The problem of financial fraud and exploitation of seniors continues to grow day by day. With many billions of dollars stolen from retirees each year, more must be done to help minimize the damage inflicted by financial scammers.
This effort will take a combination of public awareness through education and a concerted effort to protect the most financially vulnerable among us.
In my career, I have personally witnessed two financial frauds involving my own clients. In both cases, the perpetrator used popular scams, known as the IRS scam and the Grandparent scam.
Most financial frauds have a common thread. The crook probes for a targeted victim’s emotional vulnerabilities – from outright memory loss to a general limitation in understanding financial concepts – and then expertly exploits it.
Studies have shown that a person’s ability to grasp semi-complex financial situations “on the fly” – known as fluid intelligence – tends to steadily diminish with age.
Interestingly, as people grow older, their fluid intelligence can begin to diverge markedly from their overall mental skills and knowledge built-up in other important areas of their life. This divergence helps to explain why otherwise intelligent people fall for seemingly obvious scams. It also explains why many victims keep the crimes a secret due to their embarrassment and shame.
Through increased public awareness – not only for the elderly but also for their loved ones and caregivers – I believe we can help to combat scammers and to arm future victims and their families before a crime is committed.
To begin raising that awareness, here are some tell-tale signs a potential scam is underway.
The first sign is the con artist will pressure the victim to either act quickly or they will downright scare the victim, such as the threat of imminent arrest or even the revocation of their driver’s license.
In addition, the scammer may impersonate someone in a position of authority, pretend to be a loved one in need of financial help or will fake romantic interest in order to gain the victim’s trust.
Certainly, the challenge of prevention is complicated given advances in technology that allow criminals to easily mask their true identities and to avoid prosecution. Given this, developing proactive strategies and practices is our best line of defense to help protect the most vulnerable among us.
To learn more about how to better protect yourself or your loved ones against financial fraud, join Jason P. Tank, CFA, on Wednesday, October 19th at 6:30pm for his presentation for the Front Street Foundation’s Money Series held in the McGuire Room at the Traverse Area District Library. Front Street Foundation is a nonprofit with a commitment to provide open-access to financial education, for all.
