One in 18, or 5.4 percent, of older Americans experience financial fraud every year.
The financial world is littered with scams and too-good-to-be-true deals which are all to easy to fall prey to, with seniors who live alone being especially vulnerable. You might think that real estate is a relatively safe area, but you'd be wrong--older people are often victims of scams involving their homes.
So, how can you help to educate and protect older relatives?
Reverse mortgage scams. A reverse mortgage is exactly like it sounds: rather than paying the bank every month, they pay you--in return for a chunk of equity in your house. They are often popular with older people, especially those with no dependents, as there's a guaranteed right to continue to live in the property and the loan isn't usually repayable until the home owner chooses to sell. However, in recent years it has become more common for seniors to be victims of reverse mortgage scams, most often through fraudsters applying for them in their name--without the consent (or full understanding of the consequences) of the homeowner. If your parents or other older relatives are thinking about taking out a reverse mortgage, ensure they understand all the terms and conditions and that they go through a reputable lender. If they are in doubt, encourage them to consult an independent financial adviser.
Home repair scams. While groundhogs are relatively cute, the fake contractors of the same name are not: 'woodchucks' scam people out of thousands of dollars for unnecessary work to their home. As people age, it can be difficult to keep up with household maintenance. Scammers will often start by gaining the homeowners' confidence through offering to do a small job at a reasonable price, like repairing a driveway or fixing a few roof tiles. Once they are on the property though, they find other, larger jobs that need doing, often taking advantage of those who are unable to see the 'damage' for themselves. The best way to escape these scams is simply to encourage relatives to avoid contracting anyone who comes to the door about a problem they've noticed in the home. If you live close by it's easy to keep an eye on general maintenance tasks and find a reliable contractor to help out. If you or your relative are unsure of the price of a job, don't be afraid to ask several contractors for quotes--it's always a good idea to check at least three quotes, just to get a ballpark figure of what something might cost.
Keep in Touch. It can be hard to protect elderly relatives from scam artists, especially if you don't live close by. The best way to keep them safe is by staying in regular contact, and talking to them about their finances. Encourage them to always check the credentials of anyone who does any work for them, and to not be afraid to ask for a second opinion.