En español | Warren Stelman knew the drill: Buy lists of filled-out sweepstakes entries to identify promising leads. Get computer-based phone lines and Manhattan voice-mail boxes to mask the true place of operation — the Dominican Republic. Then start calling older Americans.
Congratulations! You've won the sweepstakes! What are you going to do with all that money?
For "winners" envisioning college for the grandkids, perhaps, or financial independence for themselves, the several thousand dollars that Stelman and his crew requested upfront, supposedly for taxes and insurance, seemed a small price to pay.
By the time Stelman was arrested in August 2012, he and his alleged collaborators had collected nearly $1 million from at least 78 victims — most in their 70s and all over 50. In September 2013, he was sentenced to six years in prison.
Stelman's scam and his success with targeting older people were, sadly, nothing new.
Roughly one-third of all scam victims are 65 or older, though the age group comprises only one-eighth of the population. Based on reports, victims who are 55 and up lose $3 billion a year, but the true figure is many times higher, because most of these crimes go unreported out of embarrassment.
Sweepstakes cons like Stelman's are among the most common scams hitting older Americans. But keep a special eye peeled for these other hoaxes that rank with the biggest and baddest.
The Six Common Cons You Should Avoid
Romance scammers cruise online dating websites, posting hundreds of messages a day.
After weeks of cyber sweet talk tailored to potential victims' responses, schemers inevitably request money — typically via wire transfer — saying they need it for a plane ticket to come visit or to deal with some personal emergency.
These cons cost American women 50 and older at least $34 million in 2012 — two-thirds of all the money lost in romance scams. Men 50 and older reported losing $5 million. The average financial loss from these schemes is more than $10,000 per person.
When help is needed, older people are often among the first to open their hearts and wallets. This helps make them the group most vulnerable to scams feigning aid for veterans, needy or sick children, or victims of a recent disaster, says Bennett Weiner of the BBB Wise Giving Alliance.
Most over-the-transom email solicitations for donations are fraudulent. Never give credit card information to telephone or front-door solicitors. Stick with reputable charities whose names you've known for years.
After gathering names and other details about family members from obituaries, social media and ancestry websites, scammers call, often in the wee hours.
See also: Swear off scammers
They claim to be beloved grandchildren who've been arrested or hospitalized — often while traveling — and need immediate money.
Don't believe it.
Or, at least call the grandchild or parents before heading to Western Union.
Grandparents of college-aged young people are the most frequent targets, reporting losses exceeding $110 million a year.
Unscrupulous contractors arrive unexpected at your front door, claiming to have noticed necessary repairs while driving by.
See also: Avoiding door-to-door sales scams
Some demand upfront payment for materials and then run off with the money. Others do shoddy work like applying used motor oil to recoat driveways.
Some make legitimate repairs for outrageous prices.
Perhaps the worst are "woodchucks." They might initially trim trees or clean gutters, but they continue to recommend more repairs until you're bled dry by them or their "specialist" buddies.
The come-on may be an offer of free medical supplies, a threat of losing Medicare coverage or a promise of better sex with low-cost Viagra.
See also: Help fight health care fraud
The result can be old-fashioned financial fraud or a specialized variant, medical identity theft, in which impostors get health care services under your name, leaving you with the tab.
People 65 and older are prized targets because of Medicare benefits.
In view of continuing public misconceptions about how the Affordable Care Act works, experts predict health care scams will become an epidemic in 2014.
These come in many forms: Some are free-lunch seminars hawking questionable financial products or legitimate ones with long "hold" periods that are unsuitable for older investors.
Others are pitches from cold-calling telemarketers for "no risk" investments in precious metals or penny stocks.
See also: Can you spot investment fraud?
Losses can be particularly high: Older investors who fell for the bait were out an average of $140,500 each, a study found.
The Psychology of a Con Job
Scammers know what we want: to feel secure, loved and valued. And they know that the older we get, the more we need peace of mind.
To provide it, some use sweet talk, promising a solution to a problem: money for our shrinking nest eggs, companionship for our lonely hearts, a chance to show we matter. Others feign a problem that needs quick solving, perhaps with some warning about a potential danger.
"The scammer's goal is to get you to not think rationally, to operate on an emotional level," says Jean Mathisen, director of AARP's Fraud Fighter hotline (800-646-2283), which provides counseling, education and victim advocacy. "To put you 'under the ether,' as it's called." Some of the come-ons:
Congratulations, sir. We're sending you a free medical alert device. Now you can relax about your safety.
I know you love me, Grandma. Please send the money so I can get out of jail. I want to come home.
Maybe others don't care about you, but I do. I'll listen.
The natural aging process can cause changes in brain function that benefit scammers. Often subtle, even unnoticeable, these shifts often occur around the mid-60s.
At this age, the processing of information slows. This can make you more likely to fall for scams urging you to act immediately.
Age-related brain changes can hamper the ability to recognize facial expressions that signal deceit.
Lies repeated again and again are more likely to be perceived as true as you age, experts say. Con artists use tactics that rely on an erosion of memory or the ability to focus attention. "You forgot to pay me!" or "We agreed on this price" are phrases that are often used.
Sid Kirchheimer is the author of Scam-Proof Your Life, published by AARP Books/Sterling.
Studies show that people are most susceptible to fraud within three years of some traumatic event such as loss of a loved one, illness or a move to a new living place, worrisome challenges that older people frequently face.
"Negative events occupy your attention and chew up your mental capacity," explains Anthony Pratkanis, coauthor (with AARP Washington state director Doug Shadel) of Weapons of Fraud. "Maybe your nest egg is shrinking, maybe you're facing a change of housing. The scammer learns this, and offers that last chance to grasp at the golden ring."
Jerry and Deanna Falls endured a perfect storm of negative events. In the space of eight months, a son, a granddaughter and Deanna's mother died. Another son was left unable to work by an accident.
After falling behind on their mortgage, the Fallses sought a loan modification with mortgage-holder Chase, but were denied. Scammers stepped in. "We were in a terrible state, and they knew it," recalls Deanna, 74, a former real estate agent. They sent the Fallses a loan modification "approval" letter — a bogus replica purportedly from HUD that detailed their Chase loan number, rate and balance. That information was probably obtained from public records, the Fallses were later told. They sent a $3,500 cashier's check for supposed processing fees. That money was lost forever. But luckily, the couple held on to their home. U.S. Senator Bill Nelson (D-Fla.) heard about the case and interceded. Chase modified their mortgage.
Also of Interest
- How to lower your risk of identity theft right now
- The best places to retire
- Get free help with your taxes with AARP Foundation Tax-Aide
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