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Investment Fraud: Telemarketing Scams

While virtually anyone can fall prey to investment fraud carried out through by way of a telemarketing scam, the elderly are the most vulnerable. One of the reasons is because seniors are more likely to have substantial nest eggs, making them a tempting target for scammers. Another reason: the generation that came of age between the early 1930s and around 1950 were often raised to be more polite and trusting. It is difficult for such people to simply hang up, say no, and even believe that the person on the other end of the line is anything other than sincere and acting in their best interests.

While that may have been true over half a century ago, the world has changed. Today, telemarketing scams targeting the elderly are so common that some authorities have called it the “crime of the 21st Century.” Such scams are not always perpetrated against high-worth individuals; low-income seniors are often targeted as well. Tragically, the perpetrator of a telemarketing scam is not necessarily a stranger – in fact, only about 10% of telemarketing scams involve someone unknown to the victim. In the majority of cases, the scammer is a family member. Often, it is the adult child, but can also be a nephew, niece or even a grandchild.

Telemarketing scams are not always about promises and investment opportunities. Many times, the perpetrator plays on the victim's fears. One con game that is becoming increasingly common is the IRS scam. The target will receive a threatening phone call from someone claiming to be from the Internal Revenue Service or the Treasury Department (invariably, it's a recording), informing the victim that s/he owes back taxes, or is being investigated for tax fraud. The victim will then be provided with a phone number and a warning that they need to call at the earliest opportunity in order to set up a payment plan to avoid arrest.

The downside of the scam – which is specifically intended to frighten and intimidate – is that perpetrators can be extremely aggressive and convincing. Thanks to modern technology, they can view anyone's home on Google Earth, obtain information through social media sites, and gather all kinds of details about someone's life. They also engage in what is known as “spoofing,” which means that they can make a phone call look like it originates from virtually any area code in the country.

Fortunately, the very fact that it is a phone call is the one sure sign that it is a scam. The IRS will never initiate contact over a tax matter by telephone. If there is a problem, you will be contacted by mail – usually a registered or certified letter. Furthermore, the IRS has no authority to send law enforcement to your house in order to arrest you over an alleged tax violation. Taxpayers have the right to due process. Even if you find yourself owing money to the government, there are procedures that both the IRS and the taxpayer must follow (and these procedures can often take weeks or months). The best advice: if you or an elderly family member gets a threatening recorded call from a party claiming to be from the government, hang up – then report the incident to the Federal Trade Commission.

Beyond the IRS intimidation tactic, most telemarketing fraud takes the form of the “advance fee” scam, in any of its numerous variations. One of the more common schemes involves international lotteries. The victim is approached regarding enrolling in a program, allowing him/her to play lotteries all over the world with promises of “sure winnings.” The catch: there is a weekly fee that comes off the victim's credit card or checking account. Another variation of this scam involves “guaranteed” loans or “government grants.” The caller will tell the victim that s/he qualifies for these payments and needs only to pay a “small processing fee” using a credit card or checking account information. The best protection: never provide personal financial information over the telephone.

In general, it pays to be very skeptical of anyone unknown to you who initiates contact by telephone in order to offer some type of investment opportunity – particularly if such a person (even if s/he claims to be representing a business or agency) asks for payment or banking information up front. 

For more information on Elder Fraud, click Elder Abuse

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