The number 2 Fraud used against seniors

There is a lot of information about frauds and scams and how to protect yourself. What I found is that there is not a great deal of information about the frauds and scams that target seniors. So, as I was working on creating a workshop on this topic for seniors, I thought I would add the information to the blog. The more you know about frauds and scams, the less chance you have of becoming a victim.

Financial Fraud is the number two fraud used against seniors, and there are many variations of how this fraud works. The first scam is called a Pyramid Scheme

This fraud works as follows:

The senior is recruited and invests in a scheme, and is initially very successful and the fraudster starts to pressure the senior to recruit new investors who are expected to bring in more investors. Recruiting newcomers is more important than selling products. Investors who get in early take their profits from those who join later until finally there are no new investors and the most recent people to join lose their money.

The second variation on this fraud is called a Ponzi Scheme. This is very similar to the Pyramid Scheme. It works as follows:

The fraudster entices the senior by offering consistently higher returns than one would normally make at the bank or in the stock market. The senior places an investment with the fraudster and is encouraged to invest more and more of their savings. They are also encouraged to tell friends and family about the investment opportunity. What the fraudster is doing is paying returns to early investors from their own money or the money paid by subsequent investors rather than from genuinely earned profit.

The third variation of Financial Fraud used against seniors is called the Cryptocurrency Scams

The fraud works this way:

The senior is notified that they have won a prize, and all they have to do is pay a shipping fee and taxes. They may be told they have to pay a fine due to an error in their Income Tax. The fraudster asks you to send the money using Bitcoin. Once their cash is converted to Bitcoin they cannot get it back.

To protect yourself against Cryptocurrency, do not convert your cash to Bitcoins to give to anyone.

The fourth variation of Financial Fraud used against seniors is called the Inheritance Scheme

The fraud works this way:

The senior is told that someone very rich has died and they are in line to receive a huge inheritance (details vary). All they have to do is provide bank account details . . . and maybe pay a fee for administration or taxes.

To protect yourself against the Inheritance Scheme, if you are asked for personal information or bank information or asked to send money, don’t.

The fifth variation of Financial Fraud used against seniors is called the Cheque Overpayment Scam

Many seniors may have to sell goods to make expenses and the fraudster asks the senior if they would accept a cheque from the “them” in excess of the amount owed. The pitch may be similar to this, “I love the (item) and would like to buy it, however, I am short on cash, but I just received my paycheck from (names a legit company). The fraudster shows the senior the check and says, “I can give you my check and you can give me the difference back to me.” The fraudster asks the senior to go to his/her bank and deposit the check and give the excess funds back to the purchaser. In about six weeks the check is returned for not enough funds or is a rejected as it is flagged as a fraud and the senior is out the item and the money.

To protect yourself when you are selling “stuff”, never let the buyer pay more than the agreed price by cheque and then ask for the balance in cash.

The fifth Financial Fraud used against seniors is a Real Estate Fraud

The fraud works this way:

A fraudster assumes the identity of an individual homeowner and then uses that false identity to:

· Assume the title on your home

· Sell the property

· Obtain a mortgage on your property

· Obtain a mortgage or other properties in your name

To protect yourself from this fraud, you could take out Title Insurance. In my community, I can buy title insurance for a $500,000 home, for around $300 payable only once with no deductibles and no additional annual fees, check this out in your community as each area is different.