How to protect against financial fraud

According to the FBI, millions of elderly Americans fall victim to some type of financial fraud or confidence scheme, including romance, lottery, and sweepstakes scams, to name a few. Criminals will gain their targets’ trust using the computer, phone, and mail. Government financial groups say baby boomers had 19 trillion dollars in assets in 2019.

So, you may think this is not a big issue for you.

According to the FBI, millions of elderly Americans fall victim to some type of financial fraud or confidence scheme, including romance, lottery, and sweepstakes scams, to name a few. Criminals will gain their targets’ trust using the computer, phone, and mail. Government financial groups say baby boomers had 19 trillion dollars in assets in 2019.

Criminals know there’s a lot of money to be had by focusing on older folks, especially because they don’t practice strong passwords or they open emails from strangers. As people continue to live longer, the population of older folks facing cognitive issues will continue to rise, and elder financial abuse will become increasingly more common. Forbes said seniors had $69 billion in total losses in 2014 due to financial abuse. The National Council on Aging reports over 90% of all reported elder abuse is committed by an older person’s family members, most often their adult children, followed by grandchildren.

Let's look at the facts

In a 2015 study, True Link Financial, a financial services firm that serves seniors, found that 37% of seniors are affected by abuse over any given five-year period. The study found that, of the seniors who experienced fraud, 2% lost their home, 7% skipped medical care, and 4% reduced their nutritional intake due to skipping meals. It is estimated that 954,000 seniors suffer from depression, anxiety, and loss of independence because of these nonfinancial-related exploitations. Furthermore, it’s suspected that the number of cases of elder abuse is vastly underreported since perpetrators are primarily family members, close friends, or caretakers.

Older people, who as a group, make twice as many purchases over the phone than the national average, so phone scams are easy temptations for seniors. Remember the old saying, if it sounds too good to be true then it is fake. Just hang up.

This all means you could easily become a victim of financial fraud so you need to learn how to protect yourself so lets cover the specifics now.

Common types of fraud

Let’s review the common types of elder fraud schemes as reported by the FBI.

1. Romance scam: Criminals pose as interested romantic partners on social media or dating websites to capitalize on their elderly victims’ desire to find companions.

2. Tech support scam: Criminals pose as technical support representatives and offer to fix non-existent computer issues. The scammers gain remote access to victims’ devices and sensitive information.

3. Grandparent scam: Criminals pose as a relative—usually a child or grandchild—claiming to be in immediate financial need.

4. Government impersonation scam: Criminals pose as government employees and threaten to arrest or prosecute victims unless they agree to provide funds or other payments.

5. Sweepstakes/charity/lottery scam: Criminals claim to work for legitimate charitable organizations to gain victims’ trust. Or they claim their targets have won a foreign lottery or sweepstake, which they can collect for a “fee.”

6. Home repair scam: Criminals appear in person and charge homeowners in advance for home improvement services that they never provide.

7. TV/radio scam: Criminals target potential victims using illegitimate advertisements about legitimate services, such as reverse mortgages or credit repair.

8. Family/caregiver scam: Relatives or acquaintances of the elderly victims take advantage of them or otherwise get their money.

Suggestions for action

The FBI suggests some ideas to protect yourself against these schemes.

1. Recognize scam attempts and end all communication with the perpetrator. If you stay on the line it will sound great.

2. Search online for the contact information (name, email, phone number, addresses) and the proposed offer. Other people have likely posted information online about individuals and businesses trying to run scams.

3. Resist the pressure to act quickly. Scammers create a sense of urgency to produce fear and lure victims into immediate action. Call the police immediately if you feel there is a danger to yourself or a loved one.

4. Be cautious of unsolicited phone calls, mailings, and door-to-door services offers. They can get your info online.

5. Never give or send any personally identifiable information, money, jewelry, gift cards, checks, or wire information to unverified people or businesses.

6. Make sure all computer anti-virus and security software and malware protections are up to date. Watch my video computer security esp1 to learn how to check your computer security. Use 2-step verification for all accounts.

7. Disconnect from the internet and shut down your device if you see a pop-up message or locked screen. Pop-ups are regularly used by perpetrators to spread malicious software. Enable pop-up blockers to avoid accidentally clicking on a pop-up. My video on computer security can help enable pop-up blockers.

8. Be careful what you download. Never open an email attachment from someone you don't know, and be wary of email attachments forwarded to you. A simple rule to remember is if you were not expecting an email with an attachment then delete it.

Take precautions to protect your identity if a criminal gains access to your device or account. Immediately contact your financial institutions to place protections on your accounts, and monitor your accounts and personal information for suspicious activity. You may not know that banks and credit card companies offer apps that allow you to instantly disable a credit or debit card until you get a replacement. You can also simply disable a card until you need to use it then turn it on. That way, a Home Depot hack won’t allow hackers to use your credit card.

The FDIC says you should also,

• Carefully choosing a trustworthy person to share your financial planning matters with so they can assist you with tracking your finances if you are unable to do so yourself.

• Locking up your checkbook, account statements, and other sensitive information.

• Ordering copies of your credit report to review for suspicious activity. (You are entitled to a free copy of your credit report from each of the three major credit bureaus once every twelve months. To order your free annual reports, go to AnnualCreditReport.com or call toll-free 1-877-322-8228.)

• Never provide personal information, including your Social Security number, account numbers, or other financial information to anyone over the phone unless you initiated the call.

The FDIC also recommends tips for family and friends that help notice scams or fraud.

Family and friends can help by being aware of the many ways in which an older person may be financially exploited. There are many scams and frauds that attempt to get bank information or Social Security numbers from the elderly to steal their identity or money. Be on the lookout for signs of possible financial abuse, including:

1. Unexplained account withdrawals.

2. Another individual unexpectedly making financial decisions on the older person’s behalf.

3. The disappearance of funds or valuable possessions.

4. Unanticipated transfer of assets to another individual.

5. Sudden changes to a will or other important financial documents.

6. Suspicious signatures on checks.

Act now!

Many people don’t know their identity is already been used by thieves.

There are eight big things you can do right now to protect against identity theft and most are free to do.

1. No one needs your social security number unless you are buying a house. Most credit can be done with your name and address. They don’t need your social security number at the doctor’s office so insist on it.

2. Freeze your credit. If you are not buying a home or car soon then putting your credit on freeze will prevent anyone from opening an account, including you. Once you need to get credit just unfreeze it temporarily. This single item is the best way to protect against identity theft.

3. Automate paying your bills. Paying bills can be a cumbersome process. It’s even more difficult for the elderly, who can be easily confused. Automating bill payments with direct debits from their checking account will help them stay organized, while also minimizing the opportunity to get drawn into a financial scam. If bills have been automated, it may help prevent the senior from getting duped into sending out monies to a fraudster.

4. Do not have income checks coming in your mailbox, use direct deposit so checks can not be “washed”.

5. If you still drive then drop off your bills at the post office. Criminals are “mailbox surfing” when you leave the red flag up so they can get your bills and “check wash” the payee and amount off and add their name. They then add a bigger amount and it goes through your bank because they leave your signature on it.

6. Utilize credit cards instead of cash. Once cash is sent to another party, it is very difficult to track or get the money back. Credit card companies will credit out fraudulent charges. You can also turn off a card until you need to use it.

7. For very older adults or those with memory issues, appoint trusted individuals to oversee finances. This individual can review credit history reports to check for unknown activities where someone is using your identity.

8. Review your free credit report often. You will be surprised what unknown information you find. An address that is not familiar is a dead giveaway that someone is using your identity.

In summary, criminals are working all day to get your money or steal your identity. You must invest a little time to protect yourself. If you apply the tips that I reviewed earlier then you can significantly reduce the risk of financial scams and fraud. If you procrastinate doing these things then at least freeze your credit now. That single action can prevent someone from opening credit in your name and stealing your identity.

If you need help with a personalized plan of action then we can help you with that personal plan.