not work, some are actually harmful to the health of the person using them. The senior ends up out of the money spent on the bogus drugs and sometimes sicker as a result.
Funeral and cemetery scams are cruel, to say the least. In these scams, grieving family members are targeted by scammers at the time of death of a loved one. In one scam, the criminal tells the family that the deceased owed money for xyz, and attempts to coerce the family to pay up, sometimes successfully. In another scam, an unethical funeral home will tell a grieving family that certain expenses are mandatory when they are, in fact, not mandatory, such as an expensive casket for a person being cremated. Cremations only require cardboard caskets because they will be burned in the cremation, but unscrupulous funeral homes sometimes claim that a variety of expensive services and products are required, when they are not.
Amazingly, I have even heard of burial scams in which a “company” sells plots to people in advance of their death in cemeteries that do not exist or which have no plots available. In all of these cases, the scam is especially cruel, playing as they do on the grief and emotional confusion that is associated with the loss of a loved one.
Anti-aging products are a huge market, appealing to the young as well as older people, so it is no surprise that it is an easy way to defraud seniors. Many of these scams simply involve products that promise all kinds of youthful benefits but do absolutely nothing, but there have been more sinister scams of this type, such as the Botox scam of recent years. According to the National Council on Aging, an Arizona scam sold Botox remedies that netted the scammers $1.5 million but landed the scammers in jail in 2006. Botox uses a very toxic basic substance called botulism neurotoxin as a root ingredient, so buying it from an unregulated, illegal scammer has serious health risks, not just financial risks.
Telephone and TV scams are probably more common than any other type of scam. The phone rings and the scammer says that he has come into a sum of money that he is willing to share with the senior who answers the call. To do this, he tells the senior to withdraw cash and send it to a “bank account” as a “good faith gesture” where the found money will be kept, then the account will be split and everyone will make a lot of money. However, there is no bank account and the senior, who ends up losing their “good faith” deposit. Other phone scams involve a call to the senior saying that his or her child or grandchild has been in an accident and that the senior needs to send money to an address to help pay for hospital care. Sometimes a phone scammer will call and pretend to be a charity or non-profit that is raising money for a “good cause”, appealing to the generosity of the senior who answers the phone. Phone scams are hard to trace since the phone numbers used by scammers are often temporary.
Internet fraud is on the rise, naturally. Along with all kinds of legitimate Internet commerce, criminals have come up with a dizzying array of ways to steal money using the Internet, aimed especially at senior citizens. In many cases, these scams are simply emails, pop-up ads for bogus products or services, or computer viruses designed to steal credit card numbers and personal information. Seniors report getting emails that look legitimate, from their banks, their credit card companies, their utility companies, from the IRS, from Medicare and other trusted sources, asking for verification of all kinds of data, account numbers and personal information. In some cases, the emails include threats of dire consequences if the senior does not provide the information requested. These requests are always a red flag that a scam is being attempted.
What can you do to protect yourself from Internet fraud? Here are some rules to use:
1. Exercise caution when moving money from one place to another. Use trusted electronic money transfer tools to verify requests to move money. Confirm any transfers routinely. Do not authorize any transfers from persons or companies you do not know and trust.
2. Create complex, strong passwords for access to online accounts. Do not use personal information on your passwords. Test the strength of your passwords when you create them. Change passwords from time to time.
3. Keep your antivirus and anti-virus updated.
4. Do not use free-found USB devices, which may be infected with malware.
5. Make sure the security settings on your web browser and phone apps are strong.
6. Turn off Bluetooth when not using it.
7. Do not visit web sites that you do not know or which show up on pop-up ads.
8. Log out of every web site when you finished with it; terminate access completely.
9. Do not “friend” anyone you do not know and trust.
10. Do not post or disclose personal information online.
11. Hover over the URL of any link you do not recognize and trust. Valid links start with https, not http.
12. Hover over the email address of any sender you do not recognize. Do not open if you suspect it is unsafe. Instead, click on JUNK or SPAM and BLOCK the sender or domain name, or both.
13. Do not use public computers or free Wi-Fi. Use personal WI-FI or your own hotspot.
14. Do not give access to your computer, phone or device to anyone who contacts you and claims to be authorized to fix something that is “wrong” with your device. Hang up or disconnect from this person.
15. Delete all your history of every website you have ever visited by clicking on your Internet browser, select the “Favorites” button which is usually at the top right of the screen, clicking on “History” and then choosing which/all websites to delete by clicking “Delete”. In some cases, you can filter this process with specific dates that you select to delete your activity and sites visited rom one date to another, or “all dates”. The purpose of this is to remove your activity and all records of it from Google and other search engines that have access to information about you that they collect every time you visit a website online. Microsoft has additional instructions on how to do this, in case you run into problems in trying to delete your browsing history.
Investment scams are also pretty common. When someone gets closer to retirement, or has already retired, investment scams may be more interesting than in prior years. Seniors sometimes look for ways to increase their incomes, falling prey to investment scams that offer “guaranteed” returns, higher rates of return than the market offers, deals that look a lot more attractive than usual and “no way to lose” deals. In these scams, money is invested, the deal falls apart, the scammer disappears and the senior is out a lot of money. Investment scams often involve larger sums than other types of scams, so they can deplete the net worth of a senior citizen faster than bogus anti-aging products or smaller fraud scams. Investment scams have a long history of successfully defrauding seniors, as well as people of all ages, because they always promise something that is too good to be true.
Reverse mortgage scams are a newer way to pick the pockets of seniors. What happens is that the senior is encouraged to get a reverse mortgage so that another person, sometimes a family member, can hire contractors to “do repair and maintenance work” on the home in question. In a related scam, using property tax as the key element, a scammer impersonates the local property tax assessor’s office and contacts the senior homeowner, offering to reduce their property tax for bogus reasons, for a fee that the impersonator will pocket.
Sweepstakes and lotter schemes aimed at seniors have been around a long time. They often use letters that describe elaborate situations involving inheritances and prize money that the senior can claim but which must first be “authorized” with fees and taxes paid to an account before being awarded to the unwary senior. Naturally, there is no inheritance or prize money, but the scammer gets the fees and taxes then disappears with the money.
One of the cruelest scams out there is the grandparent scam. In this scheme, which is very clever but simple, the phone rings and a young voice says, “Hi Grandma, do you know who this is?” If the scam is successful, the next words will be the grandparent saying the name of the grandchild that they think it is. At this point, the scammer has a pretty good chance of getting the money they will ask be sent via Western Union or MoneyGram (which may not require identification). Usually, the scammer/grandchild voice begs the grandparent not to tell anyone, especially his/her parents, and thanks the grandparent profusely. The “child” claims that the money requested is needed to pay rent, buy food or pay for an unexpected medical bill, in a typical scheme. Often, grandparents never report this, no one ever knows, and the scammer has figured out an easy way to defraud older Americans.
No doubt there are other, new and creative schemes being dreamed up by criminals and abusers of senior citizens. It requires vigilance and skepticism on our part to stay aware and refuse to be victimized. If you need to report fraud or financial scams, check out the resources available via the National Center on Elder Abuse at https://ncea.acl.gov. Click on “Resources”. This will take you to a page that lists every state in the US, which, if you select a state, brings up phone numbers, offices, agencies and resources available to protect Americans from elder fraud and exploitation. There are more resources being created all the time, but this is a pretty extensive list that will get most people to a contact to start the process of reporting suspected elder abuse of all kinds. Don’t become a victim. Educate your family and friends now.