Financial Scams Against Seniors
In a previous article, we saw that there are those in our society today who would seek to take advantage of seniors and the elderly, and in this article, we’ll see the top 10 financial scams people use to target seniors. We’ll list each of them, and then look at them individually in more detail.
Top 10 Financial Scams Targeting Seniors
- Medicare/health insurance fraud
- Counterfeit prescription drugs
- Funeral and cemetery scams
- Fraudulent anti-aging products
- Internet fraud
- Investment schemes
- Homeowner/reverse mortgage scams
- Sweepstakes and lottery scams, and
- The grandparent scam
Now, let’s briefly discuss each of these in more detail.
- 1. Medicare/health insurance fraud
Each U.S. citizen or permanent resident who is over age 65 qualifies for Medicare. Because of this, scam artists rarely need to research a senior’s private health insurance company in order to scam them out of their money. With these types of situations, scammers might pose as a representative from Medicare in order to get older people to give out their personal information, or they’ll give bogus services for elderly at makeshift mobile clinics, and then use that information they provide to bill Medicare and pocket the money.
- 2. Counterfeit Prescription Drugs
These scams generally operate online, where seniors can go to find better prices on specialized medications. It is also a scam that is growing in popularity. Since 2000, the FDA has looked into an average of 20 cases per year, up from five per year in the 1990s. The danger with this scam is that besides paying for something that’s not going to help someone’s medical condition, victims could potentially buy unsafe substances that will inflict even more harm onto them. It can be as hard on the body as it is the wallet.
- 3. Funeral and Cemetery Scams
There are two main types of funeral and cemetery fraud that the FBI warns seniors against. In one, scammers will read obituaries or attend a complete stranger’s funeral in order to take advantage of the widow or widower. They will claim the deceased had an outstanding debt with them, and will try to extort money from relatives to settle the fake debts. Another way scammers will work is to capitalize on family members’ unfamiliarity with the cost of funeral services to add unnecessary charges to their bill. In one type of this scam, funeral directors will insist that a casket (which is normally one of the most expensive parts of funerals) is necessary, even when performing a cremation, which can be done in a cardboard casket rather than a display or burial casket.
- 4. Fraudulent anti-aging products
Older Americans will often seek out new ways to fight aging, and thus, put themselves at risk of being scammed. In particular, Botox scams are very unsettling, since renegade labs creating fake versions of the real thing. This could be particularly dangerous because the labs might be working with the root ingredient, botulism neurotoxin, which is one of the most toxic substances out there. Getting a bad batch can lead to serious health complications far worse than wrinkles or drooping neck muscles.
- 5. Telemarketing
This is the most common type of scheme used to prey on seniors, as seniors make twice as many purchases over the phone than the national average. While a common idea may be to prey on the lonely senior citizen who has no one to talk to, what may be more likely is that the elder is simply more familiar with over-the-phone shopping. Since there is no face-to-face interaction and no paper trail, these kinds are particularly hard to trace. Once a deal has been made, the buyer’s name is also then shared with other scammers searching for an easy target, oftentimes scamming them repeatedly
- 6. Internet Fraud
Seniors can also be the targets for automated internet scams, and popup browser windows that look like antivirus software may fool them into downloading a fake program or an actual virus that will open whatever information is on the computer to scammers.
- 7. Investment schemes
As many seniors are thinking about retirement, a number of investment schemes are targeted at seniors. From pyramid schemes to fabled Saudi princes, investment schemes have been a long-successful way to take advantage of the elderly.
- 8. Homeowner/reverse mortgage scams
While homeowner’s scams and reverse mortgage scams are closely related, the latter has grown exponentially in recent years. With legitimate reverse mortgages going up by more than 1,300% between 1999 and 2008, scammers are taking advantage of the popularity. Rather than official refinancing schemes, though, unsecure reverse mortgages can lead to losing homes when perpetrators offer money or a free house elsewhere in exchange for the title to the property
- 9. Sweepstakes and Lottery
A lot of people know this one, and it takes advantage of the idea of there being no such thing as a free lunch. Scammers will inform the person they’ve one a lottery or sweepstakes and must make payment to unlock the “prize.” Oftentimes, seniors get a check that they can deposit before it is rejected as a fake. During the waiting period before rejection, criminals collect money for fees or taxes on the prize while the victim loses the prize money when the check bounces.
- 10. Grandparent Scam
Scammers will call an older person, and when the elder picks up, they will pose as a grandchild calling the grandparent. When the older person guesses the name of the grandchild the scammer sounds like, the scammer has then got a fake identity without doing any research. They will often ask for money to solve some financial issue, to be paid by Western Union or MoneyGram, since they don’t require identification to collect. They will also beg the grandparent not to tell “the parents.”
When the money from scams like this are usually in the hundreds, because there is so little research involved, the scammers can make use of it with very little cost.