Six-Figure Scams Targeting Seniors Are On the Rise

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senior scamsOlder Americans are under more financial pressure than ever. Unfortunately, scam artists are taking advantage of the sometimes desperate needs of seniors to boost their income, and victims have lost huge portions of their life savings as a result.

A recent survey from the CFP Board of Standards found that senior citizens who were victims of financial abuse lost an average of $140,500 -- and more than half of scam victims lost $50,000 or more.

Moreover, an increasing number of older Americans have been hurt by bad financial advice. More than half of the roughly 2,650 financial planners surveyed say that they've worked with at least one client who's been hit by unfair, deceptive, or abusive practices.

Here's How It Happens

Retirees are particularly attractive targets for scam artists because, unlike younger potential victims, they often have large amounts of savings available to them. That's why exploitation comes in so many different flavors, and often includes the following:

  • Invitations to free seminars soliciting payment for investment strategies were by far the most common, with 73% of advisers reporting their clients getting targeted for such presentations.
  • Cold-calling is still a popular way to lure seniors to give up control of their money, with 58% of advisers reporting unsolicited calls selling financial products and services.
  • With many seniors struggling to make ends meet, income-producing investments have become very popular. Half of all advisers dealt with clients who were offered supposedly "low-risk" high-yield investments that went bad.
  • More specialized schemes often look sophisticated enough that seniors believe they're genuine. Advisers reported seeing scams related to reverse mortgages, pension buyouts, aid for veterans, and even being named a winner of a contest supposedly offering a cash prize.

The survey singled out equity-indexed or variable annuities as "by far the most commonly used products" in senior-exploitation cases.

Surprisingly, though, scam artists aren't as greedy as you might think. The survey revealed that advisers serving clients with mid-range assets of $100,000 to $750,000 are more likely to be targeted than richer or poorer senior citizens.




How to Protect Yourself

The study concluded with two important points. First, victims are often hurt by people they know, including existing investment advisers and even guardians or holders of power of attorney. Second, many victims never report abuses.

Sadly, you have to be on guard with your money all the time. Before trusting anyone with your finances, make sure you check references, do a simple investigation, and take other measures to make sure you won't get scammed.

Motley Fool contributor Dan Caplinger thinks law enforcement should lock up financial con artists and throw away the key. You can follow him on Twitter @DanCaplinger.

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r.powel46

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June 15 2013 at 2:14 AM Report abuse rate up rate down Reply
Avice

Watch out for emails or phone calls that tell you a family member or friend is in trouble. I got an email that said my friend was in London on family business, had been robbed, and the phones didn't work! They had actually hacked my friend's email account so that the email seemed to be from her and when I sent an email to her they intercepted it. I emailed her at her office just to make sure, then just strung the guys along until they finally figured out what they were doing.

I also got phone calls from people asking for money for breast cancer research and for a firefighter/police charity. I asked the BC people to send me some literature and they said they had to have a commitment to do that. I am a breast cancer survivor, so on the third call I used some language I can't repeat here. The firefighters and police charities try to lay a guilt trip on you if you don't contribute. These "charities" are phony too. Check them out with your local departments instead of responding to the calls and DON'T GIVE THEM YOUR CREDIT CARD NUMBERS.

September 20 2012 at 4:23 PM Report abuse rate up rate down Reply
chey06akili

Greed will always let a person be an easy target for a scammer.
If it sounds too good to be true it's probably a scam.

Medicare doesn't pay anywhere close to your medical costs,I hope I never have to use it.Everyone is complaining about Obamacare and I think we should have complained about Medicare when it first came out.It is based upon the same theory of a single payer system,just like Obamacare.I had to give up a perfectly good employer medical plan,that cost me far less than Medicare and a Medicare Supplement plan when I became eligible for Medicare.The government is not here to help us,they are here to squander our tax dollars.

September 19 2012 at 8:21 PM Report abuse rate up rate down Reply
1 reply to chey06akili's comment
Avice

I am retired but have an employer medical plan as backup to my Medicare.

September 20 2012 at 4:13 PM Report abuse rate up rate down Reply
Fed Up

You think they're getting scammed now. If Romney gets in you'll see the biggest Healthcare scam ever perpetrated on the American Senior Population. They'll lose Medicare to a voucher system that won;t come close to covering costs. That's will be the Good news. The Bad news is that 30% of the Seniors won't qualify because of pre-existing conditions. Go ahead an vote for Romney, but get yourself a nice burial plot.

August 27 2012 at 6:56 PM Report abuse -1 rate up rate down Reply
1 reply to Fed Up's comment
wfreeberg

You failed to mention that the Insurance companies will see their profits go through the roof.

August 28 2012 at 1:22 PM Report abuse -1 rate up rate down Reply
democracks0

People on here actually think the government is going to eliminate fraud and waste. LMAO

August 27 2012 at 9:41 AM Report abuse rate up rate down Reply
Kay

My mother-in-law, who is a retired business woman, savvy with her money and investments, and someone who has always been sharp......was almost taken by one of these scams. Had it not been for my son asking some hard questions, she would have been taken. A gentleman called her up one day and wanted to buy her timeshare unit. She has had the timeshare on Hilton Head Island for 20 years. He was going to pay her an enormous sum for the place.....an offer she couldn't refuse. The only catch was that she would have to pay some closing costs, attorney's fees....and she had to pay with her credit card, not a cashiers check. Then this person sends her a contract (that looked legitimate) and she was set to sell. My son encouraged her to call the manager of the condo's. And to our horror, the manager said this company was scamming his members.....enough said. My mother-in-law is now 86-years-old and not as "sharp" as she once was. This could happen to absolutely anyone. So please, always talk to family or financial advisers before making big decisions like these.

August 27 2012 at 9:18 AM Report abuse +2 rate up rate down Reply
smiles41

The biggest scam victimizing seniors, obamacare, is coming straight out of the WH. The libs have victimized the uninformed and most vulnerable in our population for years. And the biggest perpetrator of this victimization is the AARP. This organization is nothing more than a libera PAC. Very sad there is really no alternative. So use it with care and think for your self.

August 27 2012 at 8:15 AM Report abuse -2 rate up rate down Reply
toosmart4u

Just republicans wanting more money with their greed. Where else can they go but to the senior citizens.

August 27 2012 at 5:15 AM Report abuse rate up rate down Reply
1 reply to toosmart4u's comment
democracks0

It's Pelosi, Reid and Obama that stole 716 billion from seniors medicare to fund Obamascarescam.

Once again you proved that your notsosmartatall

August 27 2012 at 9:27 AM Report abuse +2 rate up rate down Reply
1 reply to democracks0's comment
chris1011

Except that has been proven to be a lie. Go to Factcheck, and you will see. But of course a Faux news guy like you would rather believe the lie and perpetuate it.

August 27 2012 at 12:48 PM Report abuse -3 rate up rate down
pcliffordjr

I like how at the bottom of page it offers people a way to boost their social security by entering an email. I did not do this, so I am unsure if it is legit, but just funny how they talk about scams and then ask for an email from a teasing message : )

August 27 2012 at 12:40 AM Report abuse +1 rate up rate down Reply
bigdude3763

Dear dewlady357. If you are what you claim to be, congrats. I am appalled at two things. First, any being that can prey on the weak, especially children and seniors. Secondly, someone who would consider someone trusting or the victim of age related desieses as " uneducated". I hope you find lots of spelling and grammar errors in this comment to make yourself happy. I personally hope you remain willey enough to back up your boast. In the meantime, beware of judgement. Thank you.

August 26 2012 at 11:35 PM Report abuse rate up rate down Reply