Five Common Scams Directed at Seniors (and How to Avoid Them)
Article by Alan Henry, Lifehacker
Scammers and identity thieves prey on all types, but some of the most vulnerable—and often targeted—by those criminals are senior citizens. From convincing “reverse mortgage” ads to aggressive calls claiming to be from the government, here are some of the most common scams directed at seniors, and how to avoid them or help your relatives avoid them.
We’ve talked about how to protect yourself from identity theft both online and offline, but some of these scams don’t come in the form of email you can filter, or people rummaging through your trash. These scammers will call you and pretend to be a government official or threaten to fine or imprison you. In other cases, they’ll peddle a good-sounding but terrible financial product in commercials during your favorite reruns. Here are a few you should watch out for.
Reverse Mortgage Advertising
Despite its confusing name, a “reverse mortgage” is just another type of home equity loan. The key here is that the loan doesn’t have a monthly payment. Instead, the interest accrued is just added to the loan balance every month, and the full loan balance has to be repaid when the borrower dies, or when they sell or move out of the home. You can see immediately why banks—especially predatory ones—target these types of loans at seniors. Essentially they get to tap into the equity they have in their home, get some money, and—presumably—not have to pay it back, or leave it to their well-heeled family members to pay off in their stead when the house is sold after their passing.
There are a lot of problems with this type of loan though. First of all, calling it a “reverse mortgage” obfuscates the fact that this is, in fact, a loan you take out—one that you or your family will have to pay back. Second, many of these ads use celebrity endorsements and imagery that makes them look like government benefits, when these types of loans are not affiliated with the government at all, and the celebrity “endorsement” is just an actor trying to make a buck.
Worst of all, these ads use phrases like “you’ll never lose your home,” to make you feel secure. In reality, you could very well lose your home, and the (often difficult to sift through) fine print explains how. If you run out of equity to tap into before you die or sell your home, you’ll have to pay the loan back—and if you can’t, the lender will foreclose. Similarly, if you move out for any reason, like into a nursing home or hospice care, the loan is due, and if your family can’t pay, the lender may foreclose. Similarly, the loan comes due after you die, so your family will wind up having to pay that loan back while simultaneously dealing with funeral and burial costs.
The bottom line is this: Reverse mortgage ads are designed to be predatory. Few of themmention important details like interest rates or terms, and that’s on purpose. Like any other financial product, they can be great tools when used well, but for most people the extra cash may not be worth the headache for you—or your family—especially when you have other, more above-board options. For more, check out this piece from the Consumer Financial Protection Bureau.
The phone rings, and when you pick it up, there’s a cordial but serious voice on the other end that says they’re calling from the IRS, and that you owe them hundreds—possibly thousands—of dollars in taxes. They say you need to pay what you owe right away, or they’ll be forced to call the police or have you evicted from your home. They insist on taking the payment over the phone, via wire transfer, and immediately ask for your bank account information. Alternatively, they may tell you that they owe you money, and your only chance of getting your refund is to give them your bank account number and routing number, right then.
If it sounds kind of ridiculous, it should. Unfortunately this particular scam is prevalent enough, especially during tax season, that the IRS has repeatedly said they’ll never call you to say you owe them money. They always use certified mail. If the IRS owes you a refund, they’ll just send it to you—they won’t call. The problem with this scam is that the scammers are usually very aggressive, target seniors specifically, and refuse to give you any opportunity to verify their claim. They threaten to either call the police immediately, or that if you hang up they won’t be able to process your refund. That means no “I’ll call you back,” or “let me get my paperwork.” If you’re relying on caller ID to help you out here, that may not be much help either—often these scammers spoof real phone numbers and area codes to appear legitimate.
In short, if you have official business with the tax man, the IRS won’t call you, and they’ll never demand money over the phone. You can always call them, however, at any of their hotlines and toll-free numbers if you get a suspicious call.
The “Your Child/Grandchild/Etc Needs Money” Trap
Another scam targeted almost exclusively at seniors comes in the form of a phone call—the kind no one wants to take. You pick up the phone, and the person on the other end says that your son or daughter, niece or nephew, grandchild, or other relative is in trouble and needs your help. Sometimes they’re in prison and it’s their “lawyer” or other representative calling, other times they’re in the hospital after being in an accident and it’s a nurse on the line.
Of course, the person you’re talking to says they’re your relative’s designate, and they can handle the money and any other personal information (like social security numbers or addresses) that they need to “help.” As with most scams of this type, the pressure is on and the scammer is playing on your fears to get you to cave. You wouldn’t risk your loved one staying locked up, or not being able to get medical care, right? That’s the gist, and the scammer will play on both the false urgency of the call and that mindset to get you to give in. In some cases, they’ll even pretend to be that distant relative, like a great grandchild or long lost nephew or niece, using just enough information as they can get from Facebook or other social media—all in order to swindle you out of some cash.
Whatever the situation, it’s supposedly dire, and there’s a reason why you can’t speak directly to your relative or someone you actually know. Of course, you can never call them back either. Those should be your biggest red flags—if you can’t call someone back, it’s almost always a scam. Even if you can, you should never give out financial or personal information on the phone, especially if you can’t talk to the person who reportedly needs it. If your loved one is in jail or in the hospital and someone’s calling on their behalf, they should be able to give you details about the person’s condition, where they are, how they can be reached, and so on. A scammer won’t stand up to that kind of questioning.
Medicare or Prescription Drug Scams
These types of scams come in via email or by phone, and they’re fairly simple: The person contacting you claims to represent the government, or some company authorized by the government to dispense Medicare benefits or fill your prescription. They’ll offer to save you money on your prescriptions, or to send you medical equipment and bill Medicare. Either way, there’s some urgency to take them up on the offer, and the prices are limited-time only. In every case, you pay, get nothing, and they vanish with your money.
In the case of prescription drugs, some of these scammers may send you something, but they’re often counterfeit, or vitamins in prescription bottles. Some of these scammers use social media to collect information about you, or they may just cold call you. Either way, it’s natural to look for affordable options for prescription drugs, or to seek out affordable health care providers, but remember—you’ll have to do the homework and make the calls, not the other way around. In this case, the old adage “if it seems too good to be true, it probably is,” rings true, and your best bet is to remember that if anyone’s calling you to offer you something, your best bet is to decline and move on, or at best, take their information and do your own research before opening your wallet.
Funeral Home or Obituary Scams
Probably the worst of the lot, these scams are designed to prey on spouses and families of the recently deceased. In short, a fraudulent funeral home or scammer will read the obituaries in local newspapers, then, in the case of a scammer, contact the spouse or family to claim a fake debt or offer their “services.”
Disreputable funeral homes generally come in two types. The first are the ones that try to bilk you out of money even though you’re already doing business with them. They’ll upsell you on expensive caskets, big funeral spaces, or tons of unnecessary services (like a casket for a cremation, for example) and play on your emotions to get you to spend more money at an already emotionally vulnerable time in your life. Others read the obituaries and swoop in to offer something that your current funeral home may not offer, like special caskets or additional services after burial, like memorial plaques or other pricey items that your current funeral home may not have offered.
In every case, the key here is to prepare in advance. Talk to your loved ones and make sure you know what they want—and what you want—after they pass. That way no one can take advantage of you. It can be tough—especially with conflicting family interests—but stick to your guns and don’t let cold calls or outsiders influence your decisions, especially if they have nothing to do with your family. Anyone who has a debt with your deceased loved one can (and should) notify you in writing, and make sure you have your funeral arrangements chosen and planned out in advance.
These are just a few, and you might notice that most of them have a common theme: Most of them are conducted over the phone. You can fight back against most of these by putting yourself on the FTC’s Do Not Call list, but to be blunt, the illegal scammers out for your money probably aren’t interested in obeying the law when it comes to the Do Not Call list.
You can avoid some of these calls by switching to mobile phones (wireless numbers are harder to get, and blocking callers is easier) or by using one tactic that always works for me: Don’t answer the phone if it’s a number you don’t recognize. Google the number and see what turns up. If it’s a scammer, you’ll see it pretty quickly in the first few results. If the call is actually important, they’ll leave a message, and a way for you to get back in touch with them after vetting how legitimate the caller was.
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