Elder fraud is an increasingly prevalent issue, affecting older Americans each year. Scammers target seniors for their money, property, or personal information, with perpetrators ranging from strangers and new “friends” to trusted advisors, caregivers, and even family members.
As financial exploitation becomes more sophisticated, it’s critical to recognize common schemes and take proactive measures to safeguard seniors. Below are six common elder fraud schemes and strategies for protecting yourself and your loved ones.
If you believe you or someone you know has been a victim of elder fraud, visit the following:
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1. Home improvement scams
According to a recent survey, roughly 1 in 10 Americans have experienced a contractor scam. Baby boomers (age 60 to 78) were most likely to encounter this type of scam. Homeowners who have fallen prey to contractor fraud lost an average of $2,426.1
Prevention tips
- Ask for references. And even better, get contractor and handyperson recommendations only from people you know and trust.
- Hire only contractors who are licensed and insured. Check with your state’s licensing agency to see if a contractor you’re considering has the proper licensure and certifications.
- Make sure to get a binding contract outlining the project scope and costs to help provide assurance the home improvement project is completed correctly and on time.
- Never pay in full upfront. Don’t make a final payment until the project is 100% complete and you’re satisfied with the results.
- Be wary of any contractors that try to pressure you into signing a contract immediately, which is often paired with the offer of a discount. If it sounds too good to be true, it probably is!
2. Online and phone scams
Many fraudsters operate remotely, using phone calls or emails to solicit money or sensitive information. Common tactics include fake charitable appeals, lottery winnings requiring upfront fees, and phishing emails that seek personal details.
Prevention tips
- Make sure your elderly loved ones know not to share sensitive information like Social Security numbers, account details, or passwords over the phone, especially if they did not initiate the conversation.
- Keep personal documents secure, and shred old ones to prevent identity theft.
- Report suspicious activity to your bank immediately and monitor account statements for unauthorized transactions.
- Suggest your loved ones freeze their credit. This is free to do by contacting Equifax, Experian, and TransUnion, and can be “lifted” as needed. It acts as a simple, effective deterrent for anyone trying to take out credit in your loved one’s name.
3. Not-so-free meals
Seniors are often invited to complimentary meals accompanied by high-pressure sales pitches for dubious products or services. These events can lead to impulsive financial commitments.
Prevention tips
- Remind your loved ones to take time before making any decisions, consult with a trusted advisor, and avoid signing contracts on the spot.
- Encourage them to avoid providing any specific financial information or statements of accounts. Such meals can often include an offer to “review” this information in an attempt to gain access to personal data.
4. Exploitative caregivers and “friends”
Fraudsters posing as caregivers or friends may exploit emotional attachments to gain access to finances. This could include unauthorized use of checking accounts or coercing seniors into giving financial control.
Prevention tips
- Maintain open communication with your loved ones about their financial situation.
- Watch for red flags such as checks made out to unknown individuals, unusual cash withdrawals, or changes in legal documents.
- Suggest assigning a power of attorney to a trusted lawyer rather than an individual with whom there is no long-term history.
5. Family fraud
Family members, often trusted to manage finances, can misuse their position. Lines can blur between personal and parental funds, sometimes leading to disputes or lost inheritances.
Prevention tips
- Promote transparency by involving multiple family members in financial discussions.
- Consider holding multigenerational family meetings with a financial advisor to ensure clarity.
- Review accounts regularly for irregular activity and encourage parents to clearly define financial responsibilities.
- Request free annual credit reports from Equifax, Experian, and TransUnion. Spacing out requests every four months can provide consistent oversight throughout the year.
6. Reverse mortgage scams
Reverse mortgages are complex products that allow seniors to access home equity, but they can be exploited by unscrupulous individuals using high-pressure tactics or deceptive offers.
Prevention tips
- Encourage family members to take their time understanding the risks and costs of reverse mortgages.
- Consult with an approved housing counselor or review resources from the U.S. Department of Housing and Urban Development.
Each year, many elderly Americans fall victim to some type of financial fraud or confidence scheme. Seniors are often targeted because they tend to be more trusting, have financial savings, own a home, and have good credit – all of which make them attractive to scammers. By staying informed and engaged, you can help protect the seniors in your life from becoming another statistic in this growing epidemic. For more information, contact your advisor. Not a client? Let’s talk.
1 Weisbrot, Eric. “Contractor Corruption.” JW Surety Bonds, 19 June 2023.
