Have you ever received an email or a text excitedly informing you that you’ve won a free or heavily discounted vacation?
Or, have you gotten an urgent collections phone call from the CRA?
Fake contest wins and CRA calls are similar to emails you get from a Nigerian Prince. And while it’s easy to wonder who could fall for such a scam, millions of dollars are still lost to these schemes every year.
The scammers are experts at tapping into core human emotions (like fear and greed) — and at tricking people into sharing personal details.
And unfortunately, none are more susceptible to falling for these tactics than the elderly.
A recent Senate report shows that mature adults are robbed of over $2.9 billion dollars each year.
According to the FBI, “People who grew up in the 1930s, 1940s, and 1950s were generally raised to be polite and trusting. Con artists exploit these traits, knowing it is difficult or impossible for these people to say ‘no’ or just hang up the telephone.”
And as I told you recently, research now shows that the judgment needed for good financial decisions is the first to be affected in early stages of cognitive decline.
Here’s two common financial scams that target seniors — and what you should know about them…
“The Charity Scam”
Right after a terrible tragedy like a hurricane, flood or wildfire hits the news cycle… the scammers get to work.
They call unsuspecting people—usually the elderly—who are moved by the tragedy and want to help. They pretend to be soliciting donations from a reputable charity, like the Red Cross or The Salvation Army.
And when a “charity worker” calls with a detailed sad story and asks for your help, it’s hard to say no. Especially for an older person who wants to do their part.
These charity scams hit the elderly hard over email as well. Often, the pleas for funds are very urgent, which gets people to send money quickly.
What to do to avoid falling into this trap:
- The first key to avoid giving hard-earned dollars to a fake charity is to be aware of the scam. If someone calls you directly, write down the information — then politely hang up. Once off the phone, search the web for the phone number that called you (be sure to put quotations around the number in your search). Another great resource to check if you’re doubtful is the Better Business Bureau’s Scam Tracker site.
- If you’re inclined to give money to help after a disaster, do it proactively. Contact the charity of your choice directly. To find reputable charities that support victims of natural disasters, use the tax exempt organization search from the CRA website.
- Finally, remember that it’s easy for a scammer to create a fake website. Pay attention to details and don’t click links in emails. Type in the website address yourself to ensure that you are visiting the official site.
“Too Good to Be True” Investment Scams
Who could forget Bernie Madoff’s $65 billion Ponzi scheme?
While celebrity victims like baseball legend Sandy Koufax, and billionaires like art collector Norman Braman, stole the lion’s share of the headlines, the majority of Madoff’s prey were elderly people.
Many were forced back to work in their 80’s and even 90’s after every hard-earned retirement dollar had been wiped clean from their accounts.
And while the Madoff scam is an extreme example, senior citizens are targeted every single day with promises of fortunes from penny stocks… high pressure sales tactics… guaranteed returns… and confusing investment vehicles.
According to the Association of Certified Fraud Examiners, “Fraudsters can take advantage of victims by posing as financial advisors to get access to their retirement funds and savings. Once they have access to the funds, they take their money and run.”
What to do to avoid falling into this trap:
- The best way to avoid falling into an investment scam is to work with an advisor you trust. Don’t take investing into your own hands.
- Your advisor should be a fiduciary. That means that the advisor is legally bound to make the best investment decisions for you, and not what would bring them the highest commissions.
And if someone calls and pitches an incredible investment that could spike 200% overnight, use your best judgement. If it sounds too good to be true, it probably is!
So, what was the latest scam invitation that landed in your email? We’d love to hear your story! Contact us.
