Elder Fraud: How to Recognize (and Avoid) Scams at Any Age
Do you know anyone who has been affected by elder fraud? Seniors are certainly not the only people who fall prey to scams and schemes, but they are attractive targets for fraudsters—for a number of reasons: They often own their homes, have a nest egg of savings, and are more trusting of strangers than younger generations. Plus, elderly fraud victims are frequently reluctant to admit they've been scammed because they are ashamed or fearful of being seen as incapable of managing their own affairs.
Every year, hundreds of thousands of people of all ages get duped by cunningly deceitful con artists. And according to one study, nearly one in 20 adults over age 60 have been financially exploited at some point in their senior years.1 However, by arming yourself with information and being aware of common scams, you can take steps to avoid becoming an unfortunate statistic.
This article provides details on some of the most common scams that North Americans need to watch out for, including a few deals that fall within the law but require extra scrutiny. It also gives practical tips on how you can protect yourself from various scams and what you can do if you end up becoming the victim of a fraud.
11 Common Scams and How to Avoid Them
The key to avoiding scams is being able to identify them. After all, the more you know, the better prepared you will be. Here are the details on 11 common scams, along with tips on how you can keep from becoming a victim of them:
IRS imposter scams
This is one of the top scams that get reported each year to the Fraud Hotline set up by the U.S. Senate Special Committee on Aging. More than 2.1 million people have been approached by fraudsters pretending to be Internal Revenue Service (IRS) agents.2 This is typically a phone scam, but it is also among the most common email scams. The con artists claim that the victims owe back taxes and penalties, and unless payment is made immediately, arrest, foreclosure, or other legal consequences could result. Victims are often instructed to pay by wire transfer, credit card, certified check, or even gift card. Collectively, Americans have lost almost $65 million to this scam.2
How to protect yourself—Remember that the IRS always sends bills to taxpayers through the postal service before calling about taxes that are owed. Legitimate IRS agents will never insist on immediate payment, ask for banking information over the phone, or threaten legal action against taxpayers. If you get one of these calls or emails, the best thing to do is just hang up or delete the message (without clicking on any links provided in such emails). To confirm whether you really do owe taxes, contact the IRS at 1-800-829-1040.
Medicare phone scams
According to a survey by the AARP, scams related to Medicare are a source of concern for most American adults over age 65.3 One of the latest money scams involves fraudsters calling seniors to tell them they must pay a fee in order to receive the new ID cards that Medicare is sending out between April 2018 and April 2019. (The new cards use unique number-and-letter combinations rather than Social Security numbers to identify individuals.) In reality, all Medicare enrollees will receive their cards free of charge through the mail and do not have to do anything beyond opening the envelope and sharing the new number with their healthcare providers.
Other popular scams involving Medicare feature callers who say:
Once the con artists have your data, they can use it to obtain health services, purchase medical equipment, fill prescriptions, or file false claims and pocket the money. A 2017 report found that incidents of medical identity theft were on the rise in the U.S., particularly in southeastern states like Florida and Georgia.4
How to protect yourself—Safeguard your personal information carefully. Most Medicare scammers perpetrate their hoaxes by phone, but some use email or even show up at your door. It's important to know that real Medicare representatives contact people by regular mail. They will never come to your home uninvited, call you to try to enroll you in a drug plan, or ask for payment information over the phone. If you have any concerns, call the customer service number found on the back of your Medicare card.
Silent calls and robocall scams
Have you ever answered your phone, only to find there's no one on the other end? It might simply be a wrong number, but it might also be an automated system testing out phone numbers to see which ones are answered by real humans. These silent calls are designed to identify potential scam targets. Once you answer, your number is added to a list that gets sold to an untold number of fraudsters. And that leads to robocalls.
Robodialing technology allows con artists to make huge numbers of unsolicited automated calls easily and inexpensively. What's more, scammers can easily spoof the number that appears on your caller ID to make it look like the call is from a legitimate company or from your local area code (when in fact it might originate overseas).
Some robocalls are legal. For instance, you might get automated appointment reminders or pre-recorded messages from local candidates running for office. Those are allowed. But robocalls can't be used to promote the sale of a service. If you get a robocall warning you about a problem with your credit card or offering you a special deal on a home security system, it's probably a scam.
How to protect yourself—Get on the U.S. National Do Not Call Registry (or Canada's National Do Not Call List), screen your calls, and don't pick up if the number doesn't look familiar. If you get fooled and do answer, just hang up. Be sure not to react to anything in the message (such as a statement like "press 3 to be taken off the list") as that will probably just lead to more calls. You may also want to look into call-blocking services from your phone provider or companies like Nomorobo. These services can intercept and block calls from numbers that are known to be used by robocallers.
Sadly, it's common for scammers to pose as representatives of charitable organizations in order to prey on seniors' willingness to give to good causes. This is particularly true in the aftermath of natural disasters like earthquakes, fires, and hurricanes. Fraudsters might call you or come to your door requesting donations for either well-known charities or ones that they made up themselves. Or you might be directed to bogus charity websites (many of which will have names that are very similar to well-known organizations) that collect your money and steal your credit card information.
How to protect yourself—Don't let yourself be guilted into giving a donation until you've had a chance to research the charity, perhaps through free sites like Charity Navigator or BBB Wise Giving Alliance. Never give your credit card information to people who appear at your door; instead, ask for printed materials that you can review in your own time. Check the charity's website address for odd misspellings and keep in mind that most non-profit sites end in .org rather than .com. (And be aware that in the wake of a disaster, legitimate charities will generally appeal for donations through the media rather than approach individual potential donors.)
Counterfeit prescription medication
One of the most potentially harmful senior scams involves counterfeit medications that are sold online. While there are plenty of legitimate pharmacy websites that offer convenient service, there are also plenty of disreputable sites that are just looking to con you out of your money. Between 2008 and 2016, the National Association of Boards of Pharmacy (NAPB) identified more than 10,000 websites that were operating illegally.5
Many older adults searching for cheaper prescription drugs online end up paying for medications that either never arrive or are not the real deal. In some cases, seniors pay for drugs that do not contain the right active ingredients or are expired or contaminated with other substances. Such Internet scams pose a serious health risk to those who get caught up in them.
How to protect yourself—Be wary of sites that supply medications without requiring a valid prescription or offer drugs at suspiciously discounted prices. Check to see if the site is accredited by the Verified Internet Pharmacy Practice Sites (VIPPS) program or the Pharmacy Verified Websites Program from the NAPB. Pharmacies in both Canada and the U.S. that appear on these lists are safe to purchase from. The NAPB also maintains a list of online pharmacies to avoid.
Taking advantage of a grieving widow or widower is one of the most despicable types of elder scams. Fraudsters know that people are more susceptible to being conned when they are dealing with the loss of a loved one. Some scammers read obituaries or attend funerals of random elderly individuals, then they approach the surviving spouse claiming that the deceased person owed lots of money that must be repaid immediately. Victims can be extorted for thousands of dollars.
Some unscrupulous funeral directors also perpetrate senior fraud by requiring you to purchase services such as embalming (which is expensive and optional, except in some cases when a body is being transported across state lines) or by charging an extra fee for their services if you buy a casket from someone other than them (which they are not legally allowed to do).
How to protect yourself—To avoid getting swindled when you're emotionally overwhelmed, ask someone you know and trust to take care of your financial obligations for a brief time while you are in mourning. Have whoever is making funeral arrangements get an itemized price list of services, caskets, and outer burial containers (these are often three different lists) and scrutinize the final bill before committing to payment.
This is another one of those financial scams that play on seniors' heartstrings. Fraudsters have been known to phone random older adults and say something like, "Hey Grandpa, guess who this is?" The unwitting senior names an actual grandchild that the voice sounds most like. Having established a bogus identity, the scammer then begs Grandpa to wire some cash right away because he or she has been arrested, been in an accident, or is overdue on rent. The fraudster may add something like, "And please don't tell Mom or Dad, OK?"
If the victim complies, the con artist will frequently call again, claiming the fees are higher than initially thought. By the second call, most people realize they've been scammed. In 2016 alone, the Federal Trade Commission collected almost 15,000 complaints about people masquerading as family members and friends.2
How to protect yourself—Proceed with caution and attempt to verify the facts before wiring money to grandchildren in trouble. Try asking the person on the phone some basic questions that only your real grandchild would be able to answer, such as the name of a family pet. Or reach out to a close friend or other relative of your grandchild to see what they know about the situation.
You get a letter or phone call saying you've won a huge monetary prize in a lottery or sweepstakes. Wow! The catch is that you need to pay a small fee or provide your banking details in order to collect your winnings. This is one of the most common scams out there because it still works. A typical sweepstakes scam involves the Jamaican lottery. You get a call from a number that begins with 876, which from a quick glance can look like a toll-free number even though it is actually the country code for Jamaica. The caller says you've won the Jamaican lottery, but before you can receive your windfall, you must pay a few hundred dollars in taxes or processing fees. You are instructed to send the money via wire transfer or prepaid debit card. At the height of this scam, con artists were swindling $300 million a year from thousands of American seniors.2
How to protect yourself—Always remember that you can't win a contest you didn't enter. Also, legitimate lotteries or sweepstakes do not require you to pay a fee in order to collect your prize. Even if the letter you receive includes a check for your "winnings," the check is worthless and will bounce in a few days' time if you try to cash it. Never give out your banking information in response to a contest promotion.
Tech support scams
There are numerous variations of this scam, but this is how it typically works: Posing as a representative of a technology company such as Dell or Microsoft, a caller informs you that his or her organization has detected viruses on your computer. The scammer then convinces you to hand over your banking information as well as remote access to your machine so that the problem can be "fixed" and the service can be billed to you.
In some cases, you might be told to click on a link in an email and follow the directions given there. But when you go to the site, malware gets installed on your device and gives the scammer access to your personal files with information on your bank accounts, passwords, and health records. Some fraudsters lock victims' systems down and demand a ransom fee to restore access.
According to a report from the Internet Crime Complaint Center, losses from tech support fraud came to almost $15 million in 2017, a 90-percent increase over the previous year.6
How to protect yourself—Do not give your financial information or control of your computer to anyone who calls out of the blue claiming to be from tech support. Make sure anti-virus software and pop-up blockers are installed on your device and stay on top of updates. Never, ever click on links in pop-up ads or unsolicited emails. If you have questions, call the real tech support by finding the number on the company's website or product packaging (not on your caller ID or in an email).
Unfortunately, many older adults (most often women) fall prey to financial exploitation through romance scams. What usually happens is that a con artist will establish a bond with an older person through an online dating site, take the conversation offline to avoid the site's privacy protections, and eventually ask for cash to help him or her out of a predicament. The scammer will often claim to need money for a medical emergency or for travel to see the victim. Many fraudsters target faith-based online dating services on the theory that people are less likely to be suspicious of someone who shares their religious beliefs.
Sweetheart scams resulted in almost $220 million worth of losses in 2016, and around 70 percent of those losses were incurred by victims over the age of 50.2
How to protect yourself—Be suspicious if someone claims to be in love with you but needs money in order to come see you. If the person you're communicating with repeatedly pleads for cash and insists that you are the only one who can help, that's a sign that his or her intentions may not be honorable. Never send money to someone you only know online. Investigate the person's claims before sharing too much personal information with him or her.
Fake check scams
Lots of people sell goods via online classified sites such as Craigslist. If you're hoping to be one of them, you need to be careful: Overpaying by worthless check is one of the most common Craigslist scams.
Here's how it works: You place an ad for an item you wish to sell. Someone arranges to purchase your item and sends you a cashier's check. But for some reason, the check is for more than the actual sale price. The buyer discovers his or her mistake and asks you to wire him or her the difference. You deposit the check, send the merchandise, and wire the over-payment to the buyer. Eventually, you discover that the check was never valid, and both your merchandise and the money you wired are gone for good.
How to protect yourself—not accept checks for any amount other than the agreed-upon price. And don't let any potential buyer pressure you into wiring money; that's a common trick of scammers. Wait until the check clears before relinquishing the merchandise. Another option is to not accept checks at all and use an online payment service like PayPal instead.
Lawful Deals to Be Wary Of
Some deals promoted to seniors are entirely within the law but could still be classified as elder exploitation if they are absurdly overpriced or designed to take advantage of an older adult's lack of knowledge in a certain area. Here are a few examples of such questionable deals to watch out for:
A growing number of companies are developing computers that are designed specifically for older adults who are intimidated by technology. Such machines have simplified operating systems or user interfaces and can be very useful, but you need to understand exactly what you're getting. Some computers that are marketed as "senior-friendly" cost more than $1,000 but contain underpowered processors and small amounts of storage that limit their usability. (Keep in mind that for $1,000, you can get a fairly high-end computer with advanced features, though it may not be ideal for tech-fearful seniors.) In some cases, companies charge a monthly fee for premium tech support. All of this is legal, but it may not be the best use of your money. It's wise to ask a trusted friend or relative who understands computers to guide you.
Loans and insurance
Sometimes, financial agents who work on commission will pressure seniors into purchasing insurance or taking out loans even when such moves are not in the seniors' best interests. For instance, a senior homeowner might be persuaded to get a reverse mortgage, which is a loan that draws on the equity in a home and provides the homeowner with cash. Reverse mortgages can be a good option in some cases, but they come with significant risks that you need to understand. Some lenders or advisors may not technically lie, but they might urge you to act quickly, without giving you time to carefully weigh all your options. Don't sign anything until you've had a chance to review all the details. You may want to have a lawyer look over the contract first.
Many consumer products and services, such as magazine or software subscriptions, begin with a free trial that requires you to supply your credit card information. The catch is that at the end of the trial, you may be automatically billed for an ongoing subscription unless you arrange to cancel your subscription before the end of the trial period. In some cases, you receive no notice that your trial is about to end and only get reminded when the renewal fee appears on your credit card statement. Then, if you try to cancel, you may find out that you missed the deadline and are not entitled to a refund.
Such automatic renewals can be a problem for anyone, but older adults (especially those with cognitive impairments or memory loss) can be more prone to getting caught up in them. Many states have laws restricting or regulating auto-renewal practices, but the details vary from state to state. If you continue to be billed after asking for a service to be cancelled, try contacting your credit card issuer to dispute the charge.
What to Do If You Are the Victim of a Scam
Did you know that financial exploitation is a common form of elder abuse? Many people avoid coming forward because they are embarrassed about being duped, but reporting a scammer is essential in order to crack down on such cons and keep other people from being similarly victimized.
If you've been swindled out of money or are the victim of fraud, start by filing a police report. Next, contact your bank or other financial institution so that it can advise you about what actions need to be taken in your situation. For instance, it could mean stopping payment on a check or issuing you a new debit or credit card.
If a scammer has gained access to your Social Security number or other identifying information, you would be wise to put a fraud alert on your credit report. Having such an alert tells creditors that you may have been the victim of identity theft, which means they will contact you if anyone tries to apply for a credit line or open a new account in your name. You can place an alert by getting in touch with one of the following credit reporting companies:
- Experian at 1-888-397-3742 (U.S. only)
- TransUnion at 1-800-680-7289 (U.S. and Canada)
- Equifax at 1-800-525-6285 (U.S. and Canada)
You only need to contact one company because whichever one you call must inform the other two about the alert. Initial alerts are free, last for 90 days, and can be renewed.
If you feel that stronger measures are necessary, you can implement a credit freeze that blocks lenders from accessing your credit report. (Unlike with an alert, you need to arrange a credit freeze with each reporting company separately.) This ensures that scammers cannot open new accounts with your information. However, it also prevents you from opening new accounts unless you temporarily unfreeze your credit report, which can incur fees.
Where to Report a Scam
Whether you've fallen victim to fraud or simply been the target of an attempted scam, here are a few U.S. organizations you may want to inform:
If you're in Canada, try contacting the following organizations:
Be on Your Guard
Avoid becoming a victim of elder fraud by keeping yourself informed about common scams and taking steps to safeguard your personal information. Research the latest cons on the scammer alert website set up by the Federal Trade Commission and follow the practical advice outlined above. In doing so, you'll be better prepared to defend yourself against deceitful scammer practices.
- 1 Journal of General Internal Medicine, "Financial Exploitation of Older Adults: A Population-Based Prevalence Study," website last visited on August 21, 2018.
- 2 United States Senate Special Committee on Aging, Fighting Fraud: Senate Aging Committee Identifies Top 10 Scams Targeting Our Nation's Seniors, website last visited on August 21, 2018.
- 3 AARP, 2018 AARP Survey: Experience and Knowledge of Medicare Card Scams, website last visited on August 21, 2018.
- 4 World Privacy Forum, The Geography of Medical Identity Theft, website last visited on August 21, 2018.
- 5 National Association of Boards of Pharmacy, Internet Drug Outlet Identification Program—Progress Report for State and Federal Regulators: July 2016, website last visited on August 21, 2018.
- 6 Federal Bureau of Investigation, Internet Crime Complaint Center, 2017 Internet Crime Report, website last visited on August 21, 2018.