As a longtime consumer reporter who’s written about one scam after another, I’ve often thought that I’ve heard it all. Then I learn of a new and pernicious swindle.
Recently, I’ve learned about three — count ‘em — disturbing schemes you should know about so you can protect yourselves and your parents, who may be considered easy targets because of their age.
Hijacking Your Email
In the first scam, online cybercrooks hijack your email account and then send a letter to your financial adviser requesting that funds be transferred from your account to theirs.
This fraud, reported in USA Today, is new, but not surprising to Adam Levin, chairman and cofounder of Identity Theft 911, an identity theft recovery firm.
As banks have begun cracking down on questionable bank transfers from their customers’ accounts, “this is the next logical progression,” says Levin, who has handled two such cases, involving thousands of dollars.
(MORE: How to Protect Your Parents From Financial Fraud)
“If there is some creative way to create a crack or crevice to get into someone’s bank accounts, con artists will do it,” he adds.
Here’s how the scheme works: The hacker reads your email trails to see who you communicate with and how you write. Then the scammer mimics your email “voice” and electronically asks your financial planner, estate lawyer or other adviser to wire-transfer money into the thief’s bank account. The adviser, thinking it’s you, quickly complies.
How to protect yourself: First, says Levin, install security software on your computer, such as a software firewall and an antivirus program. Equally important, says Levin, “you must establish a security protocol with your financial planner or adviser.” Demand that they seek verbal confirmation from you before conducting any transaction on your behalf.
Also, ask your financial advisers how your personal data is protected and what steps they take to regularly update security on their computers and in their paper files.
Using Courier Services to Defraud the Elderly
This next scam uses courier services to trick older Americans into signing documents authorizing charges to their credit cards, sometimes for thousands of dollars.
The con artists use the courier services to gain the appearance of credibility and legitimacy; they also know that the charges can’t be contested once the contracts are signed.
(MORE: When Your Spouse Is Guilty of Fraud)
This type of fraud, first reported by the St. Louis Post-Dispatch, came to light after the head of the Ontime Express courier service in St. Louis, Nick Kirkou, alerted the police to stop a scam in progress.
Ontime Express had been hired to deliver three sales contracts to a 90-year-old widow. If she signed them, each contract would have authorized three $5,000 charges to the widow’s credit card. In exchange, the woman would receive a mini-laptop and wireless mouse, plus 15,000 telemarketing and email leads.
The woman thought she was signing up for an easy work-at-home job, stuffing envelopes. But Kirkou didn’t think she seemed like a telemarketer and, after asking her a few questions, realized she didn’t know what she was about to sign. “The whole thing looked like a scam to me,” he told the Post-Dispatch. “They were trying to hustle her.”
How to protect your parents: Tell them again and again never to disclose any personal information to someone they don’t know and to always be sure they understand what they’re signing. Better yet, have them call you before they agree to provide a signature to a courier with documents.
The “Free Lunch” Gambit
As I’ve written before on Next Avenue, the typical investment fraud victim is not a little old lady living alone, but more likely the face staring back at you in the mirror. Anyone who has money is a likely target.
Still, there’s no denying that older Americans with sizable assets are a vulnerable population, which brings me to the third scam. Los Angeles attorney Benjamin Blakeman, who represents consumers in life insurance and annuity cases, alerted Next Avenue to this ripoff, the latest twist in the age-old con of “free lunch” seminars offered by people claiming to be helpful financial advisers.
In reality, the seminars are sales pitches for questionable investment products, such as a "free" living trusts, which are funded with high-cost annuities that the elderly don’t need.
Blakeman is particularly disturbed by reports he’s recently heard from fellow attorneys that many of these sales pitches are happening in nursing homes and assisted living facilities, with the cooperation of their operators.
“These places have a certain credibility with the people living there,” he says. “They act like a gatekeeper, and so their residents have a right to assume that anybody allowed to come on the premises and make a sales pitch is approved by the facility.”
Elder law attorney Michael McGuire of Lakewood, Calif., says that in many cases the salespeople suggest they are employees of nonprofits with ties to the Veteran Administration (VA). “Their literature is designed to be misleading, using VA and military logos,” he says. “Often the presenters are also decked out in military regalia.”
In this scheme, the salespeople make it sound as though they can help the seminar attendees gain access to veteran benefits, almost always failing to disclose that their true purpose is selling annuities or inappropriate investments, using predatory sales tactics, McGuire adds.
How to protect your parents: McGuire says that if your parents are asked to attend a “free lunch” seminar, they should ask two simple questions:
Are you a licensed insurance salesman?
How do you provide all of these services for free?
Additionally, if the seminar operator says that he or she is a VA representative, you or your parents should go to the VA website to see if the person is accredited.
Blakeman, too, has a list of questions to guard against these types of ripoffs. Among them: Do the claims in the salesman’s written materials match those of his oral presentation? If not, that's a red flag.
McGuire says residents of assisted living facilities, as well as their children, “should demand that the facilities prescreen and vet the people they are allowing to make presentations.” And, he adds, warn your parents not to sign anything until they talk to their attorney, financial adviser or you. That could save them — and you — a lot of potential grief.