7 Scams That Can Destroy Your Finances

SPECIAL FROM Grandparents.com

Identity theft, imposter scams, charity scams, Medicare scams—the ways crooks have devised to bilk you out of your money seem endless. And the amount of money they take is staggering. In 2012 (the most recent statistics available) there were 16.6 million victims of identity theft alone, who suffered over $24.7 billion in financial loss, according to the Bureau of Justice Statistics Identity Theft Survey. Consumers also reported over $223 million in losses between 2012 until May 31, 2014 from imposter scams (thieves pretending to be everything from a grandchild who needs money, to a telemarketer saying you've won a prize), according to the Federal Trade Commission, the nation's consumer protection agency.

"Imposter scams and identity theft are the most reported crimes to the FTC," says Lisa Schifferle, an attorney in the consumer and education division of the FTC. "These scams cut across all age groups." Contrary to what you may have heard, "older adults don't tend to be victimized at any higher rates that other groups," says Schifferle. However, older adults may feel like they are being rude or disrespectful by getting off the phone when getting a scam call, which could make you more of a target.

How do you protect yourself? We've highlighted seven of the most common scams and tell you what you should watch out for.

1. Identity theft.Identity theft is so widespread you probably know someone who it has happened to, maybe even yourself. With identity theft, the thief steals your personal information, credit card number, ATM number or other information through a variety of ways. They use your information to buy goods and services, open new credit cards or take money out of your account. "With identity theft there aren't many reg flag warnings until it happens," says Schifferle. "When it does, you'll see charges you didn't expect on your bills, or get a bill in someone else's name." Identity theft can wreak havoc on your credit rating, and be a real headache to clear up with your bank and credit card companies.

Protect yourself: It's always best to protect personal information by shredding mail and documents you don't need. Since so much of identity theft is internet-based, make sure your virus software is up to date on your computer. When it comes to passwords, it may be easier to have one password for all your online accounts, but it's safer to have different passwords for every account. "Go over all charges on your credit card and bank statements every month, and don't let mail pile up," says Schifferle. And if you do see charges that don't make sense, call the company or your bank as soon as possible to alert them. You can also go to idtheft.gov to find out about setting up a fraud alert for your accounts and getting a copy of your most recent credit report.

2. Grandparents scam. This scam started several years ago and is still going strong. It cleverly plays on your emotions as a grandparent. With this scam, someone will call pretending to be a grandchild, saying something like, "Hello Grandma, it's me." The grandparent says something like, "James, is that you?" so the scammer doesn't need to identify himself. The scammer then goes on to say that he is in trouble and needs money wired or mailed to him immediately, and not to tell his parents. "Thanks to the Internet and social networking sites, a criminal can sometimes uncover personal information about their targets, which makes the impersonations more believable," according to the FBI web site. "For example, the actual grandson may mention on his social networking site that he’s a photographer who often travels to Mexico. When contacting the grandparents, the phony grandson will say he’s calling from Mexico, where someone stole his camera equipment and passport."

Protect yourself: Don't get wrapped up in the frantic nature of the call, even if the caller seems harried and upset. Instead, take your time and say you need to contact other family members or someone else you trust to check out the story. Then hang up.

3. IRS scam."This year we've seen a huge rise in IRS scams where a caller pretends to be from the IRS and tells the person on the other end of the phone that they owe back taxes and must pay them immediately," says Schifferle. "Scammers threaten that if the bill isn't paid, the person will go to jail." The scammers usually demand that the person buy a pre-loaded debit card or wire transfer and put a large amount on the card and send it to the scammer. Unnerved, the victim complies. So far, victims of IRS imposter scams have paid $15.2 million to scammers, as of January 2015, according to the Treasury Inspector General for Tax Administration.

Protect yourself: The most important thing to know, says Schifferie, is that the IRS will never call you and demand payment. The real IRS will generally contact you by mail. The other thing to know: If someone asks you to pay with a pre-paid debit card or wire transfer, chances are good that it's a scam call. If you do get an IRS call that seems suspicious, report it to the office of the Treasury Inspector General for Tax Administration at 800-366-4484. And if you think you owe money to the IRS, the FTC suggests calling them at 800-829-1040 or go to irs.gov.

4. Charity scams. Charity scams often play off current events—disasters around the world where people need immediate assistance. Typically, the scammer will call saying he or she is representing what sounds like a legitimate charity. They'll ask you for a donation and press that the charity needs help right away. They will often ask for a wire transfer or even cash or check, sending a courier to get it, according to the FTC.

Protect yourself: One way to suss out if the call is real is to ask for information about the charity. Often times scammers will refuse to answer your questions about the charity or provide more information. Tell them that you won't give a donation until you get the information and have time to look over the charity. If information does come in the mail, check out the charity online and do research to see if it's legitimate.

5. Win the lottery. Someone calls to inform you that you have won a prize or a lottery, and they are so excited that it makes you excited. They'll then say that all you need to do to collect your winnings is to pay fees or taxes, which you can do by giving them your credit card number or bank account number. That should be a red flag. If it sounds too good to be true, it probably isn't.

Protect yourself: "Don't ever give out your personal info unless you know who you're talking to," says Schifferle. If they have initiated the call, tell them that you'll call them back to make sure the call is real. "Don't use a link or number they give you, look it up yourself to be safe," she says.

6. Medicare scam.There are several ways scammers try to trick people when it comes to Medicare. A scammer can call pretending to represent Medicare and ask for your Medicare number or social security number. The scammer can also call or stop by your house unannounced trying to sell you insurance, services or medical equipment, again asking for your social security number or Medicare number. "People give the number, but they never get the equipment or services. Your health insurance is paying for services you're not receiving, and the scammer is pocketing the money," says Jason Echols, Health Care Consumer Protection Coordinator in Illinois for the nonprofit group Age Options. "This becomes a bigger problem if you legitimately need services, your doctor tries to put them through, and the legitimate claim gets denied by Medicare because it looks like you're already getting services."

Protect yourself: "Never give our your social security number or Medicare number," says Echols. Medicare would never ask you for it over the phone. "And always look at your Medicare summary notice, which shows everything that's been billed to your account." If you see suspicious charges, talk to your doctor, the hospital where you may have received services, and contact Senior Medicare Patrol in your state to report potential fraud.

7. Cemetery & funeral scams.Sometimes disreputable funeral homes can take advantage of a grieving family. The funeral home can overcharge for services, have the family buy an expensive casket, even if the deceased is being cremated, or add unnecessary charges to the bill.

Protect yourself: Do some planning beforehand which will allow you to gather information and talk to several different funeral homes about cost and options. "Educate yourself fully about caskets before you buy one, and understand that caskets are not required for direct cremations," says the FBI web page on common fraud schemes. Also make decisions with other family members to get their perspective, and read all contracts before you sign them.

Helpful Resources

• Do Not Call Registry - Sign up on the Federal Trade Commission's registry, and most telemarketers should stop calling your home within 31 days. Find out more here.
• Pass it on - Learn about other scams you should watch out for with this program designed for seniors by the FTC. Find out more here.
• Idtheft.gov - Find out what steps to take if your identity is stolen. Find out more here.
• FTC Complaint Assistant - Report a scam and file a complaint. Find out more here.
• Internet Crime Complaint Center - File a complaint about a cyber or email crime with the FBI. Find out more here.
• Senior Medicare Patrol - Report fraudulent Medicare activity. Find out more here.

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