Retirees are always prime candidates for financial scams.
Scams come from phone calls, emails, faxes, and sometimes they show up on your doorstep. In this post I examine three different scams that happened to good people in real life.
The Door-to-Door Salesperson
An elderly client received a knock at the door one day. Outside there was a representative from a chimney repair company claiming to be doing some work in the neighborhood—and that if she wanted to get a great deal she had better hire them while they were still in the area (otherwise known as a ticking-clock sales tactic).
She went ahead and agreed to the repairs, and it ended up costing her a lot of money. It turned out that this company was lying to people about the repairs they needed all over town. The police department was on to them, but there wasn’t anything they could do because it was considered a civil matter. $15,000 later, my client contacted another chimney company to inspect the work that had been done, and they told her that the chimney had not needed any of the work that had been performed—and the work that had been performed was performed badly.
The New Friend
In another example of elder financial abuse, an 85-year-old client of mine was befriended by a 30-year-old handyman who was working on a neighbor’s condominium. He ended up becoming her driver and, in what must have been an amazing segue, he brought up the topic of being included in her will. In order to avoid suspicion, he took her to a different lawyer (his lawyer) to draw up the papers. Luckily, my client realized what was going on and never signed the new will. Her example just reiterates how you have to be careful about developing trusted relationships with people that you don’t know.
The Advance-Fee Scam
An acquaintance fell victim to the classic Nigerian prince cashier’s check scam—though it was dressed up in legalese and centered around a real estate deal instead of a dubious inheritance. He was lucky (and smart!) enough to have taken the check to his bank to verify its authenticity, which the bank confirmed; it took a whole week for the bank to figure out that the check was counterfeit. Since he hadn’t drawn on the funds from the fake check, everything turned out OK for him in the end—but the perpetrator is still at large, scamming other people.
The one overarching theme to avoid your favorite older American from being scammed is to coach them to never give out any personal information. Also:
- Remind them that they don’t always have to be nice to people they don’t know. Hanging up the phone on a suspicious character is not the same as hanging up on a friend or loved one—but not before saying (or shouting) “Take me off your list!”
- Make sure any new advisor or CPA has ties to the community.
- Help them recognize when someone is attempting to tug on their heartstrings by talking about causes like animal welfare, specific diseases, land preservation, etc.
In the end, it’s not necessarily about being a genius to short circuit potential scams. Even the smartest of us have vulnerable days; it’s really a matter of paying attention. If a loved one is having eyesight, mobility, or cognitive issues, it might be best to pair them up with a reputable personal organizer or financial concierge who acts as a fiduciary.