11 Financial Scams Senior Citizens Need To Be Aware Of

In retirement, senior Americans are able to sit back and relax after a lifetime of hard work. Older age is meant to be a time of reaping the rewards of financial planning that was years in the making. A combination of Social Security and pension checks, personal savings, and retirement investments combine to replace the salary that once flowed in as a tradeoff for years of commitment.

But sadly, senior citizens are often the target of financial scams. Seniors are prime targets for the modern thief due to their long-term savings accumulation and the potential for a weaker grasp on novel technologies and modern tools of malfeasance. This creates the need for seniors and their loved ones to remain vigilant when it comes to common schemes that criminals rely on. The tricks that criminals use today run the gamut, with 58% of scammers deploying old-fashioned tactics like phone, postal fraud, and even face-to-face engagement. All told, scammers snatched almost $9 billion from Americans in 2022, with those over 70 being hit the hardest. 70- to 79-year-olds lost $1,000 per theft, on average (and those over 80 averaged losses of $1,674).

There is a silver lining, however. Much of the financial fraud in the country follows some of the same tried and true patterns, making them easier to spot if you've got your guard up. These are the most common approaches that affect senior citizens.

Another core tactic that scammers will use to entrap a senior is the grandparent con. Thieves will often call older Americans, starting the call with: "Hi Grandpa (or Grandma), do you know who this is?" All it takes is a name to slip out of their victim's mouth and they've got the opening they need.

This approach allows a criminal to extract a trusted identity that they can then assume seamlessly. Rather than trying to convince their victim of who they are, they let an unsuspecting target fill this gap in themselves. When the person on the other end of the phone identifies their fraudster as someone known to them, the trust required to steal something of value is inherently established. From here, a thief might ask for a loan or gift in order to get out of a bind of some sort. This will involve making a cash transfer, often through the use of prepaid gift cards.

Defending against this kind of threat relies on the use of common experiences or knowledge between loved ones. The best kind of safe financial loan or gift is made in person. However, if you are going to send money to someone who isn't in the same room, verify some personal information that you both know — like where you spent last Thanksgiving or a dog's name. The scam relies on the victim's misidentification of a voice, but this bluff doesn't work when it comes time to validate identity.

Scammers have come to rely on knowledge gaps in their victims. Exploiting these weaknesses is often what allows a thief to pilfer their targets' bank accounts or personal data; it's truly a difference maker in the scammer's arsenal. With that being said, one of the biggest areas that scammers try to exploit among older victims is their utilization of modern technologies. Scammers approach their targets, posing as representatives of Microsoft, Apple, or Adobe, and offer their assistance with technical issues, including upgrades, connectivity problems, or any other buzzword that might allow them to get a foot in the door. The YouTuber Kitboga is a fantastic illuminator of these schemes. He spends hours playing a cat-and-mouse game with tech support scammers to waste their time. He notes that the longer they spend chasing him, the less time they have to steal from others. In his videos, it's clear that another tactic is the promise of a refund due back to the customer.

Once they find a willing participant, their next move is to gain remote access to the victim's computer. They then work to lock them out of the system or spoof a banking website to create their hook. Only working with individual service providers you trust with your computer is a great way to defend against this kind of threat. It's also worth noting that Microsoft and others aren't known to cold call customers with the "good news" that they're due a refund.

Speaking of imposters, Medicare isn't the only government body that scammers will pose as. Another big one is the IRS, but seniors are also subjected to scam callers posing as Social Security Administration officials. These types of calls often act as phishing expeditions, with thieves looking to extract personal data that might be valuable later. However, they typically devolve into a more threatening encounter with great haste.

The ultimate goal of these types of contacts is typically to notify the victim of an outstanding debt that must be paid to the federal government. Tax season is notoriously saturated with these kinds of calls, but they can and do happen without restrictions across the year. Seniors are often ideal targets for false IRS agents because their income isn't quite as straightforward as that of a typical adult worker. Investment income and other features of a retiree's tax filings can lead to greater vulnerability when a scammer calls and claims that a tax bill remains unpaid. For its part, the IRS notes that its employees will never threaten to have you arrested (a common tactic among scammers) or demand an immediate payment from you. Moreover, the IRS won't ever call without first sending a notice in the mail.

The sale of counterfeit medication has been on the rise in recent years. In the 1990s the FDA investigated an average of five false sales outfits per year, and since 2000, this number has been around 20. They most commonly pop up on the internet — rather than as brick-and-mortar storefronts — and are a magnet for buyers looking to get the best price on essential medication. Seniors find themselves at an increased risk of targeting here, as older Americans often require larger volumes of prescription medication than their younger counterparts. With drug prices continuing to be a point of contention for all Americans, the search for low-cost medication leads many right into this trap.

The insidious nature of a fake medication supplier is twofold. For one thing, false prescriptions cost seniors money without helping to alleviate their underlying conditions. But fake pills can also be manufactured with harmful substances rather than just existing as a sort of placebo. The result can inflict even more harm on a user, further complicating their medical needs and exacerbating the already complicated financial calculations that keep treatment possible.

An offer in compromise (OIC) is a real financial vehicle that taxpayers can use in an effort to reduce their tax obligations. These require debtors to reach out to those they owe in order to make arrangements for repayment, sometimes with favorable changes to the structure of the debt. They are often deployed in conjunction with a surprise tax bill. As a result, fraudulent vendors who claim to be able to settle tax burdens or other outstanding debts for pennies on the dollar are often a common presence in the months following tax season — although the scam is, unfortunately, viable year-round.

The reality of these types of arrangements is that you can typically negotiate the same kind of deals yourself if you just contact lenders (or the IRS, in the case of a tax debt) directly. Avoiding companies that claim to be quasi-miracle workers will save you on the often-wild fees that they charge to create these compromises on your behalf. The worst part about the scam is that they don't always create repayment plans at all. But when they do the repayment obligations aren't always achievable, leading to default and a restart from square one. OIC mills don't need to get you a good deal, they just need to get you to pay them their fee.