What was the name of your favorite pet?
Wait, don’t answer! It could get you scammed!
We’ve all seen those innocent looking memes on social media asking fun questions like, “what’s your favorite song” or “who was your favorite teacher?” Millions of people give answers without realizing they’re providing password hints to scammers. Financial scams are a bigger problem than ever, and older Americans are among the most common victims. Today we’ll talk about Retirement Scams, and how to help avoid them. We’ll cover how the scam problem has intensified since Covid-19; common scams to watch out for; how to help protect yourself; and a bit about investment scams, in particular.
Let’s start with some numbers about how bad the scam problem is – and how much worse the coronavirus made it. In 2020, the FBI’s Internet Crime Complaint Center, or IC3, received over 791,000 complaints, with reported losses exceeding $4.1 billion dollars. Nearly 30 percent of the total fraud losses were sustained by victims over age 60, resulting in roughly $1 billion in losses to seniors. That represents an increase of about $300 million in losses for that age group compared to 2019. The main reason for the increase, analysts agree, was the pandemic.
Older Americans are already more likely to be targeted because they typically have more assets. During the pandemic, many were forced to conduct more personal business by phone and online. Web scammers saw this as an opportunity and pounced. According to the Federal Trade Commission, the pandemic spike cost older Americans an estimated $600 million dollars in 2020. The FTC said increases occurred in nearly all the top categories of fraud, which include romance scams, sweepstakes scams, business imposters, government imposters, investments, tech support, online shopping, family or friend imposters, and timeshare sales & resales.
To break it down further, here’s how some of the most common types of scams on this list work. Let’s start with imposter scams. These involve a scammer pretending to be someone you trust trying to trick you into giving them money or personal information such as a password, credit card, or Social Security number. Often, they pretend to be the IRS or Social Security Administration, and victims of these calls are frequently threatened with arrest or other legal action if they don’t comply. Scammers today have gotten very good at sounding or appearing legitimate, but beware! If you do receive a call from someone claiming to be the IRS or Social Security Administration, hang up. These offices never ask for personal information over the phone and never threaten arrest or legal action.
As for sweepstakes and lottery schemes, scammers will also contact you by phone, email, or ground mail to tell you you’ve won some kind of prize, but that you must do something to redeem it. Typically, what you must do is provide them with personal information or pay them some kind of service fee. It may sound like an obvious fraud, but last year Americans 60 and over lost a collective $69 million dollars to sweepstakes scams, according to the FTC. The point is, don’t ever get complacent and think you could never be victimized. Instead, get educated, and learn how to help protect yourself. Here are some more ways to do that:
Never give out personal information over the phone or by email. Most legitimate businesses and agencies won’t ask for personal information outside of any official transaction with them, and will only expect you to provide it in person or by some other confidential means. As for the internet, be very suspicious of any pop-ups directing you to click on them or take any action. Also, never click on a link in an email or a Facebook message from a source you don’t recognize. Lastly, don’t fall prey to social media memes asking seemingly innocent questions, because your answers could give password hints to scammers.
If you ever suspect you’ve been targeted by scammers, there are many resources you can and should contact. These include the state attorney general’s office and Consumer Protection Agency, the Better Business Bureau, the Federal Trade Commission, and the FBI’s Internet Crime Complaint Center. The AARP also has a Fraud Watch Network Helpline at 877-908-3360.
Finally, the Financial Industry Regulatory Authority also has a resource at finra.org specifically for investment fraud, which leads us to a question you might be wondering by now: what does all this have to do with investing for income? The answer is: everything! When scammers target you, they want as much as they can get. If they should get a major chunk of your assets, you’ve just lost a major source of your retirement income. Some scammers will go directly for those assets with investment scams. Most of us want to believe we’re too smart to fall victim to investment fraud, but remember, Bernie Madoff managed to bilk a lot of very smart people out of $65 billion dollars before authorities finally caught up with him.
The point is, protecting your assets from all threats – whether it’s market turmoil, the risk of spenddown, or scams – is vital to the income model. Those assets are the primary source of the income you need to meet your needs and achieve your retirement goals. You can be sure an Income Specialist working to help protect your money, but you need to do it, too!
Investment Advisory Services offered through Sound Income Strategies, LLC, an SEC Registered Investment Advisory Firm. Arbor Financial Services of Florida, Inc. and Sound Income Strategies, LLC are not associated entities. Arbor Financial Services of Florida, Inc. is a franchisee of the Retirement Income Store. The Retirement Income Store and Sound Income Strategies LLC are associated entities.
