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Retiree Money Scams Flourish, Change With the Times

Juanmonino | E+ | Getty Images

Retirees are a wealthy lot indeed.

According to the Employee Benefit Research Institute, those 65 and older have amassed some $8.6 trillion in their retirement accounts alone, not including pension plans or personal savings — a point not lost on the con artists of the world.

Retirees also have more spare time to consider proposals that come their way.

Scams that target older Americans are almost too numerous to name.

Some play the emotional card, knowing grandparents would do most anything to help a grandchild in need.

Some claim to cure illnesses that conventional medicine can’t fix.

Still others exploit retirees who undersaved for their nest egg, or, well, tempt the taste for a quick buck in all of us.

Here are six major con categories. If you encounter any of them run away.

Investment Scams

Investmentscams are among the most costly to seniors.

In some cases, unscrupulous brokers hold “free lunch” seminars in which they offer reckless advice, like recommending retirees cash out of their 401(k) planor take a lump-sum payment for the cash value of their pension and use the money to open an IRA through them.

Scamsters may also recommend retirees invest in high-risk securities with high fees, according to the Financial Industry Regulatory Authority, Finra, which regulates brokers.

“Retirees may be more susceptible because those who haven’t saved enough are aiming to hit the ball out of the park so they might take a little more risk than they should,” says Gerri Walsh, president of the Finra Investor Education Foundation.

If you think it’s the blue-haired widows who get hit the hardest, think again.

Finra research shows victims of investment fraud tend to be well educated, married men.

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Walsh offers these as red flags: a broker who pressures you to make important financial decisions on the spot; suggests that “everyone can retire early”; or promises a return of 12 percent or more.

You should also find out whether any broker you are considering working with is registered with Finra by calling the government’s hotline at 800-289-9999 or usingBrokerCheck.

Gold Coin Scams

With the price of gold bouncing around record highs, coin collecting has become big business.

And scam artists are on the prowl.

“There are legitimate coin collectors, but there are also a lot of scams out there,” says Doug Shadel, author of AARP’s “Outsmarting the Scam Artists.” “They’re trying to scare people with ads that say the sky is falling and the market is collapsing and the only thing you can count on is precious metals.”

Many who advertise falsify information about the grade or condition of the collectable coins they sell, use counterfeit coins or encase damaged coins in plastic display cases to obscure their resale value.

Others go so far as to sell gold coins to investors and charge a fee for storage so the buyers never have to fret about keeping it safe in their homes. Trouble is, the scammers don’t own any gold to begin with.

Employment Scams

Many retirees find that they need or want to return to work part-time, so beware the fraudulent job offer.

Some scams, advertised online or by e-mail, offer to pay you $1,000 to act as a secret shopper, in which you get paid to observe the customer service performance of major retailers.

“The ads usually say they’ll pay you $1,000 and give you another $1,000 to use for shopping, but after you sign up they send you a check for $3,000,” says Katherine Hutt, a spokeswoman for the Council of Better Business Bureaus. “Then they call to say, ‘Oops, it was only supposed to be $2,000. Can you wire us back the $1,000?”

Gotcha. The check, you guessed it, bounces when you go to cash it and you’re out $1,000.

Work-from-home employment scams can be far worse.

The bait — a legitimate looking website that claims to offer jobs you can do from your living room. When you call, the “company” conducts a fake interview and you get the job!

In order to set up payroll, however, the person on the other end of the line just needs you to fill out a form with your Social Securitynumber and bank account information.

There’s no real job, of course, but you will spend countless hours trying to reclaim your stolen identity.

Health Care Scams

Fraudulent health products that are not proven safe or effective are marketed everywhere — infomercials, magazines, the Internet.

Many claim to help consumers look younger, lose weight, or cure diseases that are common among the elderly.

The financial loss can range from hundreds to tens of thousands of dollars, but the health risk is more serious still as consumers who fall for such scams may be counseled to stop or delay conventional treatment for their disease, according to the Food and Drug Administration.

Many health fraud scams include bogus dietary supplements, arthritis remedies (magnets, copper bracelets and special diets), anti-aging and weight loss products and unapproved treatments for cancer, diabetes and HIV/AIDS, which may be conducted in foreign “clinics.”

The FDA warns consumers to be wary of personal testimonials by “real people” or “doctors,” who are played by actors on TV, and to consult their physicians before using any home health product — especially if they are already taking medications.

Targeting Grandparents

The Grandparent Scam

Another ploy plays to the heartstrings of grandparents.

Social media outlets, including Twitter and Facebook, make it easy for hackers to identify teens with grandparents, especially those who inadvertently mention the town where their grandparents live.

Lost or stolen cell phones with a contact list can also be mined for phone numbers to “Grandma” or “Grandpa’s house,” says Hutt.

Here’s how it works: The con artist calls the grandparent in the middle of the night in a panic, pretending to be their grandchild who has lost a wallet and passport while traveling abroad.

“That’s easy to pull off especially if the grandparent doesn’t talk on the phone very often with their grandchild,” says Hutt. “They’ll tell you that they need you to wire money immediately.”

Don’t fall for it. Never wire money to anyone unless you know the person, says Hutt, noting grandparents can help their family most by checking with the grandchild’s parents to confirm they are where they say they are.

The AARP also has a Fraud Fighter Call Center at 800-646-2283 to help protect consumers who may be unsure what to do.

The Free Cruise Scam

Congratulations! You just won a free cruise. The person on the phone just needs your credit card number to hold your spot. A little advice? Hang up. Fast.

Vacation scams are a dime a dozen, many offering free or low-cost trips as a ruse to get your credit card information or rack up your long distance phone bill.

In the latter case, unsuspecting consumers are instructed to call a 900 number to claim their prize. The call gets routed to a foreign country at $5 per minute.

Some, too, dangle free accommodations at a luxury hotel to lure you into a high-pressure sales pitch for timeshares or vacation clubs, while others make good on that free cruise for you, but require you to book a second guest at a grossly inflated price.

“Scam artists use a variety of persuasion tactics to get you in a heightened emotional state,” says Shadel. “They dangle phantom riches in front of you and get you to a point where you’re not thinking rationally. You are thinking emotionally. Give yourself 24 hours to think and do your due diligence."

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