By Jill Tydor, Contributing writer
With a growing number of baby boomers aging into retirement and looking to make investments, a new wave of financial scams has plagued the nation's elderly.
An investigation conducted by the Securities and Exchange Commission, state regulators and Financial Industry Regulatory Authority found seniors falling prey to a myriad of tactics.
One common tactic is the offer of a free lunch at seminars aimed at selling products; people are often told, however, that nothing will be sold. An investigation into these meetings prompted the Securities and Exchange Commission to hold a "senior summit" with the AARP to discuss investment fraud and abusive sales practices.
Still, four out of five investors age 60 and above got at least one invitation to a free investment seminar in the past three years, according to a recent survey by the FINRA Investor Education Foundation. The Canadian Association of Retired Persons found in 2005 that seniors lost about $2.5 billion annually to fraud and scams.
Although the regulatory agencies have taken notice of a growing pattern of elder abuse, there are also ways family and friends can protect seniors from getting scammed.
How To Help
Alan Kopit, an attorney for Lawyers.com, said there are some key things children with elderly parents can do to protect them from becoming scam victims.
One is to look for lifestyle changes. If you see something out of the ordinary, you need to ask what is, Kopit said.
For example, if an outgoing person suddenly becomes withdrawn and stops going to church or social functions, that's a sign something may be wrong. It can often mean someone is embarrassed or afraid to tell their family they have a problem. That is very common, Kopit said.
Family members should also review financial statements. If a parent or grandparent decides to give you financial power of attorney, they're permitting you to utilize bank accounts and pay for bills, monitor credit card expenses and handle other financial matters.
People can also request that banks send duplicate statements to a family member. It's a good idea to have someone they trust review their financial statements on a regular basis and look for any suspicious or unusual activities on their accounts.
Linda Cadd, with Shasta County Women's Refuge in California, said even in families that can mean a basic caregiver background check is important. Many times those closest to seniors are the ones taking advantage of access to their finances.
"Sometimes, the abuse can occur within the family," she said. "It may be a 50-year-old son or daughter taking care of an elderly person (and) they have the opportunity and the wherewithal to get their money."
Checking Charities, Investments
Another way to protect people is to get in writing evidence of their activities.
There are times when an elder wants to donate money to charity, or use their savings toward an investment. You need to be vigilant and find out what the charity or investment opportunity is, and get the information in writing.
Take the time to review the fine print and see if it's legitimate. Always ask for written information from the source. Remember any legitimate business or charity knows that it's appropriate for potential investors or donors to ask for written information.
Even if an investment appears valid, it is important to look at it with a critical eye. A recent scam that agencies like FINRA are warning about involves stock investment pitches where the solicitors use phony governmental Web sites.
To check the credibility of a broker, the FINRA offers a program called BrokerCheck.The SEC's Investment Adviser Public Disclosure Web site helps people examine investment advisers, and state insurance departments should have records on any insurance agents.
Authorities say the best way to protect oneself or loved ones from falling victim to a scam is to become aware of the type of scams be used.
Sweepstakes games also tend to be tempting for seniors. But federal law bars promotions of that type from requiring a purchase or fee for participating. So any offers of prizes that ask for shipping or handling charges, registration fees or storage fees are probably not legitimate.
The AARP in Washington recently opened a call center to field questions concerning senior scams, and the federal government has several links on its Web site concerning the types of scams typically encountered.
"Consumers lose billions of dollars each year to fraud," according the Washington state Attorney General's office. "People who commit these types of crimes, 'con criminals,' often target older people knowing they have spent a lifetime earning their savings. Con criminals go wherever they can to find money to steal. They use everyday tools-the mailbox, the telephone, the Internet-to reach into your pocketbook."