Financial Fraud Against Seniors

Five million! That’s the number of financial fraud cases perpetrated against seniors in the United States each year according to a recent study by Consumers Digest. However, caregivers, law enforcement or government officials only learn about one in 25 cases.

Most cases go unreported or are discovered long after the crime has been committed, leaving family members and law enforcement at a loss for what to do. The best preventive approach is to educate seniors so they’re less vulnerable to fraud.

Why Seniors?

According to the FBI, scammers prefer to target senior citizens because they are more likely to have savings, to own their home and to have excellent credit. There is also a higher probability they will be home when the criminal comes calling. Often they are physically or mentally disabled or distraught over the loss of a spouse. Moreover, this generation was typically raised to be polite and trusting, making them more likely to take the call or open the door. Plus, they may be lonely and welcome the company.

Seniors are also less likely to report fraud than other age groups. They may not know the reporting process or they may feel ashamed. A big barrier to reporting fraud is the fear that their relatives may think they are no longer able to live on their own.

Con artists also realize that seniors’ memories aren not as sharp as they once were, making them poor witnesses. And if seniors don not discover the scam for weeks or months, the details are even more blurred.

Telemarketer Scams

The U.S. Department of Justice estimates that telemarketers scam around $40 billion a year from one in every six Americans. Approximately 80 percent of their victims are age 50 or older. Scammers use the phone for investment and credit card fraud, lottery scams, identity theft and for selling non-existent goods.

One of the best ways for all Indiana residents to protect themselves against phone scammers is to register for the “Do Not Call” list (www.IndianaConsumer.com or 888-834-9969). According to the Indiana Attorney General, Indiana’s “Do Not Call” list is one of the most restrictive in the nation. And, it’s free!

Knowing the law helps. By law, when you purchase anything over the phone, the telemarketing company must provide you with a signed, written contract. You will then have seven days to cancel the transaction prior to any costs being charged.

Home Repair Scams

Home repair is a common scam against seniors. Typically the scammer knocks on the door, claims to notice damage to the home (i.e. the roof) and offers to repair it. Seniors with mobility issues may not be able to see the damage mentioned and will take the scammer at his word. To safeguard against this type of scam, get a second opinion from another company before signing an agreement. Any home improvements should have a written, signed contract and never require more than one-third of the total cost up-front.

Reverse Mortgage Fraud

These vehicles were designed to allow older homeowners to convert the equity in their residences into supplemental income. Reverse mortgages can be very appealing to “house rich, cash poor” seniors.

According to the FBI, the two most common scams are equity theft and foreclosure rescue. In equity theft, the scammer purchases a home in foreclosure and sells it to a senior. The new senior homeowner is then instructed to take out a reverse mortgage. Once the transaction is complete, the scammer steals the proceeds of the loan.

In foreclosure rescue, the scammer identifies seniors who are at risk for losing their home and encourages them to obtain a reverse mortgage to save it. When they do not qualify for a reverse mortgage, the scammer then advises them to take out a traditional mortgage. At that point the property and its equity is transferred to the scammer.

Be aware that reverse mortgages are complicated and not always the best option. For information visit the Federal Trade Commission at www.ftc.gov and search for "reverse mortgage."

Summary

The best way for seniors to protect themselves is to be alert to current scams and know what to do to mitigate the risk. The Indiana Attorney General’s website provides helpful information and allows individuals to sign-up for email and text notifications of the latest scams. Go to www.in.gov/attorneygeneral and click on “Senior" to sign up for email and text notifications about the latest scams.

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