By Eric Reich
As a parent, you spend a lot of time worrying about your kids. You try to teach them everything you think they’ll need to know in the years ahead. As they get older, you start to worry less about the basics and more about things like how they will handle money. As time goes on that worry about money starts to shift from your kids to your parents. Things such as your parents having enough money to live on for the rest of their lives, healthcare costs, etc. There is another important thing to add to the list because it is a problem that has been increasing at an alarming rate, and that is financial exploitation.
How big is the problem? The FBI logs more than 800,000 complaints per year. According to AARP it is now close to $30 billion dollars a year. The truth however, is that the problem is likely much bigger than even that enormous number suggests. The reason is because most exploitation when committed by those the person knows typically goes unreported. AARP suggests that approximately 88% of cases involving someone seniors know go unreported. Now imagine how big the problem is in terms of actual costs.
We have all heard horror stories about strangers scamming seniors. Here are a few of the more common scams.
1. Internet based scams- These can include Phishing, which is an email from a familiar looking site or sender. They try to get you to enter personal information to confirm information in your account and then steals that information. Another common internet-based scam is a pop-up that says it is an anti-virus software. Once you click on it, it either implants a virus or locks you out of your computer which might then want ransom to unlock it.
2. Phone Scams- These include people impersonating the IRS, Medicare, or health insurance. In the case of the IRS calls, they say you have an overdue balance and try to get you to pay it over the phone. The IRS will not call you, they will reach out via mail. Even if the caller ID looks valid, it is often a “spoofed” number in order to look legitimate.
3. Family or “Grandparent” Scams- Often these involve a “grandchild” calling you from a remote location telling you that they are in need of financial assistance. They often ask that you not tell their parents because they are embarrassed, etc. when in reality it isn’t even them at all. The con is that they try to get you to send them gift cards or money transfers. If you were wondering why they ask a lot of info when you buy gift cards nowadays, this is the reason.
4. Lottery Scams- These scams say that you won money but that you need to pay for the processing, etc. and provide your banking info in order for them to deposit the funds into your account.
5. Romance Scams- These are quickly becoming a much bigger scam than they were a few years ago. As more and more older people are using the internet in order to find companionship, the incidents of fraud are increasing. In these scams, people strike up an online romance with you using a fake identity and often claiming to want to move the relationship forward. They may ask for money in order to travel to see you or borrow money due to some unforeseen short term financial issue in order to scam you out of your money.
6. Elder Abuse- While this one differs from the others in that it is not perpetrated by an outsider, it is a major issue for seniors none the less. What often happens is that a family member moves into an older family member’s house usually due to a financial hardship. Shortly after, they start by borrowing small amounts of money due to their circumstances. These amounts soon begin to grow in both size and frequency. This is an extremely common situation. It is also now a crime in many cases. If a family member moves into another’s home, keep an eye on their finances. I hate to sound distrusting but trust me when I say this is extremely common in many cases didn’t intend to start out as a recurring scam.
The best way to protect yourself or your loved ones from scams, is to simply be aware that they exist and to look for any unusual activity. When in doubt, ask questions, lots of questions. If you think you have been a victim of fraud you can file a complaint with the FTC (Federal Trade Commission) at reportfraud.ftc.gov or with the FBI at ic3.gov.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. To view form CRS visit https://bit.ly/KF-Disclosures.
Eric is President and founder of Reich Asset Management, LLC. He relies on his 25 years of experience to help clients have an enjoyable retirement. He is a
Certified Financial Planner™ and Certified Investment Management AnalystSM (CIMA®) and has earned his Chartered Life Underwriter® (CLU®) and Chartered Financial Consultant® (ChFC®) designations. A lifelong resident of Cape May County, Eric resides in Seaville, NJ with his wife Chrissy and their sons ,CJ and Cooper, and daughter Riley.
