Financial Fraud and Seniors

Sometimes our advantages can become our weaknesses. If we're retired or getting close to retirement, we may have some great things going for us - like great credit, owning our home debt-free, and a substantial retirement nest egg.

However, these great things, along with our age, can also put us at greater risk for a range of frauds targeting older folks. We are going to look at a few of the most common frauds perpetrated on seniors and what can be done to avoid being a victim of fraud.

Contractor Fraud

Odds are that our residence is going to need repair at some time during our retirement, especially if we've been living in it for the past 25 years. Contractor scams happen when the contractor starts doing repairs that are unnecessary and then often overcharge for the work, too.

Other common variants include:

Taking payments in advance and then never completing any of the agreed-upon work

  • Using admittance into our residence as a means to burglarize it
  • Convincing owners to be part of fraudulent insurance claims

 Reputable contractors don't generally go knocking on doors to drum up business. If your house needs some work done, it’s usually better to ask around for referrals or check out the contractors listed by your Better Business Bureau. Check out the contractor for complaints before consenting to have any work done.

Reverse Mortgage Fraud

Reverse mortgages can be a legitimate technique to draw out equity from our home These are most commonly referred to as home equity conversion mortgages (HECM). HECMs are insured by the Federal Housing Authority (FHA). They were created so that people 62 years and older could easily pull the equity from their principal residence and not be burdened with monthly payments.

A problem can occur with non-HECM reverse mortgage scams; typically, a senior is used as an unsuspecting pawn in a property-flipping scheme or billed huge fees by an unscrupulous “advisor” that simply handles standard paperwork in a normal HECM loan.

If we’re interested in a reverse mortgage, our bank or a reputable mortgage broker is a good place to start.

Investment Fraud

While people of all ages are taken in by various investment frauds, seniors seem to be targeted the most.

 Always be skeptical and double-check with a trusted professional when it comes to our life savings. Don't succumb to any time pressure tactics; if it's something that we have to decide right now, our answer right now should be “NO.” False time limits are a common technique to get people to commit their hard-earned money to a fraud.

It probably doesn't seem fair that anyone has to be on alert in retirement; it seems like we've earned the right to just relax and enjoy life. However, unfortunately, to be on guard we must. In most instances, verifying information with third parties or simply demanding more details in writing will discourage most scam artists.

What Should We Do?

 If we are taken advantage of or spot a scam being offered to us, we should report it. Hopefully, the perpetrator will be stopped before he can harm anyone else.

Always remember that scam artists are usually looking for the easiest victim. They can be very persistent when they believe there is money to be made, but they’re also very quick to go away when things don't look promising.

We might be able to retire from our profession, but we can't retire from being careful. Keep an eye on that nest egg and don't turn it over to anyone that we haven't checked and double-checked. Such vigilance will help us keep the savings we worked so hard for away from thieves - safe and sound.

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