Question: Very recently we had a problem with my mother-in-law being hooked in with a scam where she wired a total of $6000 to Jamaica all for the so called promise of greater money later on. (sweepstakes inheritance etc.) Martha my wife got involved and put a stop to it but I have to wonder how many other elderly are involved in that type of scam. Paul, Brookhaven, MS
Answer: I'm sorry your mother-in-law was scammed. Sad to say, the list of scams seems endless. Classic pump-and-dump swindles. Deceptive charities. Ponzi schemes. Foreign lotteries. Health care swindles. Mortgage foreclosure scams. Telemarketing snake oil. Credit repair crooks. Job offers that bilk desperate people. (If you want to get depressed about all the schemes targeted at consumers read the consumer protection section in the FTC in 2011: Federal Trade Commission Annual Report, April 2011.)
Fleecing people is a growth industry, especially the elderly--like your mother-in-law.
It could get much worse with an aging population. About a third of all victims of fraud schemes are seniors, according to some estimates, even though seniors make up about 15% of the population. By the half-century mark the number of people 65 years old and older will have doubled and the population of 85 and older will have nearly quadrupled.
Another factor is that until recently law enforcement authorities seemed to issue more press releases condemning these crimes than actually devoting resources toward capturing and punishing miscreants. That has been changing for the better in recent years, although I am concerned that the effort will flag with all the cutbacks by state and local governments and the federal government under pressure to reign in its spending.
In the meanwhile, the basic message remain time-tested and worth repeating. If the money promise is too good to me true, it is too good to be true. If you don't understand a product, don't buy it. If a broker or advisor is pressuring you to do a deal quickly, don't. Never give out your financial information over the phone or the Internet unless you are absolutely sure about the company. Never send money to unfamiliar companies or strangers. Keep your money and investments well-diversified. Talk to family, friends, your lawyer and financial advisor (if you work with professional advisors) before you make a financial move. Slam the phone down on telemarketers.
Like you, family members need to be vigilant--very vigilant.
John Gannon, senior vice president for investor education at FINRA (Financial Industry Regulatory Authority), was a recent guest blogger for Marketplace Money. His topic was steering clear of scams.