Financial scams are a huge problem for all Americans and senior scams are even worse. In 2020 older adults lost $600 million to fraud. One reason these scams work so well is because everyone thinks they would never fall for them.
That is not the case though. Even the smartest person who is careful with their money can get scammed. Protecting your identity and paying attention to your financial accounts is a full-time job and is more important than ever. Thankfully there are ways to keep your savings safe with a little effort and planning. So let’s look at how to do that.
Use Technology to Prevent Senior Scams
There is no need to take a Geek 101 course to protect yourself from crooks and con artists. But technology can help protect your assets. The bad guys use technology to their advantage so you have to utilize it too, as a defense.
Most banks have automatic fraud alerts for purchases that appear suspect. You can also set up extra notifications from your online banking to be sure no one has access to your accounts. For example, you can be notified of a purchase over a certain amount. Or when your balance dips below a predetermined amount.
LifeLock and Credit Karma are two companies that help you manage your credit score and monitor identity theft. Paying a monthly fee for identity theft insurance gives you peace of mind. Because they will handle all the red tape that comes with cleaning up the mess that fraud leaves. That is a huge time saver and can help stop more fraud.
Real Retiree Scam Examples
A couple years ago I read about a gentleman who got scammed out of his tax refund. The crook had his Social Security number and was able to get the refund sent to him. It took the retiree about six months to get his rightful refund. He spent about 20 hours calling the IRS to get the mess straightened out. And of course, the scammer was never caught.
Another example is an 85-year-old grandmother who lost about $100,000 over a few years. She had started playing the lottery then got hooked on sweepstakes. Con artists got her name off a mailing list most likely and targeted her with false claims that she’d won their sweepstakes. The catch was she had to send in money to start the prize payment process. The poor lady lost every dollar she had saved.
That first senior scam could have happened to anyone who receives a tax refund. All you can do is keep your Social Security number as private as possible. The second scam preyed on an elderly person with what was likely a gambling habit. No legitimate prize should ever require you to pay a fee to get the money. A trusted loved one could have helped her see that, possibly.
Scammers use Fear
The reason senior scams work is because the bad guys use fear to make us make mistakes. A common scam is telling you that your family member is in trouble and needs money wired to them. Wiring money is often a sign that a con artist is involved. The emergency situation that demands you send money right away is another warning sign.
You also have to watch for bad guys acting as though they are the good guys warning you that your accounts have been hacked. They do this to cause panic, hoping you will give them information that lets them into your account. For example, if someone contacts you to tell you that your account is locked, just check. Don’t give them any information or click on links they send. Type in your bank website address and log in to see if you truly are locked out.
Make no mistake, criminals practice their crafty craft. Don’t let them use fear to scam you into handing them passwords or other personal information.
*Beware calls from numbers you don’t recognize. In 2019, Americans received more than 63 billion spam calls.
Not all financial scams are as complicated as the ones mentioned above. Sometimes seniors get conned with blatant lies. A story from last year saw several investors lose millions when they invested in an associate’s title company. A company that was completely made up!
The conman was known in the community and had a decent reputation so people just handed him piles of money. The lesson with that senior scam is to always investigate what you are investing in. New companies can be risky, especially those that have no basis in reality like this gentleman dreamed up.
Fighting Fraud on Credit Reports
Now for more ways to fight fraud. No Batmobile needed. If you don’t have identity theft insurance then you will have to handle fraud or credit report errors yourself. You’ll have to contact the agency to dispute errors you find on the report.
You can do that online or a safer bet is to write a letter contesting the negative mark and send it certified mail. The agency should then investigate the error and provide you with a written statement of the results. Here are some common errors people find on their report:
● Closed accounts reported as open
● Accounts that are incorrectly reported as late or delinquent
● Incorrect date of last payment, date opened, or date of first delinquency
● Same debt listed more than once
● Accounts belonging to another person with the same or similar name to you
● Incorrect accounts resulting from identity theft
As you can see there’s a lot that can go wrong without crooks being involved. A tiny typo can give Bill Reed $6,800 worth of awful debt that belongs to Bill Freed! One of those Bills is not going to be happy!
The Psychology of Scams
When I read about a Philadelphia couple using a fake dating website to scam 33 people out of millions of dollars, I wasn’t shocked. The bad guys use our emotions against us. We are human and our psychological tendencies can make us fall for mental tricks.
How effective are these tricks? In the book “Influence” the author points to studies that show we are very vulnerable to flattery. No shock right? But flattery was proven to work EVEN when a person knows the flattery is disingenuous. In other words, our human nature works against us in some instances, making us easy prey for con men who use smooth talk to set us up.
Senior Scams and Passwords
Even if you can spot the mental tricksters, you still have to be diligent with another key to protecting your finances. Passwords and log-in information. Using complex passwords and changing them often is best but it is inconvenient so people don’t take this step. In fact, the top 10 most-used (easy) passwords have barely changed in the last five years.
● Write your passwords down in a safe place
● Copy / paste them on your home computer’s notepad app
● Use a password manager
It is also smart to use two-factor authentication. This simply means you have to use a password and also receive a text code on your phone to log in to a website. It makes it nearly impossible for someone besides you to log in, even if they have the password. It’s like having a gate plus a Rottweiler on duty!
Remember, keeping your account log-ins safe may not be convenient but an extra ten seconds is worth protecting your financial accounts.
One of the last tactics to prevent identity theft scams is to freeze your credit. You must request separately that all three national credit agencies freeze your credit. With a freeze, lenders can’t access your credit reports, making it impossible to open new accounts in your name.
This provides a great sense of security and for those who don’t plan on borrowing money in the near future it’s worth considering and it’s free. Just remember, you can’t access your credit until you request that all the credit agencies unlock or “thaw” the security freeze.
Senior scams and scams in general will never end. It’s up to you to take defensive measures to avoid financial losses and the headache of cleaning up fraud. Take advantage of tools that help keep the bad guys away. And most of all, take your time with all financial decisions. Don’t let others pressure you into quick decisions with your hard-earned money.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.