Elder Fraud: Too Close To Home

Ten years ago my grandmother was a victim of elder fraud. In what I now know was a classic scam, a scammer contacted her by phone, claiming to be a grandchild in trouble. (It’s also common for the scammer to pose as someone representing a grandchild in trouble, such as a lawyer or law enforcement agent.) In my grandmother’s case the scammer said he was in jail and needed bail money to get out, convinced her to buy cash cards at a grocery store on his behalf, and intimidated her into staying silent.

At first glance it appears that there were a number of people who could have raised the red flag. My grandmother could have recognized that the voice on the phone was not familiar, the grocery store clerk could have noticed her odd behavior, or our family could have checked in more frequently, as the scam took days to complete. But on closer inspection none of these avenues were likely to stop the scam. Like many elderly people, my grandmother does not hear particularly well, and does not always recognize familiar voices on the phone. Employees at a grocery store are generally not empowered to intervene if they notice suspicious but legal purchases. And at the time of the scam my grandmother lived alone, making the frequent family contact needed for prevention difficult.

While we have since taken steps to prevent such fraud going forward, they were not quick or easy. My grandmother’s finances are now closely monitored by a family member, and she has moved closer to family, making frequent check-ins possible. While these were needed changes, perhaps most important is that the whole family is now aware of these dangers and will be ready to take action if anyone notices something amiss.

My grandmother’s experience is distressingly common. In 2022, adults over the age 60 reported 88,262 complaints to the FBI’s Internet Crime Complaint Center, with a total loss of $3.1 billion. This represents an 84% increase in losses as compared to losses reported in 2021. The average loss per victim was more than $35,000, and more than 5,000 victims lost over $100,000. California has the highest number of elderly victims of fraud, and the collective amount of reported losses incurred in California was $624,509,520 in 2022.[1]

The Department of Justice’s Office for Victims of Crime list the following common scams[2]:

  • Grandparent scams such as the one described above.
  • Romance scams where the scammer takes advantage of people looking for romantic partners or companionship through dating websites or social media.
  • Government investigation scams where the scammer claims to be a government employee and threatens to arrest or prosecute victims unless they agree to provide funds or other payments.
  • Sweepstakes/lottery/charity scams where the scammer claims to work for a charitable organization and tells the victims they won a lottery or sweepstakes, which they can collect after paying “fees/taxes”.
  • Tech support scams where the scammer acts as a technology support representative and offers to fix non-existent computer issues. The scammer gains remote access to a victim’s computer or phone and their personal information.
  • Phishing scams where the scammer uses emails and websites that claim to be associated with financial companies and manipulates victims to disclose personal and financial data. 
  • Email extortion scams where the scammer shows evidence that they have one of the victim’s online passwords and claims to have put malware on the victim’s computer that lets them capture keystrokes, watch the webcam, and track online history that may be private, such as visits to adult websites. They threaten to share this information with the victim’s contacts unless the victim pays hush money in the form of Bitcoin.
  • Cryptocurrency scams where the scammer sends a message about a virtual currency investment opportunity and claims that the virtual currency investment involves no risk and sure profits.
  • Fake check/overpayment scams where the scammer sends a bad check to pay for an item, a sweepstakes award, lottery winnings, a grant, or a scholarship and then asks that some of the money be returned for fees to claim the award or overpayment.

An increased focus on education and assistance can thwart scam attempts. One, let’s do our best to educate our elders about the pervasiveness of scammers and the types of scams they might come across. Two, let’s be sensitive to our elders who may be filling new financial shoes and walk them through how to handle everything. Three, if they are unable to take charge of their finances, agree on a trusted person to assist them whenever needed. This could be as casual as helping make a phone call to a credit card company or as involved as creating a joint account with the trusted person’s name on it. If our elders don’t feel as alone and are willing to ask for help when uncertainty arises, then as families we can better fight back against the exploitation of some of the more vulnerable members of the population.

For prevention resources or if you or someone you know has been a victim of elder fraud, visit the Office for Victims of Crime website or call the National Elder Fraud hotline at 833-FRAUD-11.

 

[1] https://www.fbi.gov/contact-us/field-offices/losangeles/news/fbi-los-angeles-raises-public-awareness-about-elder-fraud-announces-arrests-made-this-week-of-men-who-allegedly-targeted-elderly-victims-in-timeshare-scheme

[2] https://ovc.ojp.gov/program/stop-elder-fraud/common-scams-and-warning-signs

Unlikely Bedfellows: Social Security & Divorce

Through a little known Social Security benefit, our government recognizes the financial value of the work that stay-at-home moms do to support their families. We all know that the stay-at-home mom is on the job around the clock and it’s hard to put a dollar value on her estimable contributions.

But if marriage ends in divorce, the stay-at-home mom’s financial dependence can be calamitous. The opportunity cost of the mom staying home can be high, as it’s harder for her to reenter the work force the longer she is out of it. She also has to defer building a career and developing expertise, with commensurate pay, and she loses the chance to save for retirement and benefit from the magic of compounding interest. While alimony and child support can help protect a lifestyle for the mom and children post-divorce, Social Security offers a divorced spouse’s benefit to the mom to help with retirement.

Of course, these are gender-neutral benefits, and more dads now than ever are assuming the role of the supporting spouse. When I use the term mom, is it only because it is still more common that women are the ones who choose to take the off ramp, but there are certainly many dads to whom this applies.

The Rules
Divorced spouses are eligible for a benefit if:
1. They were married to their ex-spouse for 10 years.
2. They have been divorced for 2 years.
3. They are not remarried, and if they did remarry that marriage ended.
4. Their ex-spouse is eligible for benefits.

If these criteria are met, divorced spouses can claim ½ of their ex-spouse’s full retirement amount at their Full Retirement Age (FRA), which is between age 65-67 depending on their birth year, or a reduced benefit at age 62, similar to what they could claim if they were still married to their ex-spouses.

The Nitty Gritty
Must take higher benefit.
If the divorced spouse’s own benefit is higher than ½ of their ex-spouse’s benefit, the divorced spouse must take their own benefit.

Does not include delayed retirement credits.
The divorced spouse’s benefits do not include delayed retirement credits for which the ex-spouse is eligible. Delayed retirement credits accumulate when benefits are delayed past FRA, and increase by a percentage each year until they max out at age 70. For example, if the birth year is 1943 or later, benefits increase by 8% per year, which is a mighty fine rate of return.

Can optimize benefits by filing a restricted application.
If the divorced spouse was born before January 2, 1954, they can optimize their benefits and take both over time. Specifically, the divorced spouse can take the divorced spouse’s benefit, let their own benefit accumulate until it becomes higher than the divorced spouse’s benefit, then switch. This claiming strategy is considered a loophole and was closed for anyone born January 2, 1954 or later in the Bipartisan Budget Act of 2015.

Ex-spouse’s filing status is immaterial.
The ex-spouse does not need to have filed for benefits for the divorced spouse to file on the ex-spouse’s record.

Ex-spouse’s marital status is immaterial.
It doesn’t matter if the ex-spouse is remarried, as the divorced spouse’s claim to the benefit does not affect the ex-spouse’s record or the ability of any current spouse to claim benefits.

The Lowdown
There’s nothing simple about Social Security or divorce, but the welcome news is that a divorced spouse’s benefits could add up to a windfall of thousands of dollars per year. If a couple is considering divorce after 9 years and 11 months it could behoove them to wait a month. The vow “for richer or poorer” may not have endured, but Social Security has a palliative for that.