As baby boomers prepare for the biggest wealth transfer in history, the vultures are circling.
This is no surprise, given that nearly half of Americans age 65 or older manage their finances on their own, according to a recent survey of 2,200 adults by American International Group, leaving them vulnerable to financial abuse from strangers or unscrupulous family members or friends.
Randy Wolverton, a certified public accountant in Kansas City, Mo., who is a member and past chairman of the American Institute of Certified Public Accountants’ Fraud Task Force, says seniors who are worried about having enough money in retirement and those who are isolated and lonely are among the most vulnerable. These people can easily fall victim to investment scams and other cons, he says, and a number unknowingly become money-laundering mules.
Pigeon-drop scams: With these scams, victims are told that a considerable sum of money was found and will be shared with them if an upfront payment is received. According to the AIG survey, 60% of respondents weren’t aware of pigeon-drop scams.
Romance scams: It’s bad enough that victims can be swindled out of their savings by someone pretending to love and care about them, but some of these scams also can lead seniors even further down the rabbit hole by causing them to engage unwittingly in criminal behavior. Some money-laundering scams start with a budding “romance” in exchange for money. Once a level of trust develops, the scammer persuades the person to deposit money, often in the form of checks or wire transfers, on the scammer’s behalf with the instructions to send that money to someone else. The AIG survey showed 57% weren’t even aware of romance scams.
Prepaid credit- and debit-card scams: This is where victims are asked to make payments—often multiple ones—to a utility or other company to address a debt. The survey found 52% of respondents weren’t aware of such scams.
There are so many scams out there beyond these that it’s hard to avoid encountering a would-be fraudster, but there are some ways to decrease the likelihood that you’ll be a victim, says Odette Williamson, a staff attorney at the National Consumer Law Center who works on elder issues.
Recognize the warning signs. Seniors who are lonely or experiencing cognitive decline can be particularly susceptible to financial scams. Families should be wary if their loved one mentions an out-of-the-blue romance, or starts to make large withdrawals from bank or investment accounts.
Call authorities. These types of crimes are often under-reported because victims are embarrassed to come forward, says Wolverton, a former agent with the Federal Bureau of Investigation who consults…