Senior Citizen Scams & Avoiding Them

by Dr. Glenn Petry on June 26, 2011

Some senior citizens become too trusting or are mentally incapable of handling their affairs. A significant percentage of those preying on seniors are friends, relatives, caretakers, financial advisers, or supposedly trusted individuals. The following scams affect the elderly more because they are home more, may be lonely and polite, have money, and often have had people help them so they may be more generous or trusting.

Door to Door Salespersons or Solicitors. They may claim to be selling magazines, religious products, cleaning supplies, yard services, repairs (like recoating your roof or driveway), etc. to pay for some seemingly worthwhile activity. In fact, they may not be selling anything, the price may be grossly inflated, or they may be planning to commit a crime either on the spot or are “casing” your home for a latter crime. Of course, there are legitimate people that go door to door. However, it is risky to let such people in your house. We all make some allowances for people we know and others such as girl scouts. My advice is to engage them only through a locked front door, but at the very least, through a locked screen. You could even ask them for a driver’s license or other ID and copy the number down. These individuals are often part of organized crime families that roam the U.S. looking for victims and they may even rob, rape, or assault you. They often have out-of-state license plates. You are advised to call police if you are suspicious. If fraud is suspected, you can contact the following agencies:

Better Business Bureau: 816-421-7800
PhoneBusters: 888-495-8501
Federal Trade Commisssion: 877-382-4357
National Fraud Information Center: 800-876-7060
U.S. Housing and Urban Development (HUD): 1-800-569-4287
HUD Hope Program: 1-888-995-4673

Free Lunch Seminars. First, not all of them are scams, but many involve a lot of high pressure tactics and follow-up phone calls and letters. I attended one just to get information for this book. Frankly, unless you are familiar with the business or individual presenting the seminar, I would likely avoid it. The dangers are that you will be pressured into buying something that you don’t understand, whose risks are not well understood, that is just a scam, is illiquid, or that involves a “leap of faith.”

Investment Fraud. Seniors age 60 and over account for about half of the complaints received by state security regulators (North American Securities Administrators Association). According to a National Association of Security Dealers Investor Education Foundation study, those senior victims are more likely to be married men who are better educated and financially more literate than non fraud victims. They are often reluctant to admit to being a victim and may have recently suffered a serious health problem or loss of a job.

For more information about investment fraud, go to the Securities and Exchange Commission’s website called investor.gov. While it has a section “Protect Your Money” that applies to everyone, it also has one specifically “For Seniors.” The Federal Bureau of Investigation also has a site about many crimes at fbi.gov. This doesn’t necessarily involve seniors, but one investment scam involves dividing 1,000 investors into two groups and telling one group that a stock will go up and the other one that it will go down. Then the 500 winners are divided into two more groups with the same trick, but with another stock. After three advisories, one group of 125 investors has had three winning stock picks in a row and another 125 have been advised about three losing stocks. These two groups are now convinced of the scammer’s wisdom and are ripe for a big scam.

Lottery Scam. The victims are told they have won a lottery or sweepstakes (particularly a foreign one), and they need to send in money to cover taxes or bank fees. They often receive a bogus check and are asked to deposit it and send some of the balance. They are more likely to be women, less wealthy, and less educated than investment fraud victims. To guard against the above problems, relatives and guardians need to advise people of these scams and monitor people who fit a vulnerable profile.

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