Retirees are attractive targets for financial scammers for a variety of reasons. They have savings. They tend to be trusting. They typically do not report incidences of fraud out of personal embarrassment. And they aren’t as mentally sharp as they once were and may even suffer from dementia.
In a new lawsuit, a J.P. Morgan Chase employee is accused of stealing $100,000 from a client with Alzheimer’s. The banker evidently helped the client set up a separate account and issued himself a debit card. He withdrew $300 a day for a year before people close to the client caught on. Such people are out there and they often wear a suit and tie.
The very latest financial fraud targeting retirees is the grandparent scam. The FBI reports that the grandparent scam has been around since 2008, but that there has been a surge in this type of fraud this year. An impersonator will call an elderly person and identify himself as a grandchild. The impersonator may claim to have been arrested or in a car accident in another country and needs money right away.
A shocking number of grandparents fall for it. They wire money as directed without even attempting to confirm that it is, in fact, their grandchild on the other end of the phone. Last year, more than 25,500 older Americans reported sending $110 million to scammers posing as family members injured or arrested in a foreign country, according to a report in AARP Bulletin. And that understates the problem by a wide margin. The vast majority of scams never get reported because elders don’t want to seem foolish or unable to look after their own affairs.
MetLife estimates that elderly victims lose nearly $3 billion a year from fraud. Half of that is from fraud perpetrated by strangers; 34% by family and friends. Some 7 million Americans over 65—roughly one in five—have lost money from fraud schemes. Here are some tips for not becoming a victim:
- Don’t be fooled by details. Scammers have done their homework. Through social media and other places they have enough personal information to sound like the real deal, AARP Bulletin notes.
- Be skeptical of requests for a wire transfer. This is easy for a scammer to retrieve with minimal identification, and once you’ve sent the money there is no getting it back.
- Officials aren’t always who they say they are. Some scammers pose as cops or lawyers calling on behalf of a relative who was mugged or in a car accident or needs money to post bail or pay customs fees. They always want you to send money right away.
- Never send money before confirming identity. Scammers go to great lengths to keep you from checking out their story. They may call in the dead of night, when you are sleepy and reluctant to bother any other family. Posing as a service provider, they may convince a grandchild to shut off their phone for a while “for maintenance” so that you cannot contact them. So call the parents or friends, or ask questions that it would be hard for a stranger to know—like the name of a pet or a former address.
The grandparent scam is just one of dozens targeted at seniors. Your best protection is common sense. Does the situation really make sense? Why are they calling you? Why the pressure? What harm is there in waiting an hour or two while you confirm the caller’s identity and predicament, or to find someone you trust and get advice? Scammers count on a quick decision. Don’t give them one.