Scammers Have Retirees in Their Sights

Older adults tend to lose the most money to scams because criminals target them with costly schemes. Here's how you can protect yourself.

A woman puts her hands over her face while sitting in front of a laptop.
(Image credit: Getty Images)

The check for $4,870 took Patty Remmell by surprise. Remmell, 66, expected to receive $1,217.50 as a 50% deposit on a writing project she was completing for a new contact who had reached out to her on LinkedIn. Then the contact sent an email explaining that his organization wanted her to complete a second project and had processed payment for both together. Satisfied, Remmell deposited the check and finished work on the first project. A few days later, her contact emailed to say the company had changed direction, and he asked her to refund the overpayment. "I freaked out," she recalls. "I don't like monetary messes. It makes me nervous."

Her bank account showed that the funds from the deposited check were available to withdraw, so she sent the organization $2,435 for the canceled project via CashApp at her contact's request. Then he asked her for another $1,217.50, half the payment for the first project. When he kept nagging for the payment, without acknowledging that she had submitted the project or sending feedback on her work, she grew suspicious and asked a group of colleagues for a gut check. "It's a scam," one responded.

Sure enough, the check bounced a few days later. "I'm now overdrawn in my savings account by over $3,000 that I can't cover," she says. "I feel like an idiot."

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Remmell isn't alone. The FBI estimates that seniors lose more than $3 billion each year to scammers. In 2020, the Better Business Bureau saw a 25% increase in scams reported by consumers because the pandemic is giving fraudsters new ways to prey on people. Almost 1 in 2 reports involved financial loss, an all-time high. "Scammers adjust the scams according to what's in the news," says Katherine Hutt, national spokesperson for the BBB. "The people who are most vulnerable to scams are people who live alone or don't have anybody to talk things through with and who are in some way financially vulnerable."

Although seniors are pretty savvy about scams, they also lose the most money because "the scams that tend to target them are the high-ticket scams," Hutt says. Adults older than 55 were hit hardest by scams that involved romance, online purchases, travel, job offers and investments, roughly in that order.

Scams You Must Look Out For

No sooner do people catch on to a scam -- like a caller claiming to be from the IRS -- criminals change tactics. Although the details of the next scam will differ, there are definite patterns that can help you recognize a scam no matter the context.

Remmell, for example, fell prey to an overpayment scheme. That's when you're expecting to receive a certain amount of money for a product or service, but the check or money order arrives for a larger sum. "Any time somebody overpays you for anything, whether a couch on Craigslist or job, that's a red flag for a scam," Hutt says. "Overpayments like that just don't happen in real life."

The fraudsters are counting on your ignorance of the check-processing system. When you deposit a check, your bank begins a convoluted process of transmitting that check image -- often through clearing-houses -- with the bank that holds the account on which the check was drawn. By law, banks must make the first $200 of a check and the first $5,525 of certain types of checks, like cashier's checks, available the next business day. The first $5,525 of other checks must be available within two business days and larger checks generally by the seventh business day.

Most people mistakenly believe that once a check clears, the money belongs to them, but it depends on the bank. Some banks may take longer to spot a counterfeit check, fake signature or insufficient funds for the account that paid you and later negate your deposit. You may not learn that the check bounced until many days, or even weeks, after you believed the funds were yours to spend.

In the meantime, scammers will ask you to return the "overpayment" using a different method, such as Venmo, CashApp, PayPal, a gift card, wire transfer or money order. Those payment methods won't let you claw back funds the way a credit card will, so your money is lost the instant you click "send."

There's a common denominator to some scams: peer payment apps. Don't send money to someone by Venmo, PayPal or another cash app unless you've met them in person. "If you hear gift card, any sort of cryptocurrency, bitcoin, stop," says Amy Nofziger, director of fraud victim support with AARP. "If anyone instructs you to go to a store and purchase something or deposit money, that's a huge red flag. No legitimate business operates that way. No government agency takes payments via prepaid gift cards or bitcoin."

Instead, don't refund any overpayments if you're paid by check. If you receive an overpayment, don't deposit the check. Ask for a check in the correct amount. If you must send money, always pay with a credit card. Federal law protects credit card users from fraudulent charges. Your maximum liability is $50 if you fail to report your card lost or stolen. It's zero if you report a loss before any fake charges are made.

Credit cards can also protect you when you're shopping online. Internet-based shopping scams topped the BBB list of the riskiest scams overall, costing a median $96 in damages and tricking people 79% of the time. Online purchases can turn out to be fraudulent in a number of ways: counterfeiting, nondelivery or inferior merchandise. "Either the product isn't what it claims to be, or there isn't any product at all; they're just taking your money," Hutt says.

Often, you're led to fraudulent websites by an ad that pops up while you're browsing or on social media, says Nofziger. Because the advertising on Instagram and Facebook usually targets your interests, you may click on the ad without thinking. "A lot of people are buying off social media, and they're not vetting the company," Nofziger says. "If you are looking to purchase something online, take the name of the company, put it into the search engine and write the words 'scam' or 'reviews' or 'complaints' after it to see what other people are saying." Make sure it's a legitimate company before buying anything from it, she says. The same precautions apply for travel deals to exotic destinations. Bottom line, Hutt says: "You're not going to get what you see in the pictures."

The proliferation of dating apps has given scammers another forum besides online shopping where they can create fake profiles and cast out lures. "Romance scams are increasing because due to quarantine, people are feeling more lonely," says Satnam Narang, staff research engineer at cybersecurity firm Tenable.

The pandemic also makes it harder to tell if someone's reluctant to meet because the person is a germophobe or a scammer. A reluctance to meet is one of the signs of a fake dating profile. "There's always a reason they can't meet right away, some excuse, but they want to talk," Hutt says. "One of the big red flags is that they want to get off the app quickly."

Once you start texting and talking by phone, the person may seem romantic and sincere but also drops hints about problems with paying bills. Before long, you're sending them cash. You think you're developing this romantic relationship with someone, and you want to help them, Narang says. "It's so pervasive and so disgusting how heartless these scammers are."

Or perhaps your budding romantic interest wants to send you a gift or asks you to receive money for them, which could lead to an overpayment scam. Another ploy is to ask for your help cashing a check, moving money or buying prepaid gift cards.

The scammer may offer to let you keep a cut of the funds, perhaps turning you into what's known as a money mule, which is someone who helps move illegally obtained funds, often to defraud other consumers. You become the means for the scammer to move money from one scam to another, Hutt says. "The scammer might say, 'I'm getting some money wired to me at this Western Union; can you pick up the cash at this location and take it to a different location to wire it to me, and keep $200 for yourself.'"

Personal Information You Must Protect

You may know to protect your Social Security number and birth date, but what about other information in certain circumstances? Would you hesitate to give your banking information to a new employer who wants to pay you by direct deposit? What about handing over your Medicare number for a free DNA test that could alert you to health risks?

All of these tactics can open the door to identity theft. A scammer who has your banking information or Medicare number can sell that data to other criminals, who may use it to steal your identity, racking up debt in your name or raiding your bank account. AARP has tracked scams starting with a phone call asking you to verify your Medicare number, perhaps because of a change from paper to plastic cards or to add a chip to the card, Nofziger says. The scammer may use the pandemic as an excuse.

Because Medicare no longer uses Social Security numbers for identification, people may feel comfortable giving out their Medicare number. Not so fast, Nofziger says. "That number needs to be protected as if it were your Social Security number." She points out that criminals will seek payment from Medicare for a health care service they claim you received. "If something is charged against your number, that's on your record as a service rendered."

Some people are savvy enough not to click on a link or attachment, or to hand out information when called on the phone. But what if the caller asks you to visit a website that looks like a legitimate business? Or you get an email asking you to call a number that seems legit? "This is becoming a new trend," says Narang, noting that sophisticated scams often involve professional-sounding call centers.

With work-from-home the new norm, it's harder to sort out real from fake employment offers. When that so-called new employer, whom you've only met on email or LinkedIn, asks you to fill out a job application with your address and other pertinent details, you could be setting yourself up for identity theft.

How to Protect Yourself

Criminals are smart, but you can be smarter. Experts recommend putting in place the following policies that can protect you and sticking to them no matter how legitimate a request or opportunity seems.

Protect your phone. Smartphones are tiny computers that live in our pockets but can access much of our personal information. These devices need to be protected as vigilantly as you do your home, which you lock whenever you leave. Your phone's passcode works the same way. Set one up so that only you can unlock your phone. To make sure that thieves don't get in by the back door, only download apps that you've vetted.

Take advantage of the options from cellular providers and manufacturers to send unknown numbers directly to voice mail. "On your smartphone, you can go into your settings and have any unknown number go straight into voicemail," Nofziger says. "Put your contacts in your phone with their name so if your granddaughter is calling you, you see it's your granddaughter." If you have an older family member who may be vulnerable, help them set up these protections.

Build in safeguards. Use strong, original passwords for different accounts, especially financial accounts, Narang says. That way, if one gets hacked, the others remain secure. Consider password management software, which makes it easier to use complex passwords, so that you don't have to remember random strings of digits. Install security software on your devices, like an antivirus program or encryption. "Make sure you have two-factor authentication on your account," he says, so that even when you put in the password, you have to verify that it's you with a code you receive by text message or a security app on your phone.

Switch to a better device. Consider using an iPad or tablet instead of a laptop or desktop as they can offer more avenues for entry from viruses and scammers.

Review privacy settings on social media. Make sure your information is only visible to those you choose. Facebook, Instagram and other social media platforms will walk you through the steps to change your privacy settings, or ask a younger relative to help you.

Wait and talk. One of the best protections we have is a gut check with a family member or friend. Before you make a purchase or send money, ask someone you trust what they think. Whenever you buy yourself time to think about a request, you're more likely to recognize a scam. Just because someone calls or emails you doesn't mean you owe them your time. "Being assertive is not being rude," Nofziger says. "That is a stranger calling into your home using your phone that you pay for. It's OK to say no."

Contributing Writer, -

Katherine Reynolds Lewis is an award-winning journalist, speaker and author of The Good News About Bad Behavior: Why Kids Are Less Disciplined Than Ever – And What to Do About It. Her work has appeared in The Atlantic, Fortune, Medium, Mother Jones, The New York Times, Parents, Slate, USA Today, The Washington Post and Working Mother, among others. She's been an EWA Education Reporting Fellow, Fund for Investigative Journalism fellow and Logan Nonfiction Fellow at the Carey Institute for Global Good. Residencies include the Virginia Center for the Creative Arts and Ragdale. A Harvard physics graduate, Katherine previously worked as a national correspondent for Newhouse and Bloomberg News, covering everything from financial and media policy to the White House.