Financial fraud is increasing in volume and variety. In many instances, these scams are targeted at the elderly. While everyone victimized by these frauds suffers financial setbacks, it is usually more detrimental to seniors, as they have less time and energy to replenish their losses, which usually includes their retirement savings.
Here are some of the more prevalent scams as well as some measures that your elderly relatives can take to avoid them.
SEE: Tips For Keeping Financial Data Safe Online
A major online newspaper recently reported that an 88-year old retiree was scammed out of $250,000 under the 876 Scam, better known as the Area Code Scam. This scam, while relatively new, is becoming increasingly common. The calls originate from Jamaica, for which the area code is 876, and the caller misleads the individual to believe that they have won large cars prizes or valuable big-ticket items. Typically, the person being scammed is required to send cash to pay "fees and expenses" due in order to claim these prizes. In some cases, the scammers resort to threatening the victims and/or their families with bodily harm if the victim does not pay the amount demanded by the scammer. You can visit this site to learn more about the 876 scam.
This case of fraud happens when the scammer contacts the manager of an elderly home, claiming to be a contractor who is offering home repairs at a discounted price. Sometimes they will offer a free "assessment," and produce reports that are padded with incorrect information about what needs to be repaired. In some cases, they will start working after receiving a down payment, but fail to complete the repairs and in some cases cause intentional damage.
Reverse Mortgage Scam
The reverse mortgage scam targets the equity in the victim's home, and can even lead to the victim losing his or her home. The scam artist usually promises the victim a retirement nest egg based on the equity in his or her home, as would be the case in a legitimate reverse mortgage. However, the documentation presented to the victim may include a provision that transfers ownership from the victim to the scam artist. Usually, the damage has been done by the time the fraud is discovered.
Tips for Avoiding Scams
In many cases, your elderly relatives will need your help in avoiding scams. Persuade them to check with you before signing any paperwork, regardless of how insignificant it may seem, and you in turn should check with the Better Business Bureau and regulatory agencies to determine the legitimacy of offers.
SEE: 6 Red Flags Of A Financial Scam
For scams that involve making calls overseas, encourage elderly relatives to restrict their telephones from receiving or making calls outside of the country. Bear in mind that advance technology has now made it possible for calls to originate from overseas, from what used to be local area codes. As such, encourage relatives to be aware of unsolicited calls, primarily if the caller promises cash awards or prize monies.
If your elderly relatives are approached by contractors, they should ask for references or refuse the assistance altogether. Regardless of price, hiring a contractor who can provide several local references and a good record with the Better Business Bureau is probably a better deal than hiring someone with no record and no references
The Bottom Line
These scams - though they can be targeted towards anyone - are usually directed towards the elderly because they are viewed as easy targets. The Federal Bureau of Investigation created a list of reasons why the elderly are easy targets. The website also includes tips on how to avoid being defrauded.