There's no better way to ruin your retirement than to lose money when you're too old to recover it. However, that's also when you're most vulnerable to fraud. A study found that while eight of 10 Americans had received some form of fraudulent offer, seniors were significantly more likely to fall for it.
Some academic studies suggest that this is because cognitive skills begin to decline in old age (though the wisdom earned through a lifetime of experience can counterbalance at least a portion of the loss). But law enforcement officials also believe it's because older Americans tend to be too polite to hang up or call a con man a liar, leaving potential victims chatting with a crook long enough to put themselves at greater risk. After all, the more a crook finds out about you, the more likely he is to learn information -- such as the names of your relatives or where you bank -- that can be used against you later.
Obituaries and social media also put seniors at risk, said Sid Kirchheimer, author of "Scam-Proof Your Life" and author of a blog on AARP's Fraud Watch Network. That's because crooks are increasingly doing their homework, looking for information about vulnerable widows and widowers.
"It's not like the people who fall for this are idiots," he said. "The scammers have done their due diligence. If you get a call from a person maintaining they are your grandchild and using the child's name and other information about you, you're far more likely to fall for the scam."
That said, knowledge is power. Familiarizing yourself with different kinds of fraud can help you combat it. Here are the five most common scams that target seniors and how you can protect yourself.
Grandchild in trouble: The call comes late at night from someone purporting to be your grandchild in distress. The child's reported problem can be anything from being robbed overseas to being in a serious car accident or arrested. The child asks for thousands of dollars to either bail them out, help them get home or settle their debt with the mechanic. "Please, don't tell my parents," the child pleads.
The problem, of course, is this is not your grandchild. But the con artist is likely to do a couple of things to make this scam believable. First, the fact that the call is coming in late at night is designed to throw you off. Most people are less alert later in the day. In addition, if the call comes in late enough, you may be reluctant to call the supposed grandchild's parent to check on his or her whereabouts. And naturally, if the crook tells you they are your grandchild -- and uses that child's name -- you might be inclined to believe, even if the voice doesn't sound quite right.
However, there are tip-offs that this is a scam. For one thing, the phony relative will make the situation seem urgent. They need the money via cashier's check, money order or pre-paid debit card -- all untraceable sources of cash -- within 24 hours. They want you to be secretive about it because "my parents would kill me" or "I'm too embarrassed to tell anyone." And they will have an excuse about why you can't call them back on their normal cell phone number. (It's lost/stolen/broken/the police have it.)
The solution? Hang up. If you think it's possible that this really is your grandchild, call or text the person on the cell phone number you have for them (not one given to you by the person on the phone), or call the parents to find out the person's whereabouts. In the unlikely chance that your grandchild really is in some sort of trouble, his or her parents need to know anyway.
Vague condolences: You get an email on what appears to be the letterhead of a local funeral home, informing you that "your friend" has died. It invites you to click on a link in the email to get further information on the upcoming funeral service. Don't do it, Kirchheimer said. The link would take you to a malicious site aimed at infecting your computer with "malware" that could put all the personal information on your system in the hands of a crook.
If you think someone you know may have died, use your telephone to call the funeral home listed in the notice and ask.
Government threat: Two common scams have con artists impersonating government personnel -- either IRS agents or representatives of the court system. The bogus IRS agent maintains that you have an unpaid tax debt and must provide payment (by money order/debit card or cashier's check) immediately or risk "aggressive collection" actions that could include seizing your Social Security benefits or even putting you in jail.
The court system scam comes from someone who maintains that you failed to report for jury duty and will be imprisoned if you don't immediately pay a fine. Seniors are highly respectful of authority, Kirchheimer says. So they're far more likely than the average consumer to respond when someone purporting to be from a government agency tells them to do something.
But here's the reality: But neither the IRS nor the courts contact you by phone. The both use the U.S. mail. Neither collects debts via debit cards or money orders. Rest assured, if you are getting a tax or jury duty notice by phone or email, it's a fake. If you're not absolutely certain, pick up the phone. The IRS can be reached at 1-800-TAX-1040. Both federal and state courts publish their phone numbers on the web or you could find them in a local phone directory.
Bogus charities: Seniors are often too generous for their own good, Kirchheimer said. Whenever there's a disaster, they're first in line to send help. They also tend to be strong supporters of the military, police and firefighters. Unfortunately, that also makes them perfect marks for charitable scams. These telemarketing frauds use familiar and respected organizations, such as police, fire and the military, and news of recent disasters to get seniors to contribute to "charities" that are either completely bogus or that deliver only a few pennies of every donated dollar to the cause.
The solution? Give only to organizations that you have previously investigated through a website such as Charity Navigator. Also realize that in the event of a big disaster, established charities are the ones that are in the best position to help. After all, they're likely already in the country that's experienced the earthquake or typhoon or flood. They understand the geography and the politics, and know where to get the supplies. That makes them the most efficient at delivering aid.
If you're contacted by a new organization that you're tempted to add to your giving list, ask the caller to send you information in the mail. If they refuse, try to rush you into donating, offer to pick up your donation in person, or are unwilling to provide you with information about how much of your money will go to the cause rather than fundraising, hang up. Real charities want you as a long-time donor. It's the bogus ones that need you to act fast, before you wise up.
Tech support: Although not specifically targeted to seniors, seniors may be more likely than others to buy into the "tech support" scam. This has somebody calling to report that "Microsoft has detected a problem with your computer." To solve it, you need to either (a) pay a fee for technical help; (b) log on to a "help" site where the caller will able to take control of your computer to fix the supposed problem; or (c) both.
If you pay for technical help, you've just given a crook your credit card number. Worse, if you go to a web site and allow the representative to take over your computer, a crook has access to everything that's on your machine.
Unfortunately, many people find the scam believable because, if you called tech support on your own, you might very well be directed to a website where the help desk would take control of your computer. But the real Microsoft is not watching over the millions of households that use its operating systems. If somebody calls to tell you about a problem with your computer, hang up. The caller is a crook looking for a way to swindle you out of your hard-earned cash.