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Saturday, March 15, 2014

8 popular retirement scams and how to avoid them

Retirement scams
To identify a scam, verify scammer information
By Nick Habben

When retirement comes, it can be a beautiful thing. You’ve worked hard and saved hard, and now it’s time to relax. Retirement takes financial planning in order to relax, and for many, every dollar counts. The last thing you want is to lose even a small amount of your money. Unfortunately, retirees and seniors are often prime targets of scammers.

There is no shortage of scams targeting seniors, and their tactics are becoming bolder and more evolved. Surprisingly, many of these scammers are not strangers, but family and friends of the victim. Here are a few of the most common retirement scams and how to avoid falling prey. 

The troubled grandchild 

In this popular scam, someone will call, claiming to be your grandchild. They are in trouble, and need money, but don’t want to call their parents for whatever reason. It may be out of fear or embarrassment, but either way, they’ve called you and they are crying. You want to help- immediately and in any way you can. It’s no secret that most grandparents will do most anything for their grandchildren, and this scam preys on that common belief.

Instead of giving in to the knee-jerk reaction to help, tell your grandchild that you will call him or her right back. If it is your grandchild on the other line, this will be no problem. 

The advanced fee 

In this popular scam, you are asked to pay for something that you likely didn’t order. In return for your money, you will receive a product, service, or even more money. The most common of these scams is the lottery or inheritance scam- where you are told there is a large amount of money that is all yours, if only you help by paying a small fee. Other variations of this scam include sweepstakes winnings- a cruise, a tropical vacation or a car.

A legitimate claim will not require an up front fee. Be wary of all requests that involve the wiring or transfer of funds to a stranger. These requests should raise immediate red flags. 

The sweetheart scam 

This popular scam has been around for quite some time and preys upon your willingness to help others and your perceived loneliness. While one variation of this scam plays out when someone befriends you in order to gain access to your retirement account and information, romance is not required. Instead, it could simply be a drug addicted family member, neighbor, previous acquaintance, or an aide. All that is required is your trust and generosity.

Trust, but verify. This is an important means of protection against this sort of scam, which is easy to fall victim to, as it often requires the deceit of someone close. 

The charity scam 

This scam is similar to the sweetheart scam, and is particularly prevalent during the holiday season. You are asked to give money and help those in need, and when you do your information is sold for a substantial profit.

Avoid using a middleman. If you are unsure about a donation or solicitation, it is best to go directly to the source. You can also research the charity online to quickly rule out fraudsters. 

The computer scam 

It is often assumed that with age comes lack of technical understanding regarding computers and online security. Sometimes, scammers attempt to gain access to your information by preying upon this common assumption. They may call in an attempt to convince you that they are from a well-known computer company, such as Microsoft, to let you know about a virus on your computer. Once directing you to log on to a website, they can gain access or control of your computer in order to steal your identity and other sensitive personal information. 

Microsoft will never call you to alert you of a virus. If anyone calls you and requests information from you, explain your concern and request a call back number which you can then verify by calling the company in question directly for cross-reference.

If you suspect one of these online scams, get help right away. Internet fraud runs rampant these days and can do a lot of damage. While you may not have the computer skills necessary to combat these fraudsters, other professionals do – and are willing to fight for your rights! 

The time-share scam 

Most all of us have heard of time-shares, or may even know someone that owns one. Although most of us want to enjoy retirement, owning a time-share can be a costly additional expense, and many retirees opt to sell their time-share. If someone calls you and offers to sell your time-share, especially if the request is unsolicited, be wary.

While traditional realtors do collect commission on sales, a scammer will often require an up front fee that will be repaid once the timeshare is sold. In the end, you will be stuck with your time-share, and without the money paid to the scammer. 

The homeowner scam 

Occasionally, scammers will approach your home claiming to notice repairs that need to be made. While some legitimate businesses do solicit business in this manner, scammers will use this tactic to solicit repairs that you aren’t actually in need of.

If you open the door, be sure to mention your son or another family member (even if you don’t have one near) and allow them to give you their card. Do not let them into your house. Not only do potential scammers use this method to take your hard earned money by warning of unnecessary repairs, some may use it as an opportunity to case your house, potentially targeting it for robbery. 

The medical scam  

Since many retirees are in need of specialty medical equipment and devices due to health and mobility problems, they can be at risk for medical scams. In this scam, a company that claims to be running a special on products typically contacts you. In order to get in on this deal, however, they will often require instant payment or down payment. 

Once the money is paid, these scammers have not only defrauded you of money, but have gained access to your financial information as well. You are left without your deposit or payment, as well as without the medical equipment you thought you were securing.

There are also scams that revolve around the new Affordable Healthcare act. Check those out too.

Don’t fall victim to targeted scams aimed at taking your retirement money. Arm yourself with the information necessary to protect yourself. If you feel that someone is attempting to scam you, alert the proper authorities, such as the Better Business Bureau or the FBI.

About the author: Nick Habben works for eConsumerServices, helping consumers stay safe. He identifies common scams and fraud alerts. He works hard to help other people stay safe

Image license: Widjaya Ivan; CC BY 2.0