Older adults tend to have greater wealth due to years of hard work and savings. This makes them prime targets for scammers and swindlers. As our senior population continues to expand, it's crucial to bring to light the warning signs of elder fraud, the crippling impact of fraud and financial abuse, and how to prevent being taken advantage of.
Elder Financial Abuse
In some ways, financial abuse is very similar to other forms of elder abuse in that it can be devastating to the victim and is frequently traced to family members, trusted friends, and caregivers.1 Unsuspecting older adults may fall prey to offers of “help” in managing their finances. Isolated older adults with limited access to the outside world (or little contact with friends) and seniors battling Alzheimer's disease or other cognitive disorders are especially vulnerable.
In a report issued by the U.S. Consumer Financial Protection Bureau, monetary loss was more common and the amount lost was larger when the person knew the caregiver or family member.2
Signs of Elder Financial Abuse
How can you know if crooked people are taking advantage of a loved one? Be on the lookout for these key warning signs that an older adult has become a victim of financial exploitation.
- Abnormal signatures: A change in the handwriting on checks to be cashed is a red flag of financial forgery. Medicare, Social Security, and pension checks are prime targets for financial abuse.
- Loss of control over finances: Bank statements are no longer coming to the older adult, or they are not aware of their present financial provisions.
- Strange banking activities: These can be large, mysterious withdrawals or payments to people or creditors.
- Sudden affection: Long-lost relatives, caregivers, and new friends may show unexpected love or interest to a senior.
- Changes in wills, power of attorney, and property titles: The unanticipated addition of a caretaker's name (or removal of the older adult's name) on documents may signal that someone is trying to gain control of assets and financial decisions.
- Mistakes blamed on memory loss: Elder financial victims are made to believe dwindling savings and unpaid bills are due to their “old age” and memory.
Elder Fraud and Financial Scams Targeting Seniors
Elder fraud and financial scams can quickly deplete an older adult's nest egg. Research reported by Comparitech, a cybersecurity and cyber-awareness company, estimates a staggering 7.86 million cases of elder fraud occur in the U.S. annually, resulting in $148 billion in losses.
Top 5 Scams Reported to the U.S. Senate Special Committee on Aging Fraud Hotline
The United States Senate Special Committee on Aging reported a total of 8,402 complaints from Jan. 1, 2015, through Dec. 31, 2020, to the committee's fraud hotline. Calls pertaining to the top five scams featured in the report accounted for more than 65 percent of the complaints.3
|Rank||Type of scam||Number of complaints|
|1||Government impersonation scam||$3,383|
|3||Illegal robocalls / unsolicited phone calls||$636|
Types of Senior Scams
IRS Imposter Scams
As you saw in the table above, scams where someone pretends to be a government official, such as an IRS agent, are the top complaint reported to the Special Committee on Aging's Fraud Hotline. Scammers have been impersonating government officials for decades, telling victims they owe back taxes and penalties. Victims are warned they will be arrested or exported if payment of the taxes and penalties isn't made immediately.
Don't fall prey to an IRS scam. The IRS will never contact taxpayers through email, text, or social media and ask for personal information.
Sweepstakes, Lottery, and Puzzle Scams
Countless older adults are scammed into believing they're going to “win big.” The catch? Scammers trick their victims into thinking they must pay to win.
These scams work by getting victims to pay sweepstakes fees in order to receive their share of the winnings. Scammers also claim a payment is needed to participate in a weekly lottery drawing (surprise, there's no lottery). Puzzle scams begin with nominal fees. As the senior makes it to the next level, fees increase until the senior loses all their money.
Fake claims of Publishers Clearing House wins are another common sweepstakes scam. Microsoft News reported an 81-year-old man received a call congratulating him for winning $7 million from Publishers Clearing House. All he needed to do was go to the nearest drugstore and buy a “Visa Vanilla Card,” which the scammer said was for tax purposes. Publishers Clearing House never charges a fee for you to claim your prize and urges consumers to beware of fraudsters impersonating PCH employees.
Grandparent scams involve a telephone call from a person claiming to be the senior's grandchild. It's an urgent call for money for an emergency or large financial obligation such as a hospitalization, accident, or arrest. The scammer asks the grandparent not to tell anyone they are wiring funds.
The older adult sends the money, only to discover later that the person who called was not their grandchild and the true grandchild never made the call.
Many older adults incorrectly assume that being on the National Do Not Call Registry keeps telemarketing scammers from calling. However, even the Federal Trade Commission's Telemarketing Sales Rule (TSR) has exceptions. Some types of businesses, individuals, and activities are outside the FTC's jurisdiction. Certain calls or callers also are completely (or partially) exempt from the TSR's provisions.4
Telemarketing scams range from claims that the victim's auto warranty has expired to threats that they owe debt to a collection agency. These scams pressure callers to “act now.”
Did You Know: Senior cell phone plans have protection perks! For example, all T-Mobile cell phone plans come with a Scam ID feature to combat spam calls at no extra cost.
Life Insurance Scams
Scammers targeting seniors in life insurance scams do not always operate like a door-to-door salesperson. Some fraudsters do work for financial groups and insurance agencies.
Pro Tip: That unexpected phone call or email from your insurance company saying there's a problem with your policy may be a scam! Always verify the communication is valid by calling the phone number on your life or long-term care insurance statement.
Seniors who purchase a term life policy sometimes discover their term policy was switched for a more expensive whole life policy. Other fraudsters sell fake insurance policies, policies with premiums that seniors do not understand will increase as they age, and policies that insurance companies do not renew for any number of reasons.
Medicare scams are similar to IRS and bank account scams. Scammers call older adults pretending they require information to update the individual's information or “protect” them from scammers. Scammers get the older adult to disclose their Social Security number and personal information to verify the information on file is correct.
Another scam involves Medicare cards. A fraudster informs victims that they need to pay a processing fee or provide their bank information to receive a Medicare refund from their old card. If these identity thieves are successful, they can use a beneficiary's information to file false claims, fill prescriptions, or sell it to others on the dark web.5 Remember, Medicare sends your card for free once you enroll in Medicare, and you never have to pay taxes or a fee to receive it.
From the Pros: Keep your Social Security number protected. Our step-by-step guide walks you through how to create a secure My Social Security account.
Internet dating sites, social media, and email offer fraudsters opportunities to scam seniors looking for love. Scammers often steal pictures of unsuspecting good-looking men or women and open online dating or social media profiles to woo older adults.
The new romantic interest gains the trust of the unknowing senior and starts requesting money. A scammer may say they need money for airfare to visit their new sweetheart. It's also common for scam artists to create fake emergencies, like being involved in an accident or being detained in a foreign country.
Identity theft doesn't just happen over the phone or online. Mailboxes and recycling cans also provide easy access to medical documents, credit card bills, and bank statements. Identity theft isn't always at the hands of strangers. Family members or caregivers sometimes financially exploit senior loved ones, stealing their identity and opening online bank or credit card accounts.
The scam often goes unnoticed until the senior realizes they have less money, receives statements for accounts they know nothing about, or starts receiving collection agency calls.
From the Pros: Our experts have researched the industry's leading identity theft protection services and recommended their top picks for older adults. For more information, head over to our article on the best identity theft protection for seniors.
Reverse Mortgage Scams
Television advertisements for reverse mortgages proclaim homeowners can turn their home's equity into tax-free cash. However, government agencies are sounding the alarms about the dangerous scams (and downsides) of reverse mortgages.
A study published by the Consumer Financial Protection Bureau reported that older Americans thought reverse mortgages were a risk-free government benefit that allowed them to stay in their homes for the rest of their lives. Homeowners didn't understand they had to pay back a reverse mortgage loan with interest.6
Don't make a decision until you have all the facts. Contact the U.S. Department of Housing and Urban Development (HUD) to find a reverse mortgage counselor.
COVID-19 and vaccine scams continue to run rampant. The U.S. Department of Health and Human Services (HHS) Office of Inspector General alerted the public about fraud schemes related to COVID-19. Scammers are using telemarketing calls, text messages, social media, and door-to-door visits to perpetrate coronavirus-related 7scams.
Quick Tip: Our report on scams that target seniors delivers information on how to protect you and your loved ones from coronavirus scams and other fraudulent schemes.
How to Prevent Being Scammed
Follow these 15 important tips to protect yourself from scams and fraud:
- Change all of your passwords. While it's tempting to use an easy password for all your online accounts, easy passwords make for easy hacking. Choose strong passwords with uppercase and lowercase letters, numbers, and symbols. Update your passwords regularly, and never use the same password for multiple accounts.
- Set up two-factor authentication. Two-factor authentication is an extra layer of security to protect your personal information, requiring a code or fingerprint scan before you can log in to your device.
- Protect your computer with internet security software. Safeguard your computer from virus, spyware, ransomware, and identity hacks by adding security software.
- Be careful with public Wi-Fi. Does your local coffee shop, mall, or library offer free Wi-Fi? Avoid accessing your bank accounts or making credit card purchases on public-access Wi-Fi.
- Check your credit report. Federal law gives you the right to get a free copy of your credit reports every 12 months from the three national credit bureaus (Equifax, Experian, and TransUnion).
- Set up credit card alerts. Get notified every time a purchase has been made with your card by signing up for card alerts.
- Set up bank account alerts. Protect your finances by adding account alerts for unauthorized users and transactions.
- Check the Better Business Bureau's Scam Tracker. Have a nagging feeling that the phone call or email you received is a scam? Use the Better Business Bureau's Scam Tracker to search for suspected scams across the U.S. and Canada.
- Use a cell phone plan with a scam alert. Shut down cell phone spam and robocalls. Many top cell phone plans include scam alert protection.
- Keep your personal information personal. Don't disclose personal details, bank accounts, or credit card numbers over the phone.
- Write a check to charity. Never donate to alleged charities from people calling on the phone.
- Don't click on suspicious email attachments or links. Before you download an email attachment or open a link, consider who and where it's coming from. Malware (malicious software loaded onto your computer to damage it) can infect your computer and files.
- Say no to sweetheart swindling. Don't send any money or goods or provide personal information to a new romantic interest you have never met.
- Report threats immediately. Scammers use scare tactics to extort your money. They may pretend to be federal or financial representatives and threaten to arrest or fine you if they don't receive payment.
- Don't purchase gift cards to pay for “fees.” Never purchase gift cards, Green Dot cards, or similar payment methods for an alleged fine, penalty, or sweepstakes fee. No legitimate agency or business requires such payment methods.
What to Do if You Have Been Scammed
Scammers are experts at stealing our money and personal information. Have you or a senior loved one fallen victim to a senior fraud or scam? It's essential to discontinue all contact with any individual you believe is a scammer and report the scam immediately.
How to Report Senior Scams
Don't feel embarrassed to report a scam perpetrated on you by a fraudster.
When reporting any type of senior scam, provide as much information as possible to the police, federal agencies, and financial institutions. The FBI advises including as many of the following details as possible:8
- The scammer's and/or company's name
- How the scammer communicated with you
- Dates and times the scammer was in contact with you
- Email addresses, phone numbers, websites, and mailing addresses of the scammer
- Methods of payment (such as cash, prepaid cards, or wire transfers)
- Where you sent funds (including the scammer's name, address, bank information, and account number)
- Details on the scam and your interactions, including the instructions the scammer gave you
Bank Account Fraud
Report suspected bank account fraud perpetrated by a stranger, family member, or caregiver to your financial institution. Stop checks or credit card payments to sweetheart and grandparent scammers.
If your identity has been stolen, report identity theft to the FTC's IdentityTheft.gov.
If you're a victim of an internet crime, contact the FBI's Internet Crime Complaint Center (IC3).
Medicare or Medicaid Fraud
Report Medicaid and Medicare fraud by calling Medicare at 1-800-633-4227. Hearing-impaired individuals can call 1-877-486-2048. If you're on a Medicare Advantage Plan, contact the Medicare Drug Integrity Contractors (MEDICs) at 1-877-772-3379.
Social Security Fraud
Report Social Security fraud to the U.S. Department of Health and Human Services Office of Inspector General at 1-800-447-8477 (TTY: 1-800-377-4950).
It's important to report all scams to the Federal Trade Commission. According to the FTC, when you report a scam, your report will be shared with over 3,000 law enforcement agencies. Be sure to also report scams to your state, local police department, and adult protective services agency.
Quick Tip: Staying informed is key! Check out our comprehensive list of blogs for seniors. You'll find blogs that cover essential info on financial exploitation.
How Seniors Can Protect Themselves on Social Media
Social media can be a breeding ground for scammers and phishing. In the video below, Jeff Hoyt, our editor-in-chief, shares essential tips on how older adults can stay safe on social media.