The fact is that individuals over the age of 65 (senior citizens) are more susceptible to fraud. The Consumer Financial Protection Bureau reports that almost 20% of older Americans fell victim to one or more types of fraud or scams during 2016. The total loss experienced by these individuals is estimated to be in the billions of dollars.
There have been numerous studies down on this issue. Not only does the CFPB report of increasing number of seniors falling victims to these issues, but the AARP Fraud Watch Network also confirms this issue. While hundreds of thousands (if not millions) of older Americans fell victim to a fraud during 2016, the AARP notes that active investors who are enticed by unregulated, or non-standard, investments, or more likely to fall for these. But we think this issue should greatly concern everyone.
Top 4 causes in 2016
After surveying over 1000 seniors through 2016, the AARP Fraud Watch Network identified two main reasons that the elderly claim are causing these issues. Many of these can easily be stopped, and find how to prevent scams to seniors.
One is the general lack of pension/retirement income. So older people are looking for anyway to bring more more in the door or to increase their access to credit. Now maybe they should not do this and instead we recommend to always cut back on expenses first.
The second one is the increasing proliferation of technology, which allows scammers even more means to come up with clever ways to “sell” an idea and target a senior citizen. These scammers used IRS websites, cell phones, online sites, and other tools during 2016 to target an increasing number of senior citizens.
Another reason identified by the AARP is the belief that by the senior “investing” (which a fraudster claims they are doing) into an unregulated investment, the returns are higher. Some older people want to invest into unregulated investments (maybe debts or credit derivatives) to make even more money.
Now why someone would ever want to do this we have no idea as the risk of losing everything is tremendous. But the AARP study showed that too many people just associate having more wealth with being successful during their lifetime, and they are measuring their later years by the amount of money, savings, and investments they have.
Last, but not least, the Consumer Financial Protection Bureau also attributes the increased amount of money lost in 2016 to individuals that have some form of mild cognitive impairment. So while this is definitely a subset of the 17% of scams, it is harder to arrive at from a phone survey. As who wants to admit they are in effect “losing their minds” or that they may have dementia?
New tools for seniors rolled out in 2016
There are things that a senior citizen (or really anyone of any age) can do to verify a claim before entering into an investment. That is listed below. However we think the biggest thing to do is really just use common sense. If someone promises a deal that sounds too good to be true, and that makes “guarantees”, chances are it is fraud. Many of those 17-20% of seniors contacted in these 2016 surveys were told they will never lose money…and that is just not possible with any investment as any credit counseling agency would say.
Anyway, the FTC, AARP Fraud Watch Network, Consumer Finance Bureau, and us at needhelppayingbills.com recommend the following. Check a broker by using the tools at the Financial Industry Regulatory Authority (800-289-9999) or try a local National Council on Aging office. There are also CFPB and AARP resources available. If you have falling for a scam, and it is too late to stop it, be sure to report it to the police department. They may give advice or put the word out to the general public to keep others aware. So be on the lookout for these scams, and hopefully the 17% level will show a great decrease in 2017.