In 2011, when the first baby boomers reached age 65, this giant generation comprised about 77 million people in the United States. With a target of that size, all kinds of scammers, swindlers and con artists have come out of the woodwork, ready to makes use of the many technological advances (e.g., hacking capabilities) that make it possible to wreak fiscal havoc on unsuspecting consumers across the globe.
The following takes a look at the breadth of scams and rip-offs targeted specifically for the baby boomer generation, which today’s millennials are increasingly responsible for helping to avert (for their own sake as well as for their older relatives).
No such thing as a free lunch
The fliers seem innocent enough: “Enjoy lunch at [insert fancy restaurant here] to learn more about safely investing in your future.” Scammers looking to dupe near-retirement investors out of their hard-earned cash play to this group’s financial prudence by offering “free” luncheons at fancy eateries. But then a seemingly well-developed presentation urging attendees to consider their investment strategies winds up to be a dud, or worse.
With the Securities and Exchange Commission (SEC) closely scrutinizing this type of set-up, data have shown that these presentations often offer legal—but unwise—financial options, tying up investors’ money for eons and offering limited returns.
In 2006, then-SEC Chairman Christopher Cox commented at a summit meeting that, “Protecting seniors from investment scams is one of the most important issues of our time…While they’re living longer, people’s retirement plans haven’t taken that into account.” Since then, even more boomers have entered retirement—many of them involuntarily, victims of the Great Recession—exacerbating what Cox called a “perfect storm” for wily scam artists. Today, over 30 percent of all fraud victims fall in the over-60 age group.
Fake debt relief and sketchy reverse mortgages
Most baby boomers did not plan to carry debt past retirement, and so debt-relief scams are on the rise. Often, these scams appeal to the victim’s emotions—reminding them that failing to take care of the debt could mean it passes down to loved ones. After the victim agrees, the scammer requests an excessive up-front fee to help get started toward a “debt-free future,” which then fails to materialize.
Aggressively marketed reverse mortgages also continue to plague the senior demographic. In a traditional reverse mortgage, the property owner receives a lump sum of cash in exchange for equity in their home. The option is available for those aged 62 or older, and the sum need not be repaid until the homeowner moves or passes away—at which point, the estate becomes responsible for the debt. Scammers lure homeowners by promising gigantic sums of cash, as well as the guarantee that the homeowner can continue to live there as long as need be. Sadly, some victims end up losing their homes outright.
When it comes to debt-relief services, if it seems too good to be true, it almost always is. Consulting with not-for-profit debt-relief firms or government-based foreclosure mitigation agencies is the smartest way to dig out from beneath crushing debts. A chat with an attorney who specializes in debts and bankruptcy is also a good idea.
In perhaps the lowest of the low, fraudsters are relying on a victim’s good nature and benevolence in order to siphon funds in the name of fake, non-existent charitable organizations. Often, a front is set up to look like a legitimate charity, with similar logos, color schemes, or slogans. Other times, the charity is completely fake from the get-go, relying on emotional stories involving ill children, abused animals, or “awareness” for a certain issue.
Also be on the lookout for “organizations” arising in the immediate aftermath of a natural disaster, as these scammers target vulnerable donors looking to send money and aid as quickly as possible.
The Internal Revenue Service maintains a public list of non-profit organizations on its website to help ensure that all donations are sent to legitimate tax-exempt corporations, so be sure to check it out before your aging parents contribute.
Is the law catching up?
The SEC is revving up its efforts to combat fraud against seniors, distributing educational material to financial professionals and investment managers across the United States, highlighting key risk areas concerning fraud against the elderly. SEC regulations have also been enhanced to examine retail broker-deal relations for fraud and elder financial abuse.
Investors of any age are advised to keep vigilant in monitoring their nest eggs, and should report any suspected fraud to local authorities as quickly as possible—it may help save dozens of other unsuspecting victims. But the younger generations in particular need to leverage their familiarity with the tools, and indeed the tricks, of the digital age to help keep their loved ones from getting fleeced.