A retiree's lifetime of hard-work, money-saving, and budget-minded spending can be wiped out quickly by scammers who skirt the edges of legitimacy to win and exploit a person's trust. It can be downright maddening to try to sort out the details and recover money that's lost to a scammer, so a good defense may indeed be the best offense against them. With that in mind, here are five ways seniors are targeted by predators and how people can protect themselves.
No. 1: Healthcare fraud
Healthcare is becoming a ripe orchard for fraudsters because baby boomers are turning 65 at a pace of 10,000 people per day and this increasingly larger population is living longer and requiring more care.
Sometimes, con artists attempt to line their pockets by selling seniors unnecessary healthcare products such as medical equipment or services such as laboratory tests. People conducting this type of fraud promise free or low-cost products or services and then bill Medicare or an insurer, often leaving the retiree on the hook for unforeseen out-of-pocket costs.
This type of fraud can be combated by avoiding door-to-door or telephone sales people promising prices that don't ring true. Contacting your primary care doctor to confirm offered items are medically necessary for your care and reaching out to your insurer beforehand to confirm that they'll pay the bill can also keep you from falling victim.
Additionally, fraudsters may attempt to collect payment from you for medical products or services that have never been performed by sending bills that look real but aren't. For that reason, keep a detailed account of your doctor appointments and services provided so that bills can be matched up to those records before you write a check.
No. 2: Funeral and cemetery fraud
The unscrupulous may attempt to charge seniors inflated expenses for funeral or cemetery costs that aren't legitimate or necessary. For example, services like embalming, which is state regulated, or products like caskets aren't necessary for direct cremations, according to the FBI.
To make sure you don't overpay for funeral or cemetery expenses, get educated on the costs charged for similar products or services by other funeral homes in your area. Also, push back against high-pressure sales tactics designed to get you to sign on the dotted line or hand over funds before you've thoroughly considered your options.
Scammers may also scour the obituary section of the newspaper for details on a recently deceased person and then show up at the funeral claiming that the individual owes them a debt. For this reason, always verify debts are real before handing over any money.
No. 3: Telemarketing fraud
The telephone is one of the most frequent ways that seniors are targeted by con artists and the most common telemarketing frauds involve claims that a senior has won a contest or that they've qualified for something desirable, like a vacation, at little or no cost.
Often, these claims are a ruse to get a retiree to turn over credit card or other personal information that a scammer can use or sell to others. In these cases, "free" offers are accompanied by a request for a credit card payment to cover shipping and handling charges or taxes. Scammers may even offer to have a courier pick up a check or cash payment for these small fees; however, those couriers can be accomplices eager to separate you from your money.
In either case, scammers usually tell a retiree that they must act quickly to get their special deal when in fact there's no deal to be had and the only action that a senior should take is to hang up the phone.
No. 4: Investment schemes
Unfortunately, some charismatic fraudsters attempt to convince retirees that their pseudo-trustworthiness makes them the ideal person to manage retirement and taxable investment accounts.
Sometimes, these scammers are fly-by-night operators recommending the next big investment idea or penny stock. Other times, they're longtime frauds like the once-highly regarded money manager Bernie Madoff, who was discovered in 2008 to have been falsifying investment returns for over a decade. Despite a veneer of respectability, Madoff's money management firm, which relied heavily on marketing to people who were of his faith and to non-profits unlikely to require significant withdrawals, was nothing more than a pyramid scheme that relied on new investors to cover withdrawal requests from previous investors.
Ferreting out a Bernie Madoff type schemer is undeniably trickier than identifying a fly-by-night operator, but questioning returns that appear too good to be true and avoiding managers who are unwilling to detail their investment approach can reduce the risk of falling prey to these charlatans. Investors can also benefit from free anti-fraud tools provided by regulators, such as this broker search tool that can be used to look up stockbrokers to make sure they're licensed and have a clean track record.
No. 5: Power of attorney fraud
Unfortunately, 1 in 5 people over 75 requires hospitalization and one-third of Americans over 85 suffer from Alzheimer's disease. Those statistics mean that, at one time or another, our ability to make financial decisions could be limited or impaired by illness or injury.
One of the best ways to keep our financial lives intact while receiving healthcare is to establish a durable financial power of attorney that grants a trusted individual control over our money matters. In most cases, the person given this power of attorney lives up to their end of the bargain, but sometimes, they don't, and when that happens, the results can be devastating.
Because a financial power of attorney is an important planning tool that seniors should have in their toolbox, it's important that seniors don't wait until they're hospitalized to make a decision on whom to trust with the handling of their finances. Instead, consider the matter carefully beforehand so that a power of attorney can be crafted by your lawyer.
Not only should time be spent deciding who is the most appropriate person for this responsibility, but seniors should also consider whether they'd like to grant power of attorney across all of their finances, including investments, or just some of them, such as a check writing to pay bills. Once those decisions are made, a lawyer can keep this document on file at her office until it becomes necessary.