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10 Common Scams Aimed at Senior Citizen Investors

Senior Citizen Looking At Credit Card

Sadly, investment fraudsters often intentionally target senior citizens. Indeed, the North American Securities Administrators Association (NASAA) has found that nearly half of all investment fraud complaints are made by, or on behalf of, senior investors. Seniors who have been victimized are often left in a precarious financial position. This is heartbreaking and unacceptable. To help you better protect yourself and your family members, please review the following list of ten common scams that are aimed at senior investors.

Medicare and Health Care Fraud

All Americans 65 years of age and older qualify for Medicare. Of course, this means that scam artists know how the vast majority of seniors get their health care coverage. In some cases, scammers will pose as representatives from Medicare and will ask older citizens for personal identifying information. In other cases, scammers will attempt to try to get seniors to invest in fraudulent health care industry products, including insurance coverage and prescription drug benefits. 

Pyramid Schemes

A pyramid scheme is a form of investment fraud whereby investors only make money by recruiting new investors into the scam. Most often, these schemes ask investors to buy and sell a product, and to recruit new people to all become licensed sellers. However, the product (anti-aging creams, diet pills, subscription services, etc) is typically just a front to try to suck more people into the scheme. Of course, as the amount of people willing to invest quickly runs out, investors are left with nowhere to turn, and often with huge financial losses.

Reverse Mortgage Scams

A reverse mortgage is a type of home loan that allows senior citizens to receive regular payments in exchange for slowly relinquishing their home equity. A legitimate reverse mortgage is insured by the federal government. Indeed, this product was created to aid senior citizens. Sadly, reverse mortgages have also become a common vehicle for investment scams. The Federal Bureau of Investigation (FBI) has put together a list of tips to help seniors avoid reverse mortgage fraud. 

Ponzi Schemes

A Ponzi scheme is a type of investment fraud where early investors are paid back using the funds provided by later investors. Initially, Ponzi scheme operators attract investors into the scam by offering unusually impressive returns. However, these profits exist only on paper. Once the stream of new investors runs out, the whole house of cards will quickly come crashing down.

Financial Adviser Fraud

Every senior investor needs to watch out for financial advisor fraud. Unscrupulous brokers and brokerage firms can target senior citizens in a wide variety of different ways. You should always keep a close eye on your broker. Some common examples of financial advisor fraud include:

  • Charging excessive investment fees
  • Selling unsuitable investments to earn high commissions
  • Churning accounts
  • Unauthorized trading
  • Negligence; and
  • Embezzlement

Viatical Settlement Fraud

A viatical settlement is an arrangement where one sells their life insurance policy to a third party for less than its actual value. This allows the person to benefit from some of the proceeds of the policy during the course of their life. Unfortunately, fraud in this industry has become a very serious problem. Both buyers and sellers of these policies become targets for the fraud.

Charitable Gift Annuities

Be very careful when investing in a charitable gift annuity. This product has become a conduit for investment fraud. In fact, in many cases, fraudsters will pose as a representative of a charitable organization, or will create a fake organization, to try to sell senior investors annuities that will benefit themselves and the charity. In reality, the salesperson is simply stealing the money for their personal benefit.

Promissory Note Fraud

A promissory note is a signed document that promises to pay a person a certain amount of money on a certain date or at certain intervals. Many scammers present themselves or their companies as legitimate and then use promissory notes to secure investment from unsuspecting senior citizens. Sadly, these scammers never plan on repaying the money. Beware of investing in a promissory note. Many are fake. The vast majority of corporations do not offer promissory notes to the general public.

Affinity Fraud

Affinity fraud refers to any investment scam that is targeted at a particular group. In some cases, the fraudster pretends to be a member of the group; in other cases, they actually are a member. Either way, the scammer uses their in-group status to create trust and comfort in order to perpetrate their fraud scheme.

Internet Fraud

Finally, all senior investors need to be aware of internet-based fraud schemes. Internet-based schemes are a fast growing form of investment fraud. Scammers use the web to perpetrate Ponzi schemes, set up fake investment websites, commit identity theft, create fake IT scams, and much more. Be careful when giving out financial or personal information over the internet.


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