Be on guard: 3 common senior scams

By Amy Fontinelle
Amy Fontinelle is a personal finance writer focusing on budgeting, credit cards, mortgages, real estate, investing, and other topics.
Posted on Mar 28, 2018

Seniors are an attractive target for fraudsters. Indeed billions of dollars per year are scammed away from senior citizens in a variety of ways, ranging from high pressure sales tactics to caregiver abuse to outright theft and fraud.

Many seniors have risk factors that make them especially vulnerable to scams. They have ample retirement savings and home equity; in some cases they may be lonely, socially isolated, and depressed; they may be in various stages of Alzheimer’s disease or dementia. They were raised to be polite and find it difficult to ignore or hang up on people who ask for help. If they do notice that they have been taken advantage of, they are often too embarrassed to tell anyone or ask for help.

Knowing about three popular ways senior citizens are taken advantage of and parted with their money — charity exploitation, online housing scams, and home repair fraud — is a first step in curbing elder financial abuse.

Charity Exploitation

Giving to charity is a noble and spiritually rewarding activity for many people. And there are many respectable and established charities that solicit donations in responsible manner.

But many charities, some legitimate and some outright fraudulent, repeatedly and aggressively ask for donations. And the more seniors give, even if they only give small amounts, the more these kinds of charities come back to them asking for more.

Kay H. Bransford is a personal finance author and provides financial consultation services to seniors and older adults. She said in an interview that she often finds that her clients are giving away thousands in small increments. One of her clients gave away nearly $30,000 over the course of the year by making $20 and $30 donations over and over.

She also found that her own parents were writing weekly checks to several charities that Bransford said she had never heard of, to the tune of about $3,000 per year. It turned out that when her parents started writing the checks, they had undiagnosed dementia. Doctors did not diagnose it until their symptoms were more advanced.

Sometimes charities use misleading language to make seniors feel like they have already pledged to donate the money, so they feel obligated to keep giving. Seniors may not realize how much their repeated contributions are adding up. Even more worrisome are requests that seniors pledge to bequeath thousands of dollars of their estate to a charity after they pass away.

While these aggressive charitable activities do not necessarily rise to the level of fraud, they can be damaging to an individual’s finances. But without the active presence of a relative, friend, or trusted financial advisor, such activity can be hard to detect.

Bransford said that if adult children believe their parents are making lots of charitable donations, they should ask questions: Do they make these donations habitually? What charities are important to them? How much do they want to give each year? Then work on establishing a plan or schedule, perhaps with the advice of a financial advisor, to meet those goals without going overboard. (Need a financial advisor? Contact us)

In some situations, particularly in situations where age-related mental issues may be a factor, such a strategy may be difficult to implement.

“When cognitive issues are involved, prying kids usually are unwelcome,” Bransford said.

That limits options. Without a power of attorney, she said it is difficult to get charities to return donations on someone’s behalf without their participation — and victims typically do not feel they were preyed upon but just doing a good thing.

Putting potential victims on the National Do Not Call Registry and the Direct Marketing Association’s do not contact list helps, but usually takes up to a year to have an impact, Bransford said. Agreeing with your parent to redirect mail to your own address is also an effective measure, she suggested.

Online Housing Scams

There are several different online scams centered on housing, said David Layfield of Salisbury, Maryland, founder of Affordable Housing Online, which helps low-income renters find affordable housing assistance nationwide. He has spent more than 20 years working in the development, construction, ownership, and property management of affordable housing.

These scams include:

  • Fake applications for government-subsidized Section 8 housing waiting list openings that collect information such as medical and financial history and sell the applicants’ contact information to spammy marketers;
  • Fake applications for housing assistance, which identity thieves use to get applicants’ Social Security numbers;
  • Fake Section 8 application sites that charge a fee (there is no fee to apply for Section 8 housing);
  • Fake rental listings where fraudsters ask for a deposit sight unseen on nonexistent rentals.

“Many of the victims of this sort of scam are lower income seniors, as they are less experienced with online commerce and may not realize how easy it is for a scammer to set up fake application sites or fake rental listings,” Layfield said. And Section 8 housing is a popular fraud target because there are so many more applicants in need than there are Section 8 properties and vouchers.

Layfield said adult children can protect their aging parents from online rental scams by educating them.

“Older Americans may not realize how easy it is for a scammer to collect information about them and use it to open a credit card account or drain their bank account,” he said.

The federal government also provides tips on noticing rental scams:

  • The advertised rental rate is much lower than the rate for similar properties;
  • When the lease is drawn up, the actual rate is higher than the advertised rate;
  • There are spelling or grammatical errors in the housing ad.

Online housing scams can be reported to the FBI’s Internet Fraud Division, the Federal Trade Commission, the Department of Housing and Urban Development’s Office of Inspector General, the Better Business Bureau, local law enforcement, the state attorney general, or the state consumer protection office. If the scam is utilizing Google to attract victims, report the abuse to Google.

Home Repair Fraud

Home improvement scams are consistently one of the top complaints reported to the Senate Aging Committee’s fraud hotline. Such scams target the elderly because they often don’t have the physical ability to verify certain claims about the need for repairs, like climbing up a ladder to check on a roof or crawling under porch to look for wood rot.

Variations of the scam offer driveway repairs, house repainting, or installing a home security system. Contractors often ask for money up front then perform substandard work or never return. Contractors don’t respond if dissatisfied homeowners attempt to follow up.

They are more common after weather-related disasters or during seasonal changes.

For instance in Maryland, there are reportedly more than 100 crews that target the elderly in springtime by offering reasonably priced tree-trimming services. If the senior hires them, they then recommend additional home improvement work that “needs” to be done, such as fixing chimneys or repairing damaged roofs, which they “notice” while trimming trees.

The scammers, whom police call “woodchucks,” perform the work poorly or not at all and defraud their victims of tens of thousands of dollars. In just three cases, residents were fleeced of a combined $100,000. The victims not only lost their money but also their sense of personal safety and faith in their ability to trust their own judgment, the Washington Post reported.

Authorities recommend getting estimates from several contractors before signing any contracts for work. The contract should include the contractor's full name, address, and telephone number; a description of the work; a start date and estimated completion date; total cost for work performed including charges for estimates; and a schedule for payment including down payment, subsequent payments, and final payment. If a contractor refuses to provide references or proof of insurance, don’t do business with them.

The Bottom Line

Adults who have been savvy about avoiding scams their whole lives can become less so as they age due to mental changes they have no control over. Even seniors with no cognitive issues can be vulnerable to scams due to having ample financial resources, being socially isolated, not being technologically savvy, and being overly trusting. Help your aging parents and other loved ones avoid these scams by educating them, by staying involved in their lives and, if possible, by keeping an eye on their finances.

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The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own, and do not necessarily represent the views of Massachusetts Mutual Life Insurance Company.