Every day, in many ways, older people are targeted for money. From bogus calls and mail to dodgy financial advisors, here are the scams to watch for, and signs your parents are being targeted.
Scam letters in the post
I will never forget the tragic story of a man who was going through the estate and belongings of his dad, who had just died in his 90th year. Instead of the collection of old photographs and treasured mementos you would normally expect to find, the son found that his father – completely unknown to him – had literally sackloads of mail from firms telling him he had been entered into prize draws and begging letters.
Examination of his dad's bank account revealed that he had been paying out thousands of pounds for years to these firms and hadn't received a penny in return. Nearly all his money had gone this way and perhaps the stress and the worry of being systematically conned had hastened his end.
There was nothing the son could do but report these firms that had targeted his dad with bogus prize draws and begging letters to trading standards. But as they were invariably based overseas there was little even the authorities could do.
This is an extreme example of what can happen to elderly parents who are targeted by the scammers, but it happens in all sorts of different guises each day.
How can your parents avoid it, what are the main threats to their financial wellbeing, and what are the tell-tale signs to watch for?
This is a remarkably straightforward, longstanding but disturbingly effective scam. The victim is contacted by phone, email or – in the case of the elderly – by post and told that they have won a prize. Usually this involves a purportedly foreign lottery such as the Spanish or Canadian. Unusually, the victim hasn't actually purchased any ticket but has been selected at random as a winner.
Of course it may seem ridiculous to think that you could win a lottery based outside the UK without ever buying a ticket; after all, what would be the point to the organisers of giving their money away without any return?
However, as one trading standards officer explained to me, many elderly people are intrinsically trusting and this is why they are targeted.
In return for the prize, the lottery organiser asks for 'administration fees and taxes' to be paid in advance – normally by money transfer – before the supposedly large cash prize is released to the winner (make that 'victim'). And yes, you guessed it, the administration fees and tax money disappear into the pocket of the scammer and the cash prize is never released.
Often it is surprisingly successful people who fall victim to this scam. I once spoke to a retired company director who lost £21,000 through a Canadian lottery scam. He was strung along by the fraudsters and kept receiving requests for more and more cash to cover fees and taxes until the victim realised they had been had.
After the last payment he was told that someone would be arriving at his house with a cheque and a bunch of flowers for his wife and guess what? No one ever came.
The bogus prize draw
A variant of the lottery scam is a prize draw with lots of fabulous sounding prizes but with a bang ordinary one hidden in the middle such as "win a car, speedboat, holiday villa, necklace or £50,000 a year for life". Spot the odd one out on this list? Yes, the necklace. There may be no car, villa or cash to be won but there are undoubtedly thousands of tatty worthless necklaces.
The victim responds again to a request to a 'prize administration fee', which can be in the hundreds of pounds but the prizes look so good that that seems a price worth paying. Only when they hand over the cash do they get the necklace or some other worthless item. This scam is illegal but again, like lottery fraudsters, very few of the crooks are actually caught.
Spotting phishing scams
This scam plays on people's greed and also in some cases their goodwill. An email or letter is received, purporting to be from someone in trouble – often based overseas – who asks to be able to access a bank account through which they want to filter their life savings. In return, they offer a one-off payment, normally of spectacular proportions for effectively helping them launder their money.
However, like the lottery scam, there are upfront fees to be paid to help with the transfer of funds and if they are given bank account details these are often used to empty them of funds.
The likes of Trading Standards, Financial Conduct Authority and Citizens Advice normally caution the public to beware such scams, do proper checks and if something sounds good to be true then it probably is. But the likes of Which? go further and say that instead of doing checks on these lotteries or bogus prize draws, just ignore them full stop.
Dodgy financial advisers
The majority of financial advisers are legitimate and do a thoroughly good job for their clients. However, there are some that operate with the express intention of getting sales rather than recommending services and products that are best for their clients. The recent banning of commission selling by financial advisers has helped end some of the worst excesses.
However, there are still 'financial advisers' who are unlicensed, who look to persuade normally elderly people, who generally have the highest value savings and property, to invest in supposedly tax efficient investments and offshore savings or agree to pension unlocking. This is when a pension pot is transferred into an investment vehicle which pays a lump sum out to the pension pot holder (normally ten to 20 per cent of the sum saved), with the remaining funds invested in high-risk, unregulated investments that often have high fees.
The upshot is that your parent may get a cash pay-out through unlocking their pension. But they will probably see the rest of their money disappear in fees or into a dodgy investment that may crash and burn.
Five signs that your parents are being scammed
Many of the signs of a parent who could be being ripped off are similar to any one in distress and under pressure. Watch for all of these:
They have become withdrawn and locked in their own thoughts.
They are borrowing money.
They have suddenly stopped spending money and seem to be living more frugally than normal.
They receive a large amount of unsolicited mail. This could mean their name has been added to a 'sucker list', which is when fraudsters sell on the details of people they have hoodwinked to other would-be fraudsters.
There is someone new in their life who wants to get them involved in investments or who is offering to take care of their finances. This person maybe a unregulated financial adviser.
Revealed: The 10 most common scams
How to stop elderly parents being scammed
More than 12 million pieces of personal information were illegally traded online by identity fraudsters in the first quarter of 2012 alone, according to data from Experian CreditExpert- outstripping the entire of 2010.
The vast majority (90%) of this illegally traded information is password and log in combinations - a result of the spiralling number of online accounts many of us now have. Research shows the average Brit uses around five different passwords online, but with an average of 26 different accounts each – this is nowhere near enough protection.
"Using a different password for each account will minimise risks, but if password information is stolen from a website, all accounts using the same details will be compromised, and this information can spread among fraudsters rapidly," warns Peter Turner, managing director at Experian Consumer Services in the UK and Ireland.
Credit and store cards continue to prove particularly attractive to fraudsters and 2012 year has seen 73% surge in the takeover of plastic card accounts by criminals with nearly one quarter of all identity frauds, and 36% of all account takeovers, taking place on these cards.
Richard Hurley, communications manager at CIFAS explains the threat: "Whether it is through using an innocent party's details to open a new account in the victim's name, or hijacking the victim's details and taking over existing accounts, the modern fraudster will continue to pay specific attention to credit and store card accounts as an easy way of obtaining funds and goods, while leaving someone else to pick up the bill."
As if the mis-selling of payment protection insurance (PPI) wasn't scandal enough, 2012 has seen fraudsters preying on PPI victims. Consumers have received phone calls from someone who knows their name, announcing that they have won their PPI claim. The caller may also know the lender's name and an estimate of the loan amount.
However, the caller will then request a payment from the consumer in order to receive their compensation. This should signal warning bells, but many innocent victims have fallen for the scam and parted with money only for the bogus firm to disappear with their cash, and of course the compensation that never existed.
Consumers should be wary of all cold calls, particularly those that request cash upfront. There is no need to pay to make a claim for mis-sold PPI – you can claim direct to your bank for free and receive free advice from debt charities like Citizens Advice and the Consumer Credit Counselling Service.
If you do choose to take on the assistance of a claims management firm – never agree to an upfront payment. Reputable firms will only request payment for their services once you have received your compensation from your lender either by cheque or by payment into your bank account.
Phishing – when an unsolicited email arrives in your inbox requesting details to your personal accounts – continues to rise, leading to a surge in online banking fraud. Online banking fraud losses totaled £21.6 million during January to June 2012, according to CIFAS - a 28% increase on the 2011 half-year figure.
The emails trick customers into visiting fake banking websites – often made to look startlingly similar to the real thing - and disclosing their online banking login details. Online banking customers are also being tricked into divulging their bank login details and passwords over the phone to someone they believe is from their bank but is actually a fraudster.
The key point to remember is that banks will never contact you by phone or email and ask you to disclose your details, so always beware correspondence of this nature. Consumers should also be cautious of emails purporting to be from government bodies such as HMRC, or other financial accounts, such as Paypal.
There were over 50 different scams known to the 2012 Olympic Committee, with fraudsters cashing in on the good-natured spirit of the Games and nationwide scramble for tickets. The vast majority of scams took the form of phishing emails – purporting bogus job offers; prize draws; lottery wins and complimentary tickets – all with the sole purpose of duping consumers into sharing personal details or parting with cash in order to claim prizes.
Official tickets for the London 2012 Games were only available for purchase through the London 2012 website and appointed ticketing partners, so any other sources were offering fake or non-existent tickets. As for competition prizes and lottery wins – consumers should remember that it is impossible to win a competition or draw that you did not knowingly enter and that if a prize seems too be good to be true, it probably is.
Insurance is an incredibly complex area of personal finance and different forms of cover are riddled with different hitches that make it crucial to read the small print. Failure to do so could lead you to pay for a product you would be never be able to claim upon, or unknowingly do something that invalidates your claim.
Always buy the right level of cover for your needs and pay close attention to any exclusions in the policy wording. For example, many travel insurance policies for winter sports won't pay out for treatment of injuries incurred while under the influence of alcohol.
Surely the lowest of the low, charity donation fraud – when fake charities play on our sympathy by requesting donations to a worthy cause – is on the rise. Donation requests come in the form of unsolicited emails; phone calls; house visits or being approached in a public place. In many cases, donation requests are linked to a high-profile event, such as Hurricane Sandy that wreaked havoc across America last month.
Either the charity that the fraudster has asked you to donate to doesn't exist, or they are misusing the name of a genuine, often well-known, charity and pocketing your money.
Don't let fraud risks put you off donating – just make the necessary checks to ensure your money is going to the intended cause. Genuine charities are registered with the Charity Commission and print their registration details on all documentation, collection bags and envelopes, so check these details exist and if in doubt, contact the Charity Commission to confirm that they are authentic. Call the helpline on 0845 300 0218 or check the online charity register by visiting charity-commission.gov.uk.
Cases of cash machine fraud, where a device is used to trap money inside the ATM machine, have increased more than 15-fold in London in the past three months. Reported incidents have risen from 150 across the UK in May, to 2,500 in London alone in August, according to figures from Link and London's Dedicated Cheque and Plastic Crime Unit (DCPCU).
Criminals insert a device called a cash claw behind the guard on the cash drawer of an ATM. The device is undetectable to the public, who use the machine as normal until their cash fails to eject.
"The machine goes out of service and then the criminal comes along, forces open the drawer using a pair of pliers or a screwdriver, forces the device out of the cash machine, bringing the customer's money with it," explains Detective Chief Inspector Dave Carter, head of the DCPCU.
Customers are advised to immediately report any banknotes undelivered from cash machines.
Rogue property developers selling land that they claim has great investment value, when there is little or no chance of it ever being developed, are on the rise again this year. Investigations have lead to a number of convictions in 2012, yet consumers are warned to be remain wary of this big money scam.
Land banking involves plots of land offered for sale, often online, with the promise of sizable returns when planning permission is approved for housing or other development. Yet often the land is located in areas protected from development by planning law.
The companies involved soon disappear with investors' money and as the firms are not protected by the Financial Services Authority, their funds are not covered by the Financial Services Compensation Scheme.
In October, PhonepayPlus (the UK's premium rate telephone regulator) fined two firms a total of £450,000 for running a series of voucher scams on Facebook.
The scams, which claimed to offer free vouchers and supermarket gift cards for Tesco and Asda, resulted in members of the public signing-up for expensive premium-rate phone services.
The scams relied on Facebook users innocently sharing or liking the voucher promotions on their status, which included the promise of a voucher worth up to £250 for major retailers. After clicking on the promotion consumers were duped into participating in premium rate competitions, which involved questions sent to their phone at a cost of £5 each.