March 27, 2015 — So you are pretty sure you are financially literate and no one could scam you – better watch out! A recent study by researchers at DePaul University and the Rush University Medical Center came up with this scary result: Seniors who got financially related answers wrong, but were the most confident they got them right, were more often victimized by fraud. Fraud victims scored 5.39 on the overconfidence scale, vs. 4.21 for non-fraud victims. The authors of the study believe that this overconfidence, combined with declining cognitive skills, is a underlying reason for an alarming rise in fraud committed against the rapidly aging baby boom generation.
Anyone who reads the newspaper knows that fraud against seniors is a growing problem. Some of the most prevalent forms include “free” financial seminars or products, lottery and sweepstakes prizes, high yield/no risk investments, power of attorney or guardian abuse, etc. A study by the Certified Financial Planning Board found that 56 percent of financial planners know seniors who have “been subjected to unfair, deceptive, or abusive practices in connection with the delivery of financial advice or the sale of financial products.”
Beware vacation and snowbird rental scams
In the last few months your editor has personally witnessed a pair of what we hope are unsuccessful scams – but ones so deceptive that anyone could easily fall for them.
The first involved a rental property owned by a friend. He was alerted to the scam after a call from an investigator who was a friend. The detective wanted to know if the friend’s home was for rent, since there were pictures of the home online at Craigslist. The friend said yes it was available for rent – but not through Craigslist! Further investigation revealed that in fact the pictures were of his home – a scam artist had copied all the pictures and text from the authorized listing, reduced the price, and changed the contact information. Anyone who fell for this plausible bargain would have wired money somewhere and never seen the rental. Stories are legion in resort areas of tourists arriving at the door of their vacation rental, only to find they have been scammed. We haven’t heard of this happening to anyone in the snowbird rental market, but it is probably only a question of time. Be careful! See this article, “How to Avoid Apartment Rental Scams“, it has some excellent advice.
The second involved a panicked call from your editor’s 100 (at the time) year old mother. She was very upset that one of her grandsons was in jail, and needed money to get out. Fortunately she was still sharp enough to ask before acting. But she had come very close to sending money to the scam artist who wasn’t quite sure of the grandson’s name – until it was cleverly elicited from her. We hear of this scam happening frequently in Florida; sometimes the crooks are able to get multiple payments before the lights go on.
What can you do
You not only have to protect yourself, but if you have aging parents you have to help them too. Here are some ideas:
– Get yourself and your elderly loved ones on the “Do Not Call” list
– Never send money to any person you don’t know personally. Particularly don’t wire money to anyone until you’ve done your due diligence – once you wire it, it’s gone. Likewise don’t send money to charities that call you on the phone, email you, or show up at your door. Don’t make any investments with people that contact you, at least until you and your family or advisors have personally vetted them.
– Make your elderly relatives promise they won’t send money to anyone without asking you first (see link at bottom for tools that might help with this)
– If renting or buying something online, make sure you check the reviews. Beware Craigslist in particular – there are many legitimate sellers, but there are also many criminals masquerading as honest folk. Email or call the seller and get comfortable with them. Are they hiding something and completely forthcoming? Walk away if anything they are asking sounds strange. If they want money before you have had a chance to see the property, get nervous.
– Never give anyone who calls or emails you personal information of any kind
– Read the articles we have provided below to make sure you understand the kinds of scams that are out there, and what you can do to protect yourself and your love ones.
– If it sounds too good to be true – it probably is!
It is a little scary that overconfidence is a leading contributor to financial fraud. Vigilance is key, and so is staying on top of the most recent fraud trends and prevention techniques.
For further reading
Financial fraud to elders a national epidemic
Overconfidence Linked to Fraud
New Savings Products Help Deter Senior Fraud
Have you or a loved one been been approached or become the victim of financial or other type of fraud? What prevention tips would you advise?