Fraud on the Elderly Increases

The number of seniors in the U.S. is on the rise and as our parents prepare to retire, they move into one of the most vulnerable classes for fraudsters and identity thieves.

The Federal Trade Commission released a new report this week. It’s comprised of consumer complaints and what it reveals is more than alarming. The overall volume of complaints was 1.8 million in 2011, which is an increase of 24% from 2010. Identity theft topped the list of complaints for the second straight year, and accounts for approximately 15% of all complaints with one quarter of identity theft complaints involving alleged tax or wage fraud.

The report showed that the elderly are perceived as “easy marks” and with more consumers – including the retired and elderly – conduct business and shop online, the problem increases dramatically. Part of the problem is while everyone is concerned about identity theft, too few understand how to prevent it.

Everyone’s computer or mobile app may look like an open vault to a cybercrook,

the report says.

The top 10 complaints received by the agency in 2011 include:

• Identity theft – 279,156 (15%)
• Debt collection – 180,928 (10%)
• Prizes, sweepstakes and lotteries – 100,208 (6%)
• Shop-at-home and catalog sales – 98,306 (5%)
• Banks and lenders – 89,341 (5%)
• Internet services – 81,805 (5%)
• Auto-related – 77,435 (4%)
• Impostor scams – 73,281 (4%)
• Telephone and mobile services – 70,024 (4%)
• Advance-fee loans and credit protection/repair – 47,414 (3%)

In another report, The Center for Retirement Research at Boston College notes consumers are prone to financial fraud because they often rely on risky solutions for overwhelming financial problems. The report, “The Rise of Financial Fraud.” says consumers are facing financial problems in ways never before seen. The report says:

People face serious financial problems ranging from stagnant incomes after the 2008 stock market crash to skyrocketing medical costs and house values that are less than the mortgage amount.

Any one of these can make an individual more vulnerable to get-rich-quick schemes.

Older Americans specifically face cognitive skills that are on the decline, which introduces new dynamics. They’re at higher risks of being defrauded and for those between the ages of 71 and 79, a full one-fifth of those individuals are impaired. By the time they’re between 80 and 89, that number increases to fifty percent.

The FBI has its own data, as well. Senior citizens are most likely to have a “nest egg,” and to own their home. Further, the odds of them having excellent credit is substantially higher than other age brackets. These facts make them much more attractive to thieves.

There’s also a psychological dynamic, too. People who grew up in the 1930s, 1940s, and 1950s were generally raised to be polite and trusting. Thieves know this and are eager to exploit these traits. They know the difficulties these people have in saying no and rarely do they simply hang up the phone.

This, coupled with the fact that older Americans are less likely to report fraud because they’re unsure of who to report it to adds to the problem. The FBI reports many are embarrassed at being scammed and many are fearful that if they do report the crime, their family members may take actions to remove their independence or even take over their financial responsibilities.

Worse, when these victims do report their crimes, too many times, they don’t make good witnesses. Unfortunately, the criminals know this. They know there are memory problems and cognitive skills that might be compromised. They rely on this when it comes to identifying them, especially if there’s a lot of time between the crime and the completion of a police investigation.

Criminals know exactly what kind of “products” to push on senior citizens. They know they’re more interested in promises of improved cognitive function, virility, physical conditioning and even anti-cancer properties. They take advantage of that with any number of so-called “cure-alls”.

The FBI recommends these tips to senior citizens to avoid becoming a victim of credit card fraud on the internet.

• Don’t give out your credit card number online unless the site is a secure and reputable. Sometimes a tiny icon of a padlock appears to symbolize a higher level of security to transmit data. This icon is not a guarantee of a secure site, but provides some assurance.
• Don’t trust a site just because it claims to be secure.
• Before using the site, check out the security/encryption software it uses.
• Make sure you are purchasing merchandise from a reputable source.
• Do your homework on the individual or company to ensure that they are legitimate.
• Obtain a physical address rather than simply a post office box and a telephone number, and call the seller to see if the telephone number is correct and working.
• Send an e-mail to the seller to make sure the e-mail address is active, and be wary of those that utilize free e-mail services where a credit card wasn’t required to open the account.
• Consider not purchasing from sellers who won’t provide you with this type of information.
• Check with the Better Business Bureau from the seller’s area.
• Check out other websites regarding this person/company.
• Don’t judge a person or company by their website. Flashy websites can be set up quickly.
• Be cautious when responding to special investment offers, especially through unsolicited e-mail.
• Be cautious when dealing with individuals/companies from outside your own country.
• If possible, purchase items online using your credit card, because you can often dispute the charges if something goes wrong.
• Make sure the transaction is secure when you electronically send your credit card number.
• Keep a list of all your credit cards and account information along with the card issuer’s contact information. If anything looks suspicious or you lose your credit card(s), contact the card issuer immediately.

Similar Personal Finance News

• Discover Partners With DoSomething.org – August 27, 2012
• End of Summer Means Higher Gas Prices – September 12, 2012
• 3 Years In, Credit CARD Act Working – February 25, 2013
• 8 Days & Counting: Candidates & Economy – October 29, 2012
• Things You Should Know About Payday Loans – July 9, 2012