According to a June 2010 survey by Investor Protection Trust, more than 7.3 million senior citizens-roughly 20 percent of Americans aged 65 or older-- have "been taken advantage of financially in terms of an inappropriate investment, unreasonably high fees for financial services, or outright fraud."
"Having a serious conversation with your elderly parents and relatives about how they are managing their money is not easy, but it is extremely important in order to help protect them from criminals," said Steve J. Bernas, president & CEO of the Better Business Bureau serving Chicago and Northern Illinois. "It's extremely important to keep the lines of communication open so that you can identify suspicious spending habits, as well as educate your elder family members on recognizing the red flags of common scams."
The BBB warns against the following scams where seniors often fall victim:
1) Sweepstakes and Lottery Scams -Typically, the victim receives a letter in the mail stating they have won a lottery or sweepstakes; it might even claim to be from Publisher's Clearing House or Reader's Digest. The letter instructs the victim to deposit an enclosed check and then wire a portion back to the company to cover taxes or administration fees. While the funds will initially show up in the bank account, the money will be removed when the bank determines the check is fake. The victim loses whatever he wired back to the scammers-often amounting to thousands of dollars.
· BBB Advice: Never wire money to someone you don't know. You should never have to send money to receive any winnings from a lottery or sweepstakes. Be suspect of winning from something you never bought a ticket for or entered.
2) Medicare Scams - Navigating the Medicare system isn't easy and some scammers will look for any opportunity to take advantage of the confusion. Commonly, a scammer will claim to be with Medicare and ask for personal information such as Medicare, Medicaid, social security, credit card or bank account numbers. The victim might be given any number of excuses to provide this information including that an error needs to be fixed, that he or she is part of a survey or eligible to receive free products or can sign up for a new prescription drug plan.
BBB Advice: Remind your elderly family members that Medicare will never call to ask for sensitive personal financial information. If you suspect fraud contact your local police or the Health and Human Services Office of Inspector General.
3) Bereavement Scams - Scammers will often try to take advantage of the increased vulnerability of senior citizens who have recently lost a loved one, such as a spouse; one common method is by scouring the obituaries and call looking to claim on the deceased person's debts.
BBB Advice: Offer help to elderly family members if they have recently lost a loved one and are inexperienced in managing finances and personal affairs. If you are uncertain about owing a debt when collectors call, ask for written confirmation.
4) Deceptive Professionals - While many scams targeting senior citizens might not have a face, some scammers will be invited in the front door including technicians, contractors, chimney sweeps, air duct cleaners and other services. Some professionals will lie about the extent of the problem or claim safety issues and then inflate prices for unsuspecting senior customers.
BBB Advice - Find professionals you can trust by checking out www.bbb.org
5)Investment and Work at Home Opportunities - Promises of easy money often target older adults because they may be looking to supplement their income. The pitch might come in the form of an investment opportunity that promises big returns, or as a way to make money at home for an upfront cost. Regardless of the specifics, the victim is offered what sounds like a great opportunity but the extra income never materializes.
BBB Advice: Always research any work at home opportunity with the BBB prior to agreeing or sending money. Beware of investment or money-making offers that seem too good to be true or use high pressure sales tactics to get you to sign up immediately. Ask a trusted family member or friend to review anything that requires an advance fee be paid.
For more advice on avoiding scams and fraud visit http://chicago.bbb.org/