With April Fool’s Day upon us, you might find that your toilet paper has been replaced by duct tape, a mysterious For Sale sign has appeared in your front yard, or that your milk has been colored green with food coloring. These harmless pranks may make you smile, but there are more serious “pranks” that cross the line: financial scams.
Increasingly, fraudsters are targeting senior citizens. According to a widely cited 2011 study by MetLife and the Center for Gerontology at Virginia Tech, the amount of financial loss suffered by seniors each year is estimated to be at least $2.6 billion!1
What can you do to avoid becoming a victim of financial fraud? You can educate yourself on what to look for and then be vigilant in defending your hard-earned savings. The following are some of the most common financial frauds being perpetrated today as well as things you can do to avoid becoming a victim.
Too-Good-to-Be-True Investment Scams
Everyone is looking for a good deal, and that’s the premise that some fraudsters count on as they scam people out of their money. If you’re approached with an investment opportunity that provides unbelievable returns on your money, take a step back and ask the following questions:1- How did you get my contact information? If they refuse to tell you, hang up.
- What is this advance fee? If you’re asked to pay an “equity evaluation deposit” or a “penalty restriction fee,” you’re probably being prepped for a scam.
- Where can I find your firm’s license? If the organization is licensed to do business in your area, the license will be publicly available. If they make excuses about their license, hang up.
In general, if an investment opportunity sounds too good to be true, it probably is.
Over-the-Phone Credit Card Scams
In this scam, someone calls a homeowner and says something like, “Mrs. Jones, your new hot water heater has arrived, and we’re ready to come install it. We just need to run your credit card so we can get a work order placed.” You may think your husband or wife placed the order or you may have forgotten whether or not you needed something done with the hot water heater and go ahead and read your credit card number over the phone.
If you’re ever unsure about whether or not you placed an order or you’re told that your spouse placed and order but you don’t recall him or her mentioning it, tell the person on the phone that you’ll get back with them. Take down their phone number, check with your spouse and call back if it’s a legitimate order. This phone number can also be used to check with the police if you’re suspicious of a financial scam.2
Unlicensed Financial Professionals
There are people who are putting themselves out there as securities and tax professionals who don’t have valid licenses. They may not tell you up front about not having a license, or they may tell you a story about how it doesn’t really matter if they have a license because they have all the expertise necessary to take care of your money.
The best protection against this type of scam is to do your homework. Regulatory agencies like FINRA’s BrokerCheck can help you research the “professional’s” license and standing.3 Your due diligence on an advisor shouldn’t stop there but this is an important first step before beginning any kind of financial discussion.
With a few precautions and some healthy skepticism, you can avoid financial scams and keep your money safe from thieves. For more information about preserving your savings, contact us at WrapManager.
Sources:
1. MedAmerica
2. Forbes
