According to the FBI, adults over 60 lost $1.7 billion to fraud in 2021. And with financial scams becoming more sophisticated every day, it is pretty safe to assume that the amount of money stolen from retirees annually will likely increase over the coming years.
But the fact that you’re getting older doesn’t mean you have to constantly worry about your retirement accounts, or worse, expect to one day be a victim. There is plenty that retirees can do to protect themselves and their families from scammers that do not require constant vigilance. After all, retirees should be able to enjoy their golden years without worry of losing the nest egg they worked so hard for.
In this article, we’ll take a look at the most common financial scams affecting retirees, and share some ways to keep criminals out of your pocketbook.
4 Common Financial Scams Threatening Retirees
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IRS, Medicare Scams
How it works: these scams often start the same way: a person claiming to be an IRS or Medicare representative calls or knocks on your door and demands either information or money. In the case of the Medicare scam, the representative will ask for an insurance identification number which they will use to bill Medicare for fake services and collect the money. In the IRS scam, the fraudster will claim you owe back taxes and demand payment via debit card or wire transfer.
How to stop it: the remedy for both of these situations is simple: hang up the phone or close the door. In general, agents for Medicare or the IRS will not call or show up at your door out of the blue.
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Unlicensed Provider Scams
How it works: in this case, a scammer will advertise or quote a price for a product or service well below their competitors’ prices. But rather than being your lucky day, this deal is definitely too good to be true. Two of the most common businesses using this scam are fake pharmacies selling inferior (or downright counterfeit) medicine, and moving companies that load your belongings into a truck, then hold the items hostage until you pay them a ransom.
How to stop it: with these, or any other service provider whose prices seem too good to be true, always check that their business licenses are up-to-date and in good standing. Additionally, ask around to see if anyone in your family or friend circle have worked with them before, or have any other recommendations.
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Financial Advisor Scams
How it works: there are two common types of financial advisor schemes: the first involves a person claiming to be a financial advisor, who then convinces you to allow them to manage some or all of your investment accounts. Once they have access to the accounts, they take the money and skip town. The other scam comes from allowing financial advisors to send money on your behalf. In this case, a financial advisor is granted the ability to send checks on your behalf, and instead sends money to themselves or others without your permission.
How to stop it: Be sure to thoroughly vet the credentials of potential financial advisors before hiring them to manage any of your accounts. Also, do not authorize any of your advisors to send money without your approval.
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Family Scams
How it works: No one wants to believe someone would pull a scam on a family member, but it really does happen. Letting a devious family member manage one’s finances could lead to massive misuse of funds, and lead to some very awkward Thanksgiving dinners.
Another family-related scam preys upon the deteriorating mental quickness and hearing abilities experienced by many retirees as they age. In this case, a person claiming to be a grandchild or other family member will call the victim, claim to be in a crisis and rush him or her to wire them money.
How to stop it: there are many available tactics to avoid getting scammed by family members, the simplest of which is to just say no to letting them manage your finances. There are many additional options which are covered in this article from US News.
Additionally, if a supposed family member calls you in a panic needing money, chances are their need is not so immediate that you can’t first confirm its legitimacy. Hang up and contact another family member who can help you verify the details of the situation.
What else? [Webinar] Stand Up To Fraud with the Denver District Attorney’s office.
Ryan Woodhouse is the Content and Publications Manager for the Fire & Police Pension Association of Colorado. When not managing content for FPPA, Ryan can be found fly fishing in the Colorado high country or shouting at the TV during University of Wisconsin football and basketball games.