The Elder Fraud & Stock Market Volatility Connection

February 25, 2016 • Author: Denise Maines, Salin Bank Security Officer

When the stock market tumbles, many investors - especially those who may be older - naturally become concerned about the state of their finances. In some instances, however, this concern turns to panic - and that’s when seniors leave themselves vulnerable to unscrupulous swindlers and get-rich-quick scams. A recent Gallup poll, in fact, says nearly 1 in 3 - or 32 percent - of investors worry “a lot” or “a fair amount” about older family members becoming the victim of financial fraud.
 
“The elderly are a prime target because they often live alone, have ample financial resources and because some lack familiarity with newer forms of technology,” Gallup noted.
 
The Gallup survey echoes similar news reports on the increasing number of scams specifically targeting the elderly.  According to the National Council on Aging (NCOA), financial scams against seniors have become so prevalent they’re now considered “the crime of the 21st century.” Why? Because seniors are often viewed by scam artists as having large sums of money sitting in investment portfolios or savings accounts.

One of the top financial scams targeting today’s seniors is Medicare/health insurance fraud. In this particular scam, it’s common for perpetrators to pose as a Medicare representative to get older people to provide personal information about themselves. Or, the scammers might offer bogus services at makeshift mobile clinics then use the personal information seniors provide to bill Medicare and pocket the money.
 
Investment schemes are another common tactic to sway seniors out of their money. They range from the $65 billion pyramid scheme like Bernie Madoff’s (which counted a number of senior citizens among its victims), to tales of a Nigerian prince looking for a partner to claim inheritance money, to complex financial products that many economists don’t even understand.
 
The reverse mortgage scam is yet another scam targeting seniors. While there are legitimate secured reverse mortgage companies, unsecured reverse mortgages can lead property owners to lose their homes when the perpetrators offer money or a free house somewhere else in exchange for the title to the property.
 
There are several actions the NOCA and other consumer protection groups encourage seniors to consider so they don’t become victims of elder-fraud.
 
*Be aware that you are at risk from strangers - and from those closest to you. More than 90 percent of all reported elder fraud is committed by the older person’s own family members, most often their adult children, followed by grandchildren, nieces and nephews, and others. Common tactics include depleting a joint checking account, promising but not delivering care in exchange for money or property, outright theft, and other forms of abuse, including physical abuse, threats, intimidation, and neglect of basic-care needs.
 
*Shred all receipts with your credit card number. Identity theft is a big business. To protect yourself, invest in - and use - a paper shredder. Monitor your bank and credit card statements and never give out personal information over the phone to someone who initiates the contact with you.
 
*Never give your credit card, banking, Social Security, Medicare, or other personal information over the phone unless you initiated the call. Misuse of Medicare dollars is one of the largest scams involving seniors. Common schemes include billing for services never delivered and selling unneeded devices or services to beneficiaries. Protect your Medicare number as you do your credit card, banking, and Social Security numbers; above all, never allow anyone else to use it. Moreover, be wary of salespeople attempting to sell you something they claim will be paid for by Medicare. Finally, review your Medicare statements to make sure you actually receive the services billed. Report any suspicious activities to 1-800-MEDICARE.
 
*Be skeptical of any unsolicited offers and thoroughly do your research. An informed consumer is wise consumer. Take the time to call and shop around before making a financial purchase. Take a friend with you who may offer some perspective to help you make difficult decisions. Also, carefully read any contracts or purchasing agreements before signing and make certain that all of your requirements have been put in writing. Understand all contract cancellation and refund terms. If you feel pressured into making a purchase, signing contracts, or committing funds, walk away.
 
The bottom line: Elder financial fraud is not just a top concern for senior investors but also among about one-third of all investors, according to the Gallup survey. Having a trusted financial professional who can advise you on major financial decisions or even monitor accounts can help ensure you don’t become a victim, as well as protect your loved ones.