Financial Fraud is Elder Abuse

 The Late Clara and The Late Tom Porter

If you love your parents, grandparents, and other elderly relatives than you will read this blog and act accordingly. You may not know it but your elderly relatives are a target of many scam artists around the world. From your twenties to middle age, increasing knowledge and experience makes you a better decision maker.  But studies show that, on average, things turn around a few months after you turn 53. From then on, the chances of making a financial blunder or being taken in by a swindle, increases.  A 2010 survey found that one in five people over 65 years old have been ripped off.  It is believed that more than one third of Americans over age 71 have mild cognitive impairment or Alzheimer’s disease. Here is the reason why the elderly is the main target of swindles and other financial abuse. Knowing this, just think how desperate many old people are with savings accounts giving near zero interest and a volatile stock market.  

In my opinion, the lack of financial education in America has already set the stage for any scam artist to come in and take your money. It does not matter if they are in a large business or they are some door to door scammer.  So when these people become older Americans they are already prime to be victims of financial swindles and millions more are in danger of being exploited. The elderly today grew up in the 1930s, 1940s, and 1950s. They were generally raised in a time of politeness and trust.

In what areas do these scammers pray on the elderly?

Annuities. Many insurance sales people live off the elderly.  Annuities which promise tax-favored growth and lifetime income can be terrific. On the other hand, they can be lousy deals if the seller is more interested in pocketing an outsized commission than in the buyer’s well-being.  An Annuity may offer your mother a 7.8% yield. They will continue as long as your mother is alive. However, the payment that you receive is a combination of earnings and a return of part of your investment. So you are not receiving 7.8% but maybe 1% to 2% return.  Now this could be a sound investment but only if the buyer fully understands what she is getting into. 

Telephone Fraud. We have all gotten the phone calls around dinner time with someone selling something that we do not need. According to the FBI, people over 60, especially women living alone are special targets of people who sell bogus products and services over the phone. Many call about charitable contributions or that they won a prize. Some claim that they are from the bank and want their account number and other information to fix a problem.  

Mortgage Fraud.  I used my computer to look up the current mortgage interest rates. What I got back was a rash of phone calls wanting to help me with my mortgage problem. All I wanted to know was the current mortgage rate. The collapse of the housing market made fertile ground for scams aimed at desperate homeowners. Many of these scammers promise aid for homeowners threatened with foreclosure. Some claim that they can sell your property quickly. They take your fees for services that they never performed.  

  

The Nigerian Letter. This is my favorite scam. I know of a man that lives in the rich neighborhood of Camp Hill, Pa. that was taken for $20,000. In this scam a government official from Nigeria or some other African or Asian country contacts you by email, letter, or phone. They want help in transferring millions of dollars to the United States to your account. They get you to front cash to cover expenses such as taxes, legal fees, and bribes. They claim you will be reimbursed and you will be well rewarded.  They get your money and you never hear from them again.

Free Lunch Seminars. When I was in my 30s and 40s, I was always invited to free lunch and dinner investment seminars. These seminars were always followed up by high pressure sales calls. The elderly are targets of such financial threats.    

Magazine scams. Be careful of any phone sales pitch for free or prepaid subscriptions to magazines. Your elderly relative may think that they are going online to get information and find themselves secretly signing up for over $100 in magazine subscriptions.   

  What can you do about this?

 The Late William J. Williams II and the Late Jean J. Williams

Start by talking to your elderly love ones to make them aware of the threat. Don’t wait for them to alert you to the problem because by then it might be too late. If they realize it, they may be ashamed to admit that they fell for a scam. They may believe that the incident may lead to a loss of independence.  Tell your parents that you want to protect them against scammers by helping go through their mail. Get copies of their credit report using “Annualcreditreport.com” to make sure they aren’t victims of identity theft.  Put them on the “Do not call list” at 888-382-1222 or www.donotcall.gov.