Diary of a CFP® Pro: September — Celebrate Grandparents’ Day this Month by Protecting Your Elders from Financial Fraud

This month’s insight from Marguerita Cheng, CFP® Pro: Protecting the elderly from financial abuse is essential as financial fraud threats rise. While online scams are common, fraud can also happen by phone, mail, or person. What’s more, aging adults make specific targets for financial scams. According to a recent MetLife study, financial abuse costs elder Americans $2.9 billion annually.

Reality check: To best protect your loved ones, I’ve highlighted the most common types of scams to teach them the warning signs and caution them against sharing their financial information:

  • Medicare Scams: Medicare schemes that target seniors happen all too often. It can start with scammers pretending to be Medicare representatives or fraudsters posing as insurance agents to gather personal information. Because health insurance is often confusing, some people are too willing to share more than they should smooth out what they believe are medical billing issues. If an insurance thief gets personal details, they can use it to bill Medicare for fake services and pocket the money.
    • Teaching tip: When protecting the elderly from financial abuse, advise them to keep their medical information private and help them understand Medicare insurance. Remind them to limit whom they share their Medicare number, Social Security card, or other personal information.

  • Photo by Betty Tsang, flickr.com creative commons

    Funeral Scams: Funeral scams prey on widows and widowers. These scam artists read obituaries and make a point to attend the funerals, often posing as a debt collector claiming there’s an unpaid debt to prompt payment from a grieving family member. Another funeral scam to watch out for involves funeral homes and instances where they will over-charge customers for services. To catch these, look for a significant increase in the prices of services and goods since these might be fraudulent charges.

    • Teaching tip: Shop around for funeral services and pay special attention to payment details. If you notice excessive charges, speak up about them to avoid being taken advantage of during the grieving process.
  • Affinity Scams: Typically, this scam is a form of investment fraud where a caller can pretend to be a member of the same religious, career, ethnic, or community-based group to connect with individuals. Protecting the elderly from financial abuse isn’t easy with the affinity scam. The scammer uses the common ground to build trust and then convinces them that the investment is legitimate. Even more, it’s difficult for law enforcement to identify affinity scams because the groups have a tight-knit structure. Instead of reporting the fraud, the victim attempts to work things out with the group. If they’re not careful, they can lose hundreds of thousands of dollars.
    • Teaching tip: Encourage discussions about investment opportunities with you or a trusted financial advisor.
  • Sweetheart Scams: Typically occurring via the internet, sweetheart scams target victims using fake profiles on dating sites and social media to lure a lonely senior through the promise of a romantic relationship. Unfortunately, this scam can often turn into outright blackmail, and they may eventually extort them for money.
    • Teaching tip: It’s easy for an elderly widow to feel lonely and desire affection. Introducing your loved one to community groups and senior centers is an excellent social outlet and safer than building online relationships.
  • Internet Scams: Seniors are generally less familiar with how the internet works, making them more likely to become victims of fake claims of virus infections or online scams. By not having a basic understanding of online security, scammers find it easy to trick elders into downloading bogus antivirus programs in exchange for a fee. Sometimes, the fraudster requests a telephone number to talk on the phone. Hearing an authentic voice on the other end of the line can instill a false sense of trust, which may cause them to give up their sensitive financial information too freely.
    • Teaching tip: Explain the fundamentals of internet safety. Remind them that it’s unusual for a company to reach out and request credit card information or bank account numbers online.

The bottom line: Protecting the elderly from financial abuse requires you to point out some common scams they might encounter. Warning signs, such as calls from creditors, sudden expensive purchases, or mail that piles up and is left unopened indicate that something might be wrong. Sharing a basic understanding of internet safety for online scams can help protect them. The more information you give your parents, grandparents, aging neighbors, and other seniors, the better off they’ll be. If you believe someone has become a victim of a financial scam, don’t hesitate — take action!

Photos by: Remus Pereni, flickr.com creative commons (top) and Betty Tsang, flickr.com creative commons (center)

Stay tuned for next month’s installment of Diary of a CFP® Pro!

About Marguerita M. Cheng, CFP® Pro: Rita is the founder and Chief Executive Officer of Blue Ocean Global Wealth.  She has also been a spokesperson for the AARP Financial Freedom Campaign and a regular columnist for Investopedia & Kiplinger. Previously, she was a Financial Advisor at Ameriprise Financial and an analyst and editor at Towa Securities in Tokyo, Japan.

Certifications: CFP® professional, Chartered Retirement Planning CounselorSM, Retirement Income Certified Professional®, and a Certified Divorce Financial Analyst. As a Certified Financial Planner Board of Standards (CFP Board) Ambassador, Marguerita helps educate the public, policymakers, and media about the benefits of competent, ethical financial planning. She serves as a Women’s Initiative (WIN) Advocate and subject matter expert for CFP Board, contributing to the development of examination questions for the CFP® Certification Examination.

Awards: Ameriprise Financial Presidential Award for Quality of Advice and the prestigious Japanese Monbukagakusho Scholarship. In 2017, she was named the #3 Most Influential Financial Advisor in the Investopedia Top 100, a Woman to Watch by InvestmentNews, and a Top 100 Minority Business Enterprise (MBE®) by the Capital Region Minority Supplier Development Council (CRMSDC).

Rita volunteers for several organizations: CFP Board Disciplinary and Ethics Commission (DEC) hearings, she has also served on the Financial Planning Association (FPA) National Board of Directors from 2013-2015 and is a past president of the Financial Planning Association of the National Capital Area (FPA NCA).

Click here to learn more about Blue Ocean Global Wealth and here to email Marguerita!

Blue Ocean Global Wealth headquarters:

9841 Washingtonian Blvd., #200
Gaithersburg, MD 20878
301.502.5306 / 888.731.3117 (fax)
info@blueoceanglobalwealth.com