Seniors Are More Vulnerable Finacial Scams: Here’s What You Can Do
It’s fairly common to believe that while a financial scam might happen next door, it certainly won’t happen any closer to home. But unfortunately, it happens every day. Who wouldn’t want to win a trip to the Bahamas or get an exclusive deal on an investment? That’s exactly what con artists count on to help them steal money from older men and women across the U.S.
The Federal Trade Commission has the responsibility since the Elder Abuse Prevention and Prosecution Act of 2017 was passed to inform Congress about the enforcement actions over financial fraud schemes that target elders (people over 60). The report from 2019 shows that in 2018:
- In 2018, older adults were still the least likely of any age group to report losing money to fraud,
but their individual median dollar losses remained higher than for younger adults.
- Compared to 2017 numbers, reported median individual losses among consumers 60 and over
increased, and the increase was particularly large for people 80 and over.
- Older adults were much more likely than younger consumers to report losing money on tech
support scams, prize, sweepstakes & lottery scams, and family & friend impersonation.
- Phone scams were the most lucrative against older consumers in terms of aggregate losses, and
online scams were a distant second.
- Gift cards became the payment of choice for scammers, but wire transfers persisted in the top spot
for total dollars paid.
All in all, “consumers who said they were 60 and older (older adults) filed 256,404 fraud reports with reported losses of nearly $400 million.”
The Psychology of Fraud
Anthony Pratkanis, a psychology professor at the University of California, Santa Cruz, explains in an AARP Fraud Watch Network video that there are four methods scammers use to manipulate their victims. There’s phantom fixation, social proof, authority, and scarcity. And while some might seem blatantly obvious from the outside, experts say that the situation can be very different when you are on the receiving end.
Phantom fixation exists where the scammer makes up some fantasy prize or windfall that the victim would win. For example, that trip to the Bahamas or a chance to buy something valuable on the cheap.
Social proof is an element of everyday advertising, but criminals use it, too. It’s the testimonials of people who have succeeded – men and women who have won that prize. But unlike above-board advertising, scammers don’t rely on real testimonials to make their claim.
Authority is another way to support fraud. When the person on the other end of the telephone can convince the victim that they’re someone to be trusted, or that they knows their business, they take on a position of authority.
There’s also the scarcity tactic. This method is used to create a false sense of urgency. If you don’t act now, you will lose your chance to win that vacation you’ve always wanted.
Fraud Can Happen to Anyone
The susceptibility of seniors to fraud is still being researched. Part of it is thought to be related to the natural neurological changes that happen with age. USA Today explains that younger brains tend to react differently than older brains when faced with a choice between whether someone is trustworthy or not.
There are four sub-methods that can help you identify a scammer, and they’re more obvious once you know what to look for. Those include reciprocity, similarity, consistency, and contrast. These are ways that the scammer manipulates victims once they’ve got their attention.
Reciprocity happens when the scammer offers his victim a token of some sort to create a sense of obligation. Maybe it’s a free financial portfolio evaluation, which, of course, shows the scammer exactly how much money the victim has and where it’s located.
Similarity is a con artist’s way of making himself seem like a friend. Maybe he says he’s from the same town, or shares the same interests. Anything to make himself appear to be less of a threat. Consistency allows the adept scammer to twist a victim’s words against him, and contrast is a way of “proving” that what the scammer offers is worth more than it really is.
How to Protect Yourself
Here are six questions to ask yourself, which can help determine whether you’re more or less susceptible to fraud.
- Do you always answer the phone, regardless of who is calling?
- Do you have a difficult time ending a phone call, even with a stranger?
- If something sounds like an impossibly great deal, is it likely to be impossible?
- Do you believe that people over 65 are fraud targets?
- Do you listen to telemarketers?
- Is your telephone number listed on the national Do Not Call registry?
Scammers rely on people who will answer the phone and who will have a difficult time ending the call. They also thrive on victims who believe in miracle deals, and who aren’t aware that seniors are, indeed, fraud targets.
The national Do Not Call registry should help guard against some telemarketers and scammers, but not all.
If you believe that you have been a victim of fraud, there are resources for reporting it. The United States Department of Justice lists this essential contact information:
- General Fraud: Contact the FBI at 1-202-324-3000 or https://tips.fbi.gov/
- Health Care, Medicare and Medicaid fraud: Contact the Department of Health and Human Services Office of the Inspector General at 1-800-HHS-TIPS or http://oig.hhs.gov/
- Consumer Fraud and Identity Theft: Contact the Federal Trade Commission at 1-877-FTC-HELP or 1-877-ID-THEFT.
- Securities Fraud: Contact the Securities and Exchange Commission at 1-800-SEC-0330 or email at [email protected]
- Mail, Lottery, or Sweepstakes fraud: Contact the U.S. Postal Inspection Service at 1-800-372-8347. If the fraud is made using the Internet, contact the Internet Crime Complaint Center at http://www.ic3.gov/
- State and Local Fraud: Contact your local police department of the State Attorney General’s Office.
Fraud can happen to anyone at any age, but seniors are targeted, and unfortunately, many fall prey to con artists. Some victims have lost thousands of dollars, and some have lost their life savings.
But you can protect yourself against being victimized. Be alert to the dangers. If something seems too good to be true, it probably is. Never give your personal information to anyone that you don’t know to be legitimate. And finally, never pay for something that should be free. Publisher’s Clearing House wouldn’t ask you to pay to claim a prize, and neither would any other reputable business.
NewRetirement is committed to offering resources to plan for and enjoy a financially healthy and happy retirement. We have financial calculators, referral services for planning professionals, and much more. When you’ve worked your whole life to create security, you owe it to yourself to protect it. We can help.