An official website of the United States Government
  • Home
  • Blog
  • Spotlight on scams that target older adults

Spotlight on scams that target older adults

By

201306_cfpb_msoa_graphic-blog

Older Americans lose an estimated $2.9 billion annually to financial exploitation, and it’s estimated that for each case that is reported, 43 others go unrecognized. With 50 million older people in this country, and 10,000 more reaching retirement age every day, we cannot afford financial predators or practices that victimize our elder citizens.

Therefore, in honor of World Elder Abuse Awareness Day on June 15, we’re teaming up with the Federal Deposit Insurance Corporation (FDIC) to launch Money Smart for Older Adults – Prevent Financial Exploitation. This program trains-the-trainer to prevent common scams and teaches you to spot other types of elder financial exploitation.

An example of a common scam the training explores is the “grandparent scam.” It’s terrible, and this is how it normally works:

An imposter calls a grandparent pretending to be a grandchild in trouble; the scammer may even know the grandchild’s name. The scammer is usually crying making it hard to recognize the grandchild’s voice. The scammer pleads for the grandparent to immediately wire money and not tell any family members for fear of upsetting them. Many people will immediately jump to the assistance of the grandchild and won’t ask questions until later.

Should you get a call asking for money from a relative in distress, verify that the caller is not an imposter.

  • Ask a question that only your loved one can answer.
  • Hang up and call the relative’s known phone number.
  • Call someone else you trust to verify the story before you send money.

Other potential threats to older Americans’ financial security can come in the form of financial products that are risky, expensive, and inappropriate for their needs. For example, there are companies that target retirees who may need access to cash by offering them lump sum “advances” on their pension payments. These so-called advances are reported to carry interest rates from 27 to 106 percent, threatening many older borrowers’ safe retirement.

Pension advance firms have been targeting military veterans, and reportedly have recently begun targeting teachers, firefighters, and police officers. In the case of veterans, federal law contains a general prohibition on assigning military pensions to a third party. Reports indicate that many firms may try to get around this by calling the lump sum payment a loan or an advance and by urging veterans to deposit their monthly retiree payments in a newly created bank account controlled by the firms, which is then debited to pay back the lenders. Whatever the name, these transactions generally are not a good deal for veterans or other retirees.

Here’s what to do if you are offered a pension advance loan:

An informed consumer is the first line of defense against abusive practices. Older consumers and their loved ones can learn how to recognize and prevent fraud scams, and other forms of financial exploitation in the Money Smart for Older Adults’ Participant/Resource Guide or request a training for a group from a Money Smart Alliance Partner by emailing the FDIC at communityaffairs@fdic.gov. The FDIC also offers a full range of Money Smart resources.

  • CarmanK

    I had such a phone call about my son. They claimed he was in South America in jail and needed the money to get out. Fortunately, I called by son and he was fine!. But, my brother in law was not so lucky. His son travels for a living. He got a call and wired $6,000.00 to help his son. They knew the answers to some personal questions, which made it more difficult. Unfortunately, these types of THEFTS are not tax deductible because they dont meet the 10% threshold. So, it is a lose/lose for seniors.

  • Dr. Jack Marrion

    “each case that is reported, 43 others go unrecognized. ”

    That is outrageously false and cannot be supported. According to academics peer-reviewed studies conducted by Pillemer & Finkelhor; Tamara and Joegerst, among others, for each case reported there are SIX unreported. That “43 to 1″ ratio was a reporter’s OPINION for 2000 where he admitted his own research did not support the number. CFPB should check their “facts” before printing them.
    Dr. Jack Marrion

    • http://www.consumerfinance.gov CFPB Web Team

      Thank you for your comment Dr. Marrion. The source of the statistic that for every reported case of elder financial exploitation, 43 go unrecognized is Under the Radar: New York State Elder Abuse Prevention Study conducted by Lifespan of Greater Rochester, Inc. and others (May 2011). This study is available at: http://www.lifespan-roch.org/documents/UndertheRadar051211.pdf.

The CFPB blog aims to facilitate conversations about our work. We want your comments to drive this conversation. Please be courteous, constructive, and on-topic. To help make the conversation productive, we encourage you to read our comment policy before posting. Comments on any post remain open for seven days from the date it was posted.