People 60 and over make up 15 percent of the United States population, but they represent about 30 percent of the investment fraud cases according to a recent report by AARP. And these are just the reported cases. Many cases of consumer fraud go unreported because the victims are just too embarrassed to admit they may have been cheated.
In the midst of all the homebuyers who have been pleased to finance a new home at close to historic low interest rates, we can miss the fact that individuals who depend on interest income for their living expenses are being squeezed. Before the recession began, government estimates pegged the amount of income that 65+ year olds derived from investment earnings at about 10 percent. The most recent data following the Great Recession put that figure closer to 6 percent, the result of reduced investments and reduced interest rates.
We all have heard of the phone callers who pose as a family member out of town and in desperate need of cash for a fine or bail, etc. Well, the economic downturn has given scam artists another pitch they can use. Faced with living longer and bank deposit returns of one percent or less, seniors have been looking for better returns in order to keep putting food on their tables. Ads have appeared in newspapers or solicitations have come in the form of telephone calls offering interest rates higher than the prevailing returns at banks. Some of those placing the ads pose as “senior financial advisors” and they may be selling government securities at higher rates than US treasury notes or surefire stock investments with dividends that outpace current bank returns. All of these should be warning signs of a scam.
Other signs of a deal that is “too good to be true” are seen in the math. If the rate of return on a “secure investment” is more than a point or two higher than prevailing treasury rates, be suspicious. Ask for a second opinion or check with your state Department on Aging. Other signs include free lunch seminars on investments or deals that require that you “act now.” Any deal that does not allow a person to walk away and come back later with a decision is probably not a good deal.
So, recalling that the older adult for whom you are a caregiver may be too ashamed to talk about being scammed, keep up an ongoing dialog with your loved one. Look for signs that they may be at risk for scams as well as signs of the aftermath of a scam. Get to know their investment advisor. And be prepared to see something new, because history certainly has taught us that successful scam artists continue to be very creative people.
Charlotte Bishop is a Geriatric Care Manager and founder of Creative Case Management, certified professionals who are geriatric advocates, resources, counselors and friends to older adults and their families in metropolitan Chicago. Please email your questions to firstname.lastname@example.org.