Retirees have long been susceptible to financial fraud because the boomer generation has considerable wealth, did not grow up with technology, and typically have more free time to entertain various schemes presented to them. Between July 2022 and June 2023, the U.S. Justice Department identified approximately 650 criminals who collectively stole more than $1.5 billion from over 2.4 million victims, according to a recent testimony from the attorney general. The estimated figure for total financial fraud in 2023 was well above $3 billion dollars.
Unfortunately, this is an accelerating trend, and we are seeing fraudsters becoming more creative and deceptive in their tactics. Because of this, we thought it helpful to share what we have learned about the most common fraud schemes and how to proactively protect yourself and your loved ones.
4 Common Fraud Schemes Targeting Retirees:
1) Technology Support Scam
A scammer may reach out acting as a tech support representative claiming to work for a well-known company and site a problem with the retiree’s computer or phone. The caller will offer assistance to resolve the issue. If the retiree agrees, the scammer can then gain remote access to victim's device and steal sensitive information such as banking credentials or credit card information.
2) Grandparent Scam
The grandparent scam involves a scammer impersonating a grandchild and asking for money. The term to describe this is "voice phishing," which means making phone calls using voice impersonation to sound like someone else. The scammer posing as a grandchild will offer up vague information and act like he/she is unable to be reached. The scammer will make it sound like the grandchild has had an emergency that requires financial assistance.
3) Financial Reward Scam
This is one of the scams that has been used with great frequency over the past few months. Scammers will tell the intended victim they have been selected as a “valued customer” of a store frequently visited. The scammer will claim that the victim won this year’s client appreciation event and will ask them to pre-pay taxes/service fees before receiving their prize money. Sometimes the scammers will ask for banking information to deposit your fake proceeds and then actually wire funds out of your bank account.
4) Romance Scam
Scammers try to manipulate retirees with the illusion of a romantic relationship. When the victim wants to meet in person, scammers will often provide excuses. After spending time building a connection, the scammer will likely ask for money for reasons such as travel expenses to meet in person or medical emergencies.
5 Tips to Help Retirees Prevent Financial Fraud:
1) Create Awareness
This sounds so simple, but helping your retired family members (and friends) avoid fraud starts with having a conversation. Sometimes we think “fraud would never happen to me,” but identifying a scam is not as easy as we may think. Many older adults are lonely and eager to chat with anyone, but they need to know that there are professional criminals interested in defrauding them. We need to encourage friends and family to keep a guard up especially if someone is asking for personal financial information.
2) Review Bank Accounts & Investment Accounts
It is important to develop a clear financial plan as you age. This is one of the value-add services The Price Group offers to our retired clients. We call our financial plan a Live Well Plan. If your finances are overly complex, we recommend you consolidate accounts for simplicity and safeguarding.
3) Monitor Accounts
Retirees should frequently review their bank accounts and credit card activity. Reviewing credit reports for any unexplained debts is also recommended. Immediately report any unauthorized transaction to your financial institution.
4) Protect Sensitive Information
Remind your retired friends and family to avoid giving their account information, driver's license number, Social Security number, passwords, or other sensitive information to anyone who they do NOT have a pre-existing relationship with.
5) Consider Using Your Power of Attorney
Some retirees may consider giving power of attorney to another person to transact their affairs on their behalf if they become ill or incapacitated. While this may be helpful, having power of attorney also allows the appointed person to take money from your account, take out loans in your name, and transact deals on your behalf. We remind clients and children of clients that the power of attorney document does not work like a water faucet… you cannot turn it on/off as you please.
4 Steps to Take If You or a Loved One Was Scammed:
1) Contact your bank or financial institution.
2) Report financial abuse to the proper government agencies. This is typically done with a police report. Sometimes the police agency will refer you to the Cyber Crime division of the FBI if the scam is above a certain dollar threshold.
3) Contact credit bureaus and ask that they freeze your credit.
4) Tell loved ones. We have found that this can be the hardest step to take, but your family needs to know so they can support you in the coming weeks and months.
About the Author
Matt Price serves as a Partner and Managing Director for The Price Group of Steward Partners. He resides in Houston with his wife, Emily, their four children and "Fisher" the family golden retriever. Matt studied at the University of Pennsylvania – Wharton School of Business for his Certified Investment Management Analyst (CIMA®) designation after receiving his undergraduate degree from the University of Tennessee - Knoxville. Over the past 12 years, Matt has helped families make high quality, common sense decisions regarding their wealth and their legacy. Matt firmly believes everyone needs a wealth coach!
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