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Protecting Seniors from Fraud

Posted on Wednesday December 12, 2018


Protecting Seniors from Fraud

In our hyperconnected society, everyone is vulnerable to falling victim to any of myriad fraud schemes. In this article, we will focus on the schemes most frequently used to target seniors. We will explain why seniors are targeted, how to educate your loved ones about these types of fraud and how to recognize scams in order to avoid getting "taken".

You're having coffee with a long-time friend. She begins telling you about a very nice "representative" who recently came by collecting for a local organization that helps youth living on the street. Your friend chose to make a monthly donation using her credit card. You ask her the organization's name, and when you check on the Internet, you discover that the organization in question ceased operating more than two years ago! Seniors are commonly targeted by multiple types of fraud, including identity theft, telephone scams in which the caller demands money (under threat of imprisonment or some other penalty), e-mail or mail fraud such as Canada Revenue Agency misrepresentation scams, fraudulent door-to-door solicitation and others.

 

Why do the offenders target seniors?

As people age, they often become more isolated. Their children may move away, a spouse may die, illness (physical or mental) may leave them housebound or they may outlive their friends. According to the Report on the Social Isolation of Seniors, approximately 50% of people over the age of 80 report feeling lonely. Scammers often find these people to be easier targets as they are more approachable and vulnerable. The reasons why scammers target seniors include the following:

  • They may be more open to accepting overtures from strangers (frequently individuals purporting to be "friends of the family").
  • They are frequently more responsive to promises of high return through "miracle" investments, since they are more likely to be unemployed or retired.
  • They are more likely whether out of courtesy or due to loneliness to listen to someone who comes to their door or calls.
  • They may have cognitive or memory issues that could make them easier to manipulate or even compromise the weight of their testimony in any possible court proceedings or investigation.

 

Most common scams

According to the Financial Consumer Agency of Canada, most cases of fraud involve loans and investments. The following are some typical or frequent scenarios.

 

Scenario 1: high-pressure sales

The scammer first invites people to attend a "free" information or training session on some type of investment or investing in general. She proceeds to use highly aggressive sales tactics (for example, a limited-time offer or major benefits if the investor makes a decision on the spot) to encourage the attendees to invest immediately without giving them time to think about the offer or conduct research to verify the accuracy of the information presented.

 

Scenario 2: poor investments

The scammer recommends high-risk, or even fraudulent, investments without disclosing the risks associated with the products offered. In some situations, the investment is never even completed and the offender "disappears" overnight.

 

Scenario 3: RRSP fraud

The scammer presents an "RRSP investment opportunity" and talks victims into withdrawing funds from their RRSP' and handing them over to him! Once again, the fraudster quickly disappears, leaving as few traces as possible.

 

Scenario 4: incredible deals

An exciting start-up is about to go public. "Now is the time to invest before its stock price goes sky-high", the fraudster may explain. This classic scenario is almost always a scam.

 

Scenario 5: foreign investments

A rare metal is about to skyrocket in value. You need to invest in project X in such-and-such developing country. Your investment could even be tax-free. This is yet another unlikely scheme concocted by a seasoned scammer. Although many foreign investments may indeed be advantageous, a person is probably better off investing in reputable companies to avoid the risk of losing everything without warning. Even in situations where an investment opportunity appears genuine, false promises of tax savings could leave you paying penalties or subject to prosecution.

When a potential victim rejects an offer, the scammer is often armed with effective rebuttal arguments, especially if he thinks the person is vulnerable. The follow-up offer (with promises of even greater returns!) may be even harder to refuse. It's important to be aware of this strategy. Remember: reputable companies rarely harass potential clients.

Unfortunately, fraud and scams targeting seniors show no sign of abating. When the time comes to make financial decisions involving your life savings, it's important to take your time, be cautious and conduct checks with the appropriate financial authorities. For additional information, visit the Canadian Securities Administrators website, and do not hesitate to report potential fraud to your financial institution. To learn more about fraud in New Brunswick, visit the website of the Financial and Consumer Services Commission.

 

In an upcoming blog post, we will explore other types of fraud schemes targeting other population groups, such as young adults. We all need to stay alert!

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