Senior Citizen Looking At Credit Card

While you are cozied up next to your television, surrounded by the comforts of home, you hear a ring emanating from the telephone. You pick it up and on the other line is a voice you recognize, the voice of someone trying to sell you something. Most of us have a habit of immediately turning a cold shoulder to this type of person, but seniors in relatively lonely environments are vulnerable to this type of call, even if they are bonafide scam artists. 

The scams targeting seniors mainly happen in the form of telemarketing but also in the form of verbal scams. When people are on the phone, they are vulnerable to manipulation and play into the scammers' hands. Seniors who seem like they could become quite confused are vulnerable to being manipulated in person verbally. There is one thing for sure: the more educated the general population is on scams perpetrated on seniors, the better individuals will become at spotting the perpetrators. Whether it be caregivers, children, or seniors, everyone should be aware of these unfortunate tactics. 

Pyramid Schemes

Pyramid schemes are a form of investment fraud where people who join the scheme can make money by recruiting new members and receiving money from their earnings. Pyramid schemes typically start with a person, or people, at the top who recruit members to invest in a company. As more people invest, more levels form below them, with each layer having fewer and fewer members. Each layer is called a “level,” which means that if you’re on the bottom level, you have no one above you paying into your account. For this reason, you can't make any profit within the scheme as every single member will eventually be on their own level, making no profit from those above them. With time on their hands and ambition to earn extra pocket money, seniors are very susceptible to this. If your nan is pushing Herbalife or life elongating mushroom tea, you might want to talk with her. 

Ponzi Scheme 

A Ponzi scheme is a type of fraud in which the operator generates returns for older investors through revenue paid by new investors. This is done without any legitimate business activity and relies solely on a predictable stream of new participants. Seniors who are perhaps looking for a better return on their retirement savings can be particularly susceptible to these dirty tricks. Educating seniors on how investments work and what the market dictates can be incredibly useful in combatting this.

Medicare and Health Care Fraud

Due to seniors’ reliance on the health system in general, Medicare and healthcare fraud are rife. Medicare is a favorite target of fraudsters, defrauding 25 billion dollars from the program in 2020. There are cases where Medicare fraud occurs because of the vulnerability of Medicare’s computer systems. People use data entry errors or implement false billing codes to make fraudulent claims with Medicare using their personal information. This helps them receive financial reimbursement for services they never received or goods they never purchased, like durable medical equipment (DME). Scammers can use seniors’ identities to scam the system, so they should be on alert not to give personal information to people over the phone or knock on their door. 

Financial Adviser Fraud

One of the ways fraud occurs is through financial advisors. Financial advisors are experts in investing and saving your money, but they are also experts in convincing you to give them your money. They do this by leveraging their position of power to convince clients that they know best for them. Seniors are a target of financial advisory scams because they are deemed to have assets and not be as sophisticated when discussing current market dynamics.  Account churning, exorbitant fees, and unauthorized trading are just some of the common ways that financial fraudsters bilk seniors. 

Charitable Gift Annuities

Charitable gift annuities might seem like the ideal investment, a way to give back as well as make a decent return on your money. However, recently these structures have become rife with fraud and malfeasance. In 2006, charitable gift annuities were at the top of the Security and Exchange Commission's list of Most Common Older Investor Scams. The SEC asserts that the scammers “hijacked” the previously dormant charities and fraudulently marketed and sold investment contracts they called charitable gift annuities. If you are looking for a charity to give your money to in retirement, we recommend checking out Charity Navigator.  Most charities do not provide funds for the actual cause but rather take lofty administration fees and spend too much on marketing.  At Senior Directory, we support local and national charities and have done our homework on the charities we support, such as Alexander Muss Highschool and World Wildlife Fund


Affinity Fraud

Affinity fraud is a form of investment scam that uses false affiliations with religious or ethnic groups to gain the trust of potential investors, who are then persuaded to make what they believe to be safe investments. Affinity scams exploit people's desire for warmth and acceptance. The social aspect of the fraud makes it uniquely profitable and addictive, as people who've been scammed find themselves trapped in a "socially-driven addiction" and will continue to invest despite adverse consequences. This can be a dangerous scamming tactic for seniors looking for a social outlet and just general acceptance. 

Viatical Settlement Fraud

A viatical settlement is an agreement between a terminally ill person and an investor, typically an insurance company. The investor purchases the life insurance policy of the terminally-ill person in return for a cash payment to the terminally-ill person or their family. This scam can phase all seniors or those seniors with ill loved ones as it is a financial product that few people are familiar with. 

Promissory Note Fraud

Promissory note fraud is a crime that generally involves using false promissory notes, a contract that can be used to borrow money. An example of this type of fraud would be creating a forged promissory note to collect on the forged note. The forgery process includes altering an existing document, photocopying techniques to produce new records, or using software to create new documents. The forgery process can sometimes involve adding small amounts to large numbers that are not visible in the document but still impact how much money is owed. The types of alterations can include changing names and dates, changing interest rates, or changing the amount owed either by increasing or decreasing it.

Internet Fraud 

As more and more seniors are becoming internet savvy, internet fraud is increasing exponentially in this category. Many seniors are not familiar with the intricacies of email and especially social media, where they might have grandkids and family spending a significant amount of time. Seniors who are looking for a romantic partner are particularly susceptible to this. If your grandmother met someone online who supposedly lives in Virginia but has a thick Nigerian accent, it can arouse suspicion. Seniors need to be careful and wise when using the internet. 

Reverse Mortgage Scams

A reverse mortgage is a loan that enables homeowners aged 62 or older to receive regular payments from the lender, usually on an annual basis. This type of mortgage is designed to help retirees meet some of their financial needs in retirement but can also quickly be taken advantage of by scammers. If you are looking to get a reverse mortgage, seek one out from a legitimate financial institution rather than a cold call or a knock on the door.