No shortage of scams targeting seniors
I recall during one of my first few years in the financial services business, I got a call from a client who had great news.
The client was an older man in his late 80s. He had received a call from a company about a unique investment. He could invest in a gold mining company that was going to guarantee him a 15 percent return each year for five years in exchange for a $25,000 investment.
The investment was not going to be liquid for the first two years but he could get out of the investment after that whenever he wanted. All he had to do was wire the money to the company within 48 hours and he was in. A member of the “club,” so to speak. I asked him if he had received any information in writing or if he had the name and number of the person he’d spoken with. All he had was the information he’d heard on the phone and the wire information.
At the time, 15 percent was a king’s ransom. Interest rates were in the mid single-digit range and the stock market was not going anywhere except down. This client was an intelligent man and yet without me there to ask some questions, he was ready to go to the bank as soon as it opened and initiate the bank wire.
According to one study, annual losses from elder financial fraud jumped 12 percent to $2.9 billion in 2010 from $2.6 billion in 2008. Seniors are much more prone to becoming victims of financial abuse. Unfortunately, statistics say that only one in 44 such crimes are reported — often because the victims feel embarrassed and afraid to come forward and report the crime.
If you are a senior or know and love someone who is, here are a few of the scams to be alert to:
A caller will say “Grandma” in the hope the senior will volunteer a name. The caller will then let the grandparent know their “grandchild” has lost their wallet in a foreign country and ask them to wire money.
Be wary of any invitations to investment seminars that involve a free meal, especially those done by out-of-state investment people. If it’s a local investment person who would like you to attend, check out who they are and ask them how they got your name. If it’s through a friend, that’s one thing. If they can’t or won’t answer, hang up the phone and find a friend to have over for lunch.
There are many telemarketing scams, sweepstakes, charity scams following local or national disasters.
A popular scam has the caller telling you there may have been some fraudulent charges on your card and then asking you for confidential information so they can “verify” the charges.
There are many other scams that take time and prey on elders who are alone and looking for companionship. There are ways to protect yourself, to make sure you and your assets are safe:
If a solicitor calls you or comes to your door, tell them that you never buy from or give to anyone who calls or visits unannounced or on a first visit. You will need information in writing.
Never give out any personal information over the phone unless you initiated the call. That includes your credit card, banking or Social Security numbers as well as health insurance or Medicare information.
Whenever possible, use direct deposit to prevent checks from being stolen.
I remember going to a prospective client’s home and being asked if they should make their investment check out to me personally. It’s important to remember NEVER to make a check out to a investment professional for investments. Always write checks out to an investment firm so you know where your money is going.
Lastly, as an older person be sure to establish a support group of people you can talk with about financial matters even if they aren’t that financially-savvy. Much of this is common sense but having someone to discuss ideas with is very helpful and can save you a bundle of money and a lot of aggravation and sadness.
Whether you are a senior, or you know someone who is, there is a huge market for scams. Be sure you and those you know are protected and understand that an innocent call can spell financial disaster unless you are alert and smarter than the voice at the other end of the phone.
Karen Paul is a financial advisor based in Burlington.