Protecting against financial scams
Has anyone else been getting hundreds of spam phone calls recently? These scams have been on my mind lately. It seems more patients are sharing with me how they were taken advantage of by these and other financial scams. Financial fraud is one of the fastest growing crimes, and older adults are disproportionately targeted. This is such a large issue that the FBI actively maintains a website with statistics about this problem. They report an astonishing figure - in 2021, over 92,000 older adults reported losses of $1.7 billion and this represented a 74% increase compared to 2020!
Anyone can fall for a scam. One of the best protections against scams is knowledge! Learn the common scams, know what makes someone vulnerable, and develop an action plan.
Below are some of the most common financial scams.
- Romance – Scammers create fake profiles on websites, dating apps, and social media and eventually ask for money after building a relationship. A common method is to ask for giftcards. This has been one of the costliest frauds recently, with an estimated $139 million in losses in 2020.
- Government imposter – Scammers pose as someone from the Social Security Administration, the Internal Revenue Service, or the Centers for Medicare and Medicaid Services and threaten legal action unless fees are paid.
- Sweepstakes or lottery – Scammers claim that a prize has been won but can only be collected by providing a fee.
- Grandparent – A scammer pretends to be a grandchild or other family member in trouble and asks for emergency funds.
- Email/phishing – Messages that appear to be from a reputable or known organization (banks, utility company) asking you to “click here” for updates or verification of personal details.
- Tech support – Scammers offer to fix non-existent computer problems and gain access to personal information.
Common reasons that make someone vulnerable are isolation (not having others available to recognize potential threats), loneliness (engaging with scammers to feel a sense of connectedness), and memory or other cognitive impairment.
Consider these ideas to reduce the risk of financial scams:
- A common scammer tactic is to pressure someone to make a quick decision. Take your time, and don’t feel pressured to act right away. Ask for more information in writing. Don’t be afraid to hang up if you are uncertain about the situation.
- If an email or phone call seems to be too good to be true, it probably is. Seek a second opinion.
- Be cautious in providing personal information over the phone if you did not initiate the call. Contact a company directly if you are not sure if the email or phone call is genuine.
- Consider using an answering machine, caller ID, or voicemail to screen calls.
- Discuss the topic with trusted family or friends. Consider ways in which they can help monitor your financial information.
- Ask your bank what steps can be taken to keep your account safe. For example, some banks can send alerts and notifications to you or a loved one when a debit card is being used or when there is unusual activity in your accounts. Another option is adding a loved one as a co-signer or joint account holder on banking and investments accounts. Some banks even allow third-party monitoring of accounts.
- Increase “financial literacy,” which is defined as knowledge of financial information, terms, and concepts, and numeracy or calculations. Many local organizations provide courses or educational information on finances.
- Consider signing up for the National Do Not Call Registry and the National Do Not Mail Registry.
The United States Senate Special Committee on Aging provides an excellent annual report of the top scams targeting older adults. They also provide many practical tips for protecting yourself.
AARP also has detailed information on ways to detect and manage frauds and scams.
Comment below with your own tips for protecting against financial scams.