Every day, thousands of people are taken advantage of by professional criminals and con artists who use slick and sophisticated methods to steal their money. Often, even as the crime is being committed, the victim is unaware of the scam. Too often, the victims feel ashamed because they placed their trust in people who stole from them—and they are too embarrassed to report the crime. You are not alone if you have fallen victim to a financial scam.
Being informed is one of the best ways to protect yourself from financial scams. Remember that, with every opportunity, if it sounds too good to be true, it probably is! For more information on the most common scams that target the elderly, please visit the Senior Living website.
The Grandparents Scam
A grandparent receives a frantic call from someone they believe to be their grandchild. The supposed grandchild sounds distressed and may be calling from a noisy location. The supposed grandchild claims to be involved in some trouble while traveling in Canada or overseas, such as being arrested, in a car accident, or needing emergency car repairs and asks the grandparent to immediately wire money to post bail or pay for medical treatment or car repairs.
A variation of the scam may involve two scammers -- the first scammer calls and poses as a grandchild under arrest. The second scammer, posing as a law enforcement officer, then gets on the phone with the grandparent and explains what fines need to be paid.
A common theme of scams across the nation is the caller’s request for the grandparent to wire money through Western Union or MoneyGram or to provide bank account routing numbers. Wiring money is like sending cash; there are no protections for the sender. Typically, there is no way to reverse the transaction, trace the money, or recover payment from the telephone con artists.
Pay Up Front Scam
Advance fees, or upfront payments, are an instant “red flag.” Advance fee con artists pose as representatives of companies that seem real. They use slick presentations to trick their victims into paying large upfront fees for bogus loans, loan modifications, loan refinancing or credit cards. They frequently target individuals with poor credit histories by promising easy or “guaranteed” approval. However, to take advantage of the offer, the victim must pay high but seemingly legitimate fees for the application, insurance or other “services.” Ultimately, the scam artist takes off with the fee and the victim gets nothing in return.
People encounter advance fee scams in various ways, including telemarketing calls, text messages, emails, well-designed documents, classified ads, and the Internet, including social media.
Ponzi Scam
Ponzi schemes are named after the early 20th century swindler Charles Ponzi, whose most infamous modern successor is Bernie Madoff. Ponzi schemes take many forms, but they all depend upon a steady stream of investors who are promised regular, abnormally high rates of return. Without a steady stream of new investors, the Ponzi scheme becomes a “house of cards” that collapses under its own weight, with the scam artist long gone with investors’ money.
IRS Scam
You have received a phone call or email from someone claiming to work for a government agency like the Internal Revenue Service or the U.S. Treasury. Even though you have not received any notices from the government, the caller claims that you owe money for unpaid or back taxes, or that you missed a paperwork deadline.
The caller then threatens you with arrest or lawsuit if you do not pay them or give them personal information (for example, your Social Security number or date of birth). The caller demands that you wire them money, purchase a prepaid debit card, or otherwise arrange to send them money in ways that cannot be traced. The caller sounds demanding and authoritative. What are you supposed to do?
Remember: No U.S. government or state agency will call you out of the blue and demand money or information. While they may contact you via phone, the U.S. government and state agencies will always send important legal information by mail.
Counterfeit Cashier’s Check Scam There was a time when cashier’s checks were considered the next best thing to cash. Today, sophisticated forgeries of this once trusted payment method are being used to bilk private sellers out of big cash.
This scam targets individuals selling expensive items such as cars, apartments, or horses through classified advertising and online auctions. The counterfeiter, often in another country, poses as an interested buyer and offers to pay with a cashier’s check. After the victim presents the check to the bank, the buyer suddenly backs out of the deal and asks for a refund. Because the funds from the check are available from the bank after a few days, the victim assumes the check has cleared and agrees to return the money. By the time the bank discovers the forgery, up to 60 days later, the bogus buyer is long gone and the victim must now repay the bank for the amount of the fake check. In other cases, the counterfeiter may send a cashier’s check for more than the item's asking price and then ask the victim to wire the “overpayment” back or to a third party.
The Romance Scam
You have met someone in another city, state, or country through an online dating profile or social media. WARNING! This person may be “catfishing” you—a person on the Internet who is not who they claim to be. This person makes himself or herself attractive to you and begins texting, emailing, or even calling you regularly. He or she claims to have fallen in love with you quickly, forming a swift emotional attachment.
Next thing you know, this new love interest has experienced some crisis and needs your help quickly. Or maybe you have made plans to marry, which will require travel, a visa, or other wedding-related expenses. This person needs money and asks for your help – through a money transmitter like Western Union, Money Gram, or by loading up a prepaid debit card. Or you may be asked to provide access to your bank account to make money transfers more easily.
He or she will stay in touch with you and promise anything if you keep sending money. You will never actually meet this person and cannot trace the money you sent.
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