Top Investment Scams that Target the Elderly

sad old man, investment fraudThe elderly are favorite targets for investment scammers because they are often technologically illiterate, suffer diminished mental faculties, and are believed to be wealthy, making them vulnerable to investment scams. Financial scams targeting the elderly are so prevalent that the National Council on Aging (“NCOA”) dubbed it “the crime of the 21st Century.”

Unfortunately, financial crimes are difficult to prosecute and heavily underreported. Moreover, according to the NCOA, these crimes are being committed by family members, specifically, a grandparent’s adult children, grandchildren, and nieces and nephews.

Medicare/Health Insurance Scams

This scheme targets adults who qualify for Medicare coverage (i.e. those aged 65 and over). Fraudsters will pose as Medicare or Medicaid representatives to collect information about the victim and use that information to file fraudulent charges to Medicare and Medicaid. Some police event report that these criminals set up fake mobile clinics and provide bogus medical services to complete their illusion. These crimes are often committed by sophisticated individuals who understand how to manipulate victims and Medicare/Medicaid.

Counterfeit Prescription Drugs

As medical costs increase, including prescription drugs, many elderlies are turning to the Internet to locate cheaper, specialized drugs. Sadly, unscrupulous individuals set-up fake websites peddling cheaper, counterfeit drugs that the elderly purchase.

Aside from having their money stolen, these victims are also at risk of suffering adverse medical consequences related to the counterfeit drugs they are ingesting and because they are not taking the medicine that they need.

Funeral and Cemetery Scams

The FBI has released a bulletin describing two funeral scams. One method involves the scammers reading the obituaries, attending the funeral or wake for the deceased person, and then posing as a debt collector or creditor. The scammer will take advantage of the grieving spouse or family member to attempt to extort money from the individual.

In the other method, disreputable funeral homes use the obscurity surrounding their industry to attach unnecessary charges and costs to a bill. Funerals cost several thousands of dollars, and these funeral companies use that to their advantage by hiding fraudulent charges in the bill. Additionally, some of these funeral homes will insist that a person is buried in an expensive casket when a cremation is an acceptable option. Essentially, funeral homes try to “up-sell” their services and products by obscuring costs and facts.

Anti-Aging Products

Similar to fake prescription drugs, fraudulent companies will peddle snake oil as an anti-aging cream, pill, or treatment. Some criminals, like an outfit in Arizona, even sold fake Botox and made $1.5 million in one year. Moreover, homeopathic remedies are so loosely regulated, that many companies promise a broad range of anti-aging results despite no supporting scientific proof.

Furthermore, Botox-based scams are particularly dangerous because it involves fake labs creating counterfeit versions of Botox that use, botulism neurotoxin, the active ingredient in a Botox treatment. Botulism neurotoxin is one of the deadliest substances in the world. A single counterfeit batch of Botox can have significant medical consequences, far beyond drooping neck muscles or wrinkles.

Telemarketing and Phone Scams

The most common scheme, one that touches millions of people a year, is the phone scam. These scams specifically target the elderly who make twice as many purchases over the phone compared to the national average. Phone scams are notoriously difficult to track and prosecute because there is no paper trail, no face-to-face interaction, and the Internet allows criminals to use numbers that could be based anywhere.

There are several versions of this scam including:

  • The Scare Tactic: involves one scammer calling the victim and threatens them with (1) debt collection (2) tax debt or something similar, the scammer informs the victim that this is the final warning before a criminal complaint is filed and that the victim can avoid criminal charges if they pay immediately. The scammer directs the victim to withdraw funds from a bank account and either (1) send a wire or (2) purchase gift cards and send to the scammer. If the victim questions, a second scammer will call posing as a police officer or federal agent as a final tactic to scare the victim.
  • Charity Scam: this involves a scammer soliciting money for a fake charity following a natural disaster.
  • Fake Accident: involves a scammer calling a parent or grandparent to inform them that their child/grandchild was injured and is being treated at a hospital, however, that they do not have any money and cannot pay their bills.
  • The Pigeon Drop: involves a scammer calling the victim to inform them that they found money/won a prize and they will share it with the victim, however, they need a “good faith” payment by withdrawing funds and wiring it to the scammer. Usually, a second scammer will call posing as a lawyer, accountant, or banker to offer support.