With the rise of social media, smart phone usage, and AI technologies, there has been an increase in financial scams, especially financial scams aimed at seniors.
Many seniors are rightfully concerned about these financial scams, but the best way to stay safe is to know how to spot a scam.
Financial scams may change and evolve slightly over time, but they tend to have many of the same characteristics, making them easier to spot if you know what to look for.
Common Types of Financial Scams
While financial scams can affect anyone, at any age, the FBI’s 2023 Internet Crime Report (the most recent published report), shows that individuals over the age of 60 are particularly vulnerable.
In 2023, the FBI received 101, 068 complaints from people over 60, totaling an estimated $3.8 billion in losses, with California registering the largest number of complaints by state.
The most common types of financial scams reported include:
Government Impersonation Scams
In this scam, bad actors will contact an individual claiming to be from the Internal Revenue Service, Social Security, or Medicare. They may suggest you have unpaid taxes and threaten legal action, deportation, or denial of services unless you pay immediately.
Alternatively, they may ask for personal information like a social security number, which can later be used for identity theft.
Sometimes, these scammers will ask for a specific form of payment, like a wire transfer, prepaid debit card, gift card, cryptocurrency, or cash.
These scams may be hard to catch as the scammers often “spoof” the real phone number of the agencies, making it appear as a legitimate call on your caller ID.
Robocalls and Phone Scams
Robocalls make use of sophisticated phone technology to call a large number of homes. There are legal uses for this sort of technology, like calls from debt collectors and emergency alerts from schools and churches. But this technology is sometimes used by bad actors, as well.
One common robocall features a voice saying “can you hear me?” The goal is to get you to say “yes.” The scam caller records that answer and hangs up. The recording can be played later to make it appear you have authorized charges or transactions on your accounts and credit cards.
Other robocall scams may claim warranties on electronic devices or a car is about to expire and payment is needed to maintain coverage. Robocallers may also claim to be from a government or law enforcement agency, claiming you are the subject of an impending lawsuit and if you don’t pay a fine, you will be arrested or sued for a fictional offense.
Computer Tech Support Scams
In these scams, a pop-up appears on a computer, tablet, or smartphone, saying the device is damaged and needs fixing. When the individual calls the support number provided in the pop-up, the person on the other end will request remote access to the device. This access then gives the scammer access to personal information, passwords, and bank account information.
Lottery and Sweepstakes Scams
With this scam, you receive a phone call telling you that you have won a lottery or sweepstakes prize. But, to claim the winnings, you must send money, cash, or gift cards upfront. The claim is that this upfront money will cover taxes and processing fees.
The Grandparent Scam
The grandparent scam is, unfortunately, rather effective as it plays on the emotions and affections of older adults.
The scammer will call an older adult and say something like, “Hi Grandma, do you know who this is?” The unsuspecting grandparent will then offer the name of the grandchild the person sounds most like. From there, the scammer pretends to be that grandchild and asks for money, claiming to be in some sort of financial emergency, like overdue rent, car repairs, or being stuck somewhere while traveling. They often request money as gift cards or wire transfers, things that rarely require identification to receive.
In a variation of this scam, the caller will pretend to be an arresting officer or a lawyer trying to help the grandchild, demanding money to resolve the problem as quickly as possible.
Red Flags to Watch Out For
While these scams can be effective, there are a few red flags that can indicate something isn’t quite right with the situation.
Unsolicited Requests for Personal Information
Most of the time, legitimate businesses and agencies will not reach out to you for information.
For example, your phone or internet provider is not going to reach out to tell you there is something wrong with your device. If these companies do contact you, they will never request personal information from you.
Government agencies may request your Social Security Number (SSN) to verify your identity, but they will not ask for it via the telephone, email, or text.
A service provider, like your bank, may ask for the last 4 digits of your SSN to verify your identity but they will not ask for the entire number. And when this happens, it is like that you have contacted THEM and not the other way around.
If someone has contacted you and is asking for personal information like your full SSN, date of birth, or maiden name, it is likely a scam.
Urgency and Pressure Tactics
Scammers will often use aggressive tactics to elicit a response.
They will use deadlines, like “pay the fine by X day to avoid charges” to cause panic and force action. Sometimes, they will use repeated pressure tactics to wear down the individual.
While legitimate businesses might use pressure-based sales tactics, like not taking no for an answer, they will not threaten and they will not suggest dire consequences if action is not taken immediately.
Offers That Seem Too Good to Be True
If someone is calling you with an unbelievable offer, it may be a scam.
While some businesses do offer amazing deals, view all offers with skepticism. Especially if a service provider, like the phone company, is contacting you and suddenly offering steep discounts for “valued, long-time customers,” it may be a scam.
This red flag can be a little tricky to navigate as sometimes deals are legit. But pay attention to what the person is asking of you. If they are looking for personal information to verify the account or your identity, it is likely a scam. If you are unsure, reach out to the company yourself to see if the deal is actually being offered.
This flag can apply to sweepstakes and lotto scams, too. If you do not recall entering the lottery, draw, or sweepstakes, the call or email you have received is likely to be a scam.
Requests for Payment Through Unusual Methods
If you are being asked to submit payment in gift cards or wire transfers, the request is likely a scam.
Most legitimate payment requests are handled through cheque, debit, or credit card payments.
Steps to Protect Yourself and Loved Ones
There are many simple steps you can take to protect yourself or a loved one from financial scams.
Regularly Monitor Financial Accounts
Keeping a close eye on all bank accounts, investment accounts, and credit card statements is a great way to protect yourself from scams.
By regularly monitoring your accounts, you are more likely to catch fraudulent and illegitimate expenditures or withdrawals, allowing you to alert the bank or credit card company and increasing the likelihood of getting the transaction reversed.
If you are a child of or a caregiver for an older adult, talk to them about monitoring their accounts. Depending on your relationship, consider asking to review monthly bank statements with them to look for unusual transactions.
Use Strong, Unique Passwords
We all know that remembering passwords is a pain. That’s why many of us will use simple or easy to guess passwords, or reuse the same password across multiple logins.
Make sure that every account has its own unique password. And make sure that password is complex enough that a scammer cannot guess it. Avoid using the names of people in your life, the names of pets, or important dates like birthdays and anniversaries. The more random your password, the better.
If you have a difficult time remembering strong passwords, consider writing them down and keeping them in a safe place in your home.
Report Suspicious Activities to Authorities
If you believe you have been targeted in a potential financial scam, do not keep silent.
Report your experience to local, state, and federal authorities. Reporting to local and state authorities helps them better understand what is taking place in their communities and helps them better protect, advise, and monitor.
Consider using the Where to Report Scams tool created by the federal government to learn which agency to contact.
Have Conversations with Seniors in Your Life
Whether you are a senior or a caregiver, having conversations about financial scams can go a long way to preventing them.
Talking about the scams out there and some of the ways to protect against them creates an awareness that makes seniors less likely to be victimized.
Remember, knowledge is power. The more people know about financial scams, the easier it is to spot them.
Resources for Help and Support
Because financial scams are common, there are many resources and support available to you.
If you notice a fraudulent charge on your account or are worried that someone has access to your banking information, contact your bank immediately. They can help address your concerns, reverse the transaction, and protect your account.
Do not hesitate to contact local law enforcement or consumer protection agencies to report your experiences and uncover the next steps to help, especially if you provided the money or information to the scammer.
The Federal Trade Commission (FTC) has created a resource that details what to do if you think you have been scammed.
Organizations like the National Council on Aging, Adult Protective Services, or your local Seniors Center may also have resources and support available to help you if you do not know where to turn or what to do next. Another valuable resource is the Santa Clara Department of Aging and Adult Services.
If you have a trusted caregiver, like someone from Care Indeed, talk to them about your experience. It is likely that they will have knowledge of resources or can help you make the necessary calls to protect your finances going forward. They do not need to know your passwords or have access to your accounts, but they can guide you through the process or supply you with the contact details so you can follow up on your own.
Many seniors feel ashamed or embarrassed after being scammed. And while this emotion is entirely understandable, keeping the experience to yourself only emboldens the scammers and puts your finances at further risk.
Speaking out about your experiences is the best way to stay safe. More often than not, you will be met with admiration and respect for your courage in coming forward.
These financial scams are common because they are effective. Being aware of potential scams, spotting the red flags, and actively protecting your own interests are the best protection strategies.