Although anyone can be a victim of a scam, most of these perpetrators seem to go after senior citizens. It isn’t that seniors are gullible, but their desire to help people, especially family members in need, makes seniors susceptible to having their pockets picked.
Of course, not all scams are immediate requests for money, which make them hard to initially detect. Some involve an investment of time from the con artist in order to build a relationship. Since you’re more apt to help someone you know and like versus a stranger, the person running the scam will spend whatever time is necessary to make you feel comfortable that they are a trusted friend. When a con artist makes this kind of time investment, the money they try to extract from the “mark” can be substantial. Unfortunately, we’ve all heard stories where an elderly person living on fixed income loses anywhere from tens of thousands of dollars to their entire life savings, which is why you need to keep your eyes open and be alert.
Probably the best way to avoid a scam is to apply the same philosophy you use in investing: “If it’s too good to be true, it is.” Finally, always be a well-informed consumer and don’t expect the government to have regulations to protect you at every turn. Even the most stringent laws and regulatory oversight have loopholes that unscrupulous people consistently find and exploit.
Most of the items listed below not only apply to seniors but to everyone, so take a close look to ensure you avoid these common scams:
- Avoid having checks sent to you via mail and sign up for direct deposit. Not only do most companies, as well as the government, prefer direct deposit, the process to establish direct deposit with your financial institution is easy as well as free.
- Never agree to anything over the phone, especially when you’re contacted by a stranger. The best way to avoid these marketing calls is to sign up for the National Do Not Call Registry online at (www.donotcall.com) or by calling 1-888-382-1222.
- Along the same lines as the above point, never give anyone your personal financial information over the phone or in writing unless you are 100% sure they’re with the company you’re contacting. For example, if someone asks you for your Social Security number to confirm who you are, tell them you’re not comfortable providing that information. In most cases, the person you’re dealing with over the phone can confirm your identity by asking your account number, address, or even a personal identification number (PIN) that you may have established when you opened the account.
- Do not respond to offers sent to you via conventional mail or e-mail. I don’t know how many times my daughter has seen the mail and said, “Hey Dad, all we have to do is fill out this card and we’ll get a new car or $5,000.” Remember, if it’s too good to be true, it is. You can get your name removed from these mailing lists by going to the Direct Marketing Association at (www.dmachoice.org). Any offers you receive should be shredded, especially offers for credit.
- Always check your bank, credit card, and investment accounts for any unusual activity. If someone gets your mail or is able to access your online accounts, they can extract pertinent information that can result in them redirecting your assets, running up charges on your existing credit cards, establishing credit under your name, etc. All these things can ruin your credit score, which could take you years to correct/repair.
- Be careful when you give someone power of attorney. This document allows this person to be your agent and make decisions on your behalf if you become incapacitated. An unscrupulous person, who could easily be a family member, could wipe you out very quickly.
- Watch out for Medicare scams under the new Medicare Advantage programs (i.e., Medigap or Medicare supplemental insurance). Although the approved insurance providers are allowed to offer Advantage programs, the devil is in the details as you may end up selecting a plan that doesn’t offer you the coverage you need, which will result in large out-of-pocket expenses before the insurance kicks in. Since insurance agents can receive large commissions for signing up new members, there are some that may not be as forthcoming about the coverage, which is why you need to be careful before selecting a provider.
- Watch out for investment scams where you’re promised guaranteed returns that can range from 5% to 15% a year. With yields on short-term savings around 1%, an offer to earn 5% may sound like a windfall. If opportunities that guaranteed high investment returns were legitimate, everyone would own them or at the very least you’d hear about them from various reputable financial sources.
- Remember the old saying, “There’s no such thing as a free lunch.” Well, keep that in mind if you get a phone call or an invitation in the mail for a free lunch or dinner if you attend an information seminar. Some of these seminars are legitimate, while others are just a way to get you in the door so they can apply high-pressure sales tactics.
- Check your credit reports to ensure there aren’t any errors or irregularities. Since you’re entitled to one free credit report every 12 months from the three credit bureaus (Experian, Equifax, and TransUnion), you should do this every four months.
As you can see from the above list, it’s always a good idea to stay clear of unsolicited offers. The chance of you being that person who will get a free car by filling out a form is probably one in a million, so be polite and hang up, delete the email, or shred the letter if you received it via conventional mail. When it comes to your money, it’s always safer to be a cynic and question everything that’s offered for free or well below fair market value.