Ways To Protect Seniors Against Investment Fraud

Ways To Protect Seniors Against Investment Fraud

Have your parents ever told you about a dubious email or text message they got requesting that they change their account information? Or did the caller tell your grandparents that they needed remote access to their computer to fix their password since it had expired?

Seniors are more likely to fall for scenarios like these, even if they may raise serious red flags to you and are becoming more widespread.

Therefore, we’re here to assist you in protecting your loved ones from con artists and scams aimed at them.

The Top 5 Financial Scams Targeting Seniors

The first step to protecting yourself against scams or investment fraud is to be familiar with what they are.

Here are the common financial scams that older adults are usually prone to, according to the National Council on Aging

1. Government impersonation scams

In government impersonation scams, often called government imposter scams, con artists appear to be from the Internal Revenue Service (IRS), Social Security Administration, or Medicare when they call vulnerable elderly persons.

Their tactics often include the following;

  • Claiming the victim owes back taxes and threatening to have them arrested or deported if they don’t pay immediately.
  • If the victim doesn’t supply personal identifying information, they could threaten to stop providing Social Security or Medicare benefits. The use of this data can then be made for identity theft.
  • Government imposters could also require particular payment methods, such as cash, a wire transfer, or a prepaid debit card.
  • Using specialized technology, they frequently call from the same zip code or “spoof” a government agency’s real phone number. This may lead some people to believe the caller is legitimate.

2. Sweepstakes and lottery scams

The sweepstakes scam is familiar to many people. 

Most of the time, sweepstakes and lottery scammers will;

  • Inform an older adult they have won the lottery or another kind of award by calling them. The elder adult must submit the money, cash, or gift cards in advance—often thousands of dollars worth—to settle alleged taxes and administrative costs before they may receive their winnings.
  • Use a well-known sweepstakes organization’s identity to gain the trust of your victims. Naturally, every award is never given out.
  • Tell the older adult their wins will be received shortly to get them to submit even more money. After scamming their victims with an initial sum of money, many continue to phone them for weeks, months, or even years.

3. Robocalls and phone scams

Robocalls employ sophisticated, automated phone technologies to call many homes worldwide in a short period. While this technology has legitimate applications, robocalls can also be used to commit a number of frauds on unsuspecting senior citizens who pick up the phone.

Robocalls may be used to scam seniors in many ways, such as;

  • Stating that the victim’s vehicle or electronic device’s warranty is about to expire and that payment is required to extend it. Scammers frequently fake the number they are phoning to make it seem like the call is from a reputable institution, just like government impersonation calls.
  • Recording an older person’s voice when they respond to their common “Can you hear me?” robocall. The criminal then has a voice signature to authorize unwanted charges on items like stolen credit cards. 
  • Sending an urgent and frightening call about an “impending lawsuit” to someone while pretending to be from a government or law enforcement agency. The victims are told if they don’t pay a fine by a certain deadline, they will be sued or arrested for some made-up offense.

4. Computer tech support scams

Scams targeting technical support play on seniors’ ignorance of cybersecurity and computers.

Here’s how it usually goes;

  • On a computer or phone, a pop-up message or blank screen typically notifies the victim that their gadget is broken and requires repair.
  • The con artist may either demand remote access to the older adult’s computer and demand they pay a charge to repair it when they phone the support number for assistance.

The Internet Crime Complaint Center (IC3) received 13,900 tech support fraud complaints in 2021 from senior citizens who lost close to $238 million. Real people who have suffered terrible losses at the hands of cybercriminals are hidden behind the statistics.

5. The grandparent scam

This type of scam is so simple and devious because it uses one of older adults’ most reliable assets, their hearts. 

This type of scam usually involves tactics like;

  • Scammers may phone prospective grandparents and say something like, “Hi, Grandma, do you know who this is? When the uninformed grandmother guesses the name of the grandchild the con artist most resembles, the con artist can gain their trust immediately.
  • The fictitious grandchild then requests funds to address immediate financial issues (such as overdue rent, car repairs, or jail bond). They might then beg the grandmother to keep their identity a secret.
  • The older adult might never be able to get their money back because fraudsters frequently demand to be compensated with gift cards or money transfers, which don’t necessarily require identification to collect.

In various variations of this con, the caller presents themselves as a police officer making an arrest, a doctor, or a lawyer trying to assist the grandchild. They then apply high-pressure techniques that prey on their victim’s emotions to get them to send money as soon as possible. Scammers have reportedly pretended to be “couriers” to collect money at the homes of elderly people.

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Steps to take if you’re a victim of a scam

Do not hold back from speaking out if you believe you have been defrauded; waiting will only worsen matters. Immediately:

  • Reach out to your bank or credit card provider.
  • Debit and credit cards connected to the stolen account should be canceled.
  • Your identification number should be reset.

If necessary, get in touch with legal aid and adult protective services. Visit the Eldercare Locator or contact them toll-free at 1-800-677-1116 on weekdays at 9 a.m. to discover your neighborhood offices. To 8 p.m. ET.

Common Older Investment Frauds 

Securities fraud has increasingly targeted senior investors in recent years. Fraud on elderly investors is especially concerning since, in addition to having frequently accumulated their investment funds over decades, they are typically past their prime earning years and have little to no potential to replenish their retirement savings.

According to the U.S. Securities Exchange and Commission, the following list offers instances of investment goods increasingly being utilized in shady schemes to scam senior investors. Every senior should be aware of these items.

Charitable Gift Annuities

In this scheme, a con artist will masquerade as a charity offering monthly annuity payments in exchange for money allegedly invested to pay the investor an annuity and help charitable causes. Unbeknownst to the investor, a sizable amount of the funds is invested in the fraudsters’ accounts rather than for charity causes.

“High Return” or “Risk-Free” Investments

A con artist would frequently advertise fictitious returns that may be made from “Low-Risk Investment Opportunities” in this kind of scheme. No investment, however, is risk-free. Additionally, occasionally, the promoted investment goods are nothing more than frauds. Investors should use caution when considering options that guarantee returns or advertise exceptional rewards.

Investment Advisor Services

A person or business that manages money and advises investors is known as an investment advisor. The best interests of the investor client must come first for the investment advisor. However, there are situations when an investment advisor will abuse their position of trust by employing unapproved and dishonest ways to essentially steal money from their clients.

Certificates of Deposit or Bonds

Certificates of deposit are frequently chosen by investors looking for relatively low-risk assets that are simple to convert into cash (CDs). A certificate of deposit (CD) pertains to a unique deposit account with a bank or thrift organization that normally offers a greater interest rate than a standard savings account. 

CDs offer government deposit insurance up to $100,000, unlike other assets. However, investors should be suspicious of guarantees of returns above the market and cautious about verifying the validity of the CD with the alleged issuing bank or thrift institution.

Promissory Notes

A business may issue a promissory note as a type of debt to raise money, analogous to a loan or an IOU. Typically, an investor consents to make a fixed-term loan to the business. In return, the business guarantees to give the investor a set return on their money, often the principal amount invested plus yearly interest. 

Promissory notes can be a reliable investment. However, those that are heavily promoted to individual investors frequently end up being frauds. Investors should use caution in determining their legitimacy and if in doubt, should consult a neutral third party for guidance.

Sale and Leaseback Contracts

Some investments are designed to resemble the sale of a piece of equipment, like a payphone, ATM, or Internet booth situated at a remote location where the investor cannot service and maintain the equipment and must enter into a servicing agreement to circumvent the investor protections of the securities law. 

Investors are informed that the equipment can be returned to the seller at the investor’s original purchase price after a specified time, enticing them to the agreement.

Additionally, the investor is guaranteed a particular rate of return. A variation of this concept involves selling a real estate stake rather than actual equipment, like a long-term lease in a resort community. 

Frequently, the promised equipment or property does not exist, and the seller cannot make good on their cash commitment. Investors should exercise caution when entering into any sale and leaseback agreements and if in doubt, should consult with a neutral third party.

High-Risk Investments. 

Some dishonest investment advisors make inappropriate suggestions to buy investments that don’t fit an investor’s financial situation or investing goals. When a broker offers speculative investments to a 95-year-old widow on a fixed income with a low-risk tolerance, such as options and futures, penny stocks, etc., this may constitute unsuitable recommendations.

Investors should carefully examine the risk profile of any investment recommendation and when in doubt, should consult with an impartial third party.

How to Avoid Fraud

Fraudulent schemes frequently target seniors. You may, however, prevent fraud and save your hard-earned money if you have a rudimentary understanding of how con artists operate. Learning safe investing techniques can significantly impact your retirement years.

Here’s how you can protect yourself or your older loved one against fraud and scams, according to Investor.gov.

Ask questions and check out the answers.

Before investing, wise investors take the time to conduct independent research and consult with friends and family. Make sure you comprehend the investment, the risk involved, and the organization’s background.

Research the company before you invest.

You should thoroughly comprehend the company’s operations and offerings before investing. Check out the company’s financial statements using the SEC’s EDGAR database or get in touch with your state’s securities authority before purchasing any stock.

Know the investment professional.

Even if you already know the individual socially, take the time to investigate the person promoting the investment before you invest. Always confirm that the person you are speaking to is authorized to offer securities in your state, and ask if they or their companies have ever run into issues with regulators or other investors. At Investor.gov, you may swiftly and cost-freely look up an investing professional’s disciplinary record.

Never judge a person’s integrity by how they sound.

Be cautious since skilled con artists can pass for professionals.

Watch out for investment professionals who prey on your fears.

Con artists are aware that many seniors are concerned about the sufficiency of their retirement assets, particularly if they are expected to incur high medical costs. As a result, con artists frequently promote schemes that promise absurdly high rates of return.

Take your time—don’t be rushed into investment decisions.

It doesn’t necessarily follow that you will succeed financially just because someone you know did or says they did. Be especially wary of investments advertised as “once-in-a-lifetime” opportunities, especially if the promoter relies on “inside” or private information to support the advice.

Be wary of unsolicited offers.

Be extra cautious if you get an obnoxious call or email about a company or see it extolled on a message board on the internet, but you can only discover current financial information about it from reliable sources.

Don’t lose sight of your investments. 

Never rely on an investment advisor who tells you to “leave everything to me”; always keep an eye on your account’s activities and ask for regular statements. Never hesitate to ask questions about any trade activity you don’t understand. Keep in mind it’s your money.

Question why you cannot retrieve your principal or cash out your profits.

If your financial advisor hesitates when you ask for your principal or profits, they may have already taken your cash. Never believe excuses for why your money is out of reach or advice to reinvest your “earnings” in different ventures.

Never be afraid to complain.

Do not let embarrassment or worry that you may be deemed incapable of managing your affairs keep you from filing a complaint with the SEC, FINRA, or your state securities regulator if you suspect fraud or a questionable practice and the explanations you receive are not adequate.

Fraud Warning Signs To Watch Out For

  • If the investment offered sounds too good to be true, it is. 
  • “Guaranteed returns” investment. This is often untrue, as every investment has some risk. Low risk generally means low returns, and high yields typically involve high risk.
  • Pretty and professional-looking websites as a front. Don’t be fooled easily by these, as they are easy to create.
  • Pressure and urgency to send money RIGHT NOW.
  • Being contacted ‘out of the blue.’ It could be a knock on the door, a phone call, or a piece of mail you weren’t expecting.

Where to Get Help

Here is some important contact information for frauds and scams that you need to know.


Telephone: (800) 732-0330

Fax: (202) 772-9295 

You also can send an online complaint form (www.sec.gov/complaint.shtml) or email them to help@sec.gov. 

To Find Your State Regulator:

(202) 737-0900

Visit their website: nasaa.org

FINRA Securities Helpline for Seniors: (844) 574-3577


Sadly, seniors are the preferred targets for many con artists and scammers as they are especially trusting and vulnerable. Hence, it is important to know any hints and warning signs of a scam and what these frauds are.

Stay up-to-date on the latest scams targeting senior citizens. Look for the warning signs of identity theft and fraud and talk about anything that feels suspicious. 

If you sense that you are being financially abused, it’s best to speak about it with your family members instead of keeping it to yourself so they can help you recover or protect your assets.

Make sure to have the contact information of agencies responsible for handling these scams ready, so you can easily contact them when you encounter suspicious calls, emails, or messages.

To learn more about other senior financial matters we’ve created a guide that will help you navigate through finances involved in retirement.