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Be Suspicious

Paul Merriman

THIS IS NOT MY favorite topic. But it’s a necessary one these days—when a seemingly endless number of companies and individuals are intent on separating us from our money. Some of them will use any means, fair or foul.

I’m going to share a story about a longtime friend whose kindness and generous nature were used against him when he was vulnerable. As much as anyone I’ve ever known, my friend—I’ll call him Bill—was a gentle man and a gentleman. He treated everybody with respect. He was honest and trustworthy. And he was always willing to help somebody in need.

A few years ago, after his wife passed away, Bill came to regard opening his mail as a daily highlight. We all know the usual content of the mail. If you separated your mail into two piles, one for people or organizations sending you money and the other for people or organizations wanting your money, almost everything would go on the second pile.

Now imagine that reality from Bill’s point of view: The mail is an important regular event, you read every piece of mail and you never want to say no. Bill’s generosity was his ticket to a growing number of mailing lists that charitable organizations bought and sold.

Fortunately, Bill made friends with a woman who we’ll call Anita, a nurse he had met at a hospital during his wife’s last illness. Anita lived near Bill and eventually became his caregiver.

One day, when Anita stopped by his house, Bill told her he had just gone to the bank. What she heard prompted her to offer to help with his bills and finances. Bill always answered the phone, and the previous day he had said yes to somebody who asked him to wire money directly from his bank account.

Bill wired $1,600. The following day, the same person called back to say that the wire transfer had not gone through. He asked Bill to send the $1,600 again. Bill went to the bank and—fortunately for him, but not for the scammer—the teller knew Bill. She not only stopped him from making that transaction, but also helped him report a fraud claim.

Anita soon learned that, in just one month, Bill had written 108 checks to 14 charities and political organizations. The checks were small, usually $10 to $25 each. But they added up to a hefty financial outflow.

Then she found that Bill had somehow signed up for monthly withdrawals from his bank account for things like “internet repair services,” extended warranties on items he no longer owned and undefined technical support. He was unaware of these “services” he had been buying. At his bank’s suggestion, Bill closed his account, though he didn’t want to because he had memorized the account number.

Anita suspected that he was being taken advantage of in other ways. Oh, was she ever right. She noticed he was receiving large boxes filled with materials that apparently were part of a “start your own business from home” scheme he had signed up for, thinking it would give him something to do. She opened one of the boxes and discovered it contained an invoice for $325 for “supplies and pamphlets.”

The damage from that particular scam was much larger, as I discovered when I got involved. All told, Bill’s efforts to keep busy and be useful cost him more than $100,000.

Fortunately, Bill completely trusted Anita, and soon she got his financial affairs under control. Among other things, she persuaded him to let her review whatever checks he wrote before he put them in the mail. And she set up a laptop in a way that made it easy for them to monitor his bank account.

Unfortunately, many other seniors don’t have somebody like Anita to help them. Sometimes, the “helper” turns out to be the scoundrel. I knew a retired couple who relied on the choir director at their church for investment advice. When they inherited $50,000—a very substantial sum to them—they turned to this “friend.”

The choir director was not a fiduciary advisor, and he had become very good at gaining the trust of parishioners. Maybe you can sense where this is going. From any objective viewpoint, this couple had a pretty low risk tolerance. They could not afford to lose this money.

Nevertheless, once the choir director learned of the couple’s inheritance, he persuaded them to invest in limited partnerships—thus earning himself some hefty sales commissions. One limited partnership was invested in a coal-mining venture. Another was financing a grove of palm trees in South America. With a friend like this, do you need an enemy?

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If I hadn’t intervened, the couple most likely would have lost all their money while the choir director kept his commissions. But after we threatened legal action against the choir director and the firm he worked for, the couple recovered all their money.

Another story comes from a friend who worked for a moving and storage company. An elderly man living in a downtown Seattle hotel, with daily visits from a paid caregiver, occasionally ordered things online. He received packages that, with the hotel’s blessing, were delivered directly to his room.

One day, a UPS driver realized she was delivering six to eight packages a day to this man, and she sensed something might be amiss. It didn’t take long for the driver to determine that most of the deliveries were things the caregiver had ordered for herself, but was charging to the man’s credit card. Fortunately, the solution was simple: a new credit card number—and a new caregiver.

There are countless other ways that older people are taken advantage of: COVID-19 scams, banking scams, phone scams, IRS scams, charity scams, investment scams, pyramid schemes. The U.S. government has created an excellent online resource to help identify these and more—and to protect yourself or somebody you care about.

If you use email, you are a target. You may get messages asking you to confirm “account information,” including your phone number and shipping address. Maybe there’s “a problem with your bank account”—even a bank where you don’t have an account.

What to do? Maybe the No. 1 all-purpose suggestion I have is to simply slow down. No transaction you’re likely to make is so urgent that it can’t wait for you to think about it or get a second opinion from someone who has earned your trust. Educate yourself using the government’s website. Don’t give out personal information by phone unless you initiated the call.

I hate the need to give blanket advice to be suspicious. But as too many people have learned the hard way, that can be very good advice. In fact, that advice could save you more dollars than you care to think about.

Paul Merriman runs PaulMerriman.com, a site dedicated to financial education. Richard Buck contributed to the above article. Paul and Richard are the authors of “We’re Talking Millions! 12 Simple Ways to Supercharge Your Retirement,” which is also available as a free PDF.

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UofODuck
UofODuck
7 months ago

I worked for over 40 years in the personal financial services business and saw far too many seniors who had been taken advantage of – personally and financially. There is a tendency to believe that if someone has an estate plan and power of attorney in place, they are protected from fraud. Unfortunately, this is far from true as family members/designated representatives may wait too long to step in when a senior needs help. Mom or Dad may be able to dress and feed themselves, pay their bills (we think) and even drive to the bank, but what we may not be able to see (or choose not to see) is that their decision making capabilities have eroded to the point where help is needed.

Complicating matters may include a senior who is convinced that they are OK and who will resist any and all efforts of help. A legitimate need to intervene and help Mom or Dad may be met with threats of disinheritance and refusals to meet and discuss their needs.

Unfortunately, these situations are not rare and are often compounded by unscrupulous care providers or disaffected relatives who are aided by unethical or misguided financial and legal advisors (paid for by Mom or Dad).

There is no sure fire cure for any of this, but it matters greatly who we ask to hold our power of attorney and their ability to step in and take action when needed, even when Mom or Dad say otherwise. Our power holder should not be a committee of 2 or more people and should not be someone our own age. Pick one person who lives nearby, who is 20 years or more younger and who you have confidence will make tough decisions when you are no longer able to.

R Parker Slayton
R Parker Slayton
7 months ago

Paul,

I love your podcasts and articles. They are some of the best!

I have listened to so many of your podcasts, I can hear your voice talking when I read your articles LOL.

Thank you for all you do!

Mark Schwartz
Mark Schwartz
7 months ago

Great reminder about elderly financial abuse and how easy it can happen.

Thomas Taylor
Thomas Taylor
7 months ago

Thanks for the article. I think everyone has a story in their personal and/or professional life with these types of issues. It seems a never ending task to defend yourself against the mail, email, calls and texts trying to separate you from your money. Even the legitimate charities irk me sometimes. I have one that does good work and I’ve supported for many years. I make monthly automatic gifts and have asked numerous times to please take me off their mailing list. I still get a request in the mail about once a month on average. Over the years, I’ve have just learned to shred most requests from this one and most other organizations. I don’t answer my phone for unknown numbers and if you are not in my contact list, it won’t ring. I figure if it’s legitimate, they will leave a message. Nobody has left a message yet. The emails and texts are getting quite sophisticated. It’s scary.

booch221
booch221
7 months ago

One of your best columns ever, Paul.

R Quinn
R Quinn
7 months ago

Very important article reflecting a serious problem.

Jerry Pinkard
Jerry Pinkard
7 months ago

Thank you for your article and its great advice. I was the IT Director for a large organization and many vendors and consultants pitched their wares to me. I told my staff I assumed they were all crooks until they proved otherwise. That seemed to both some of my staff but that approach served me well. Alsoi, i had an extensive network of colleagues around the country, and there was usually colleagues who had dealt with whomever I was planning to use for work. I very rarely got taken by some unscrupulous person.

As a retiree, I use a similar strategy. Never assume a salesperson has your best interests at heart. Be very deliberate in engaging people to do work and make sure you have a written contract that protects you, and that clearly defines the scope of work and acceptance criteria for payment.

I am 77 and can no longer keep up with my home maintenance and 2 acres of land. I have to hire people to do various things. I am very careful who I hire. I get references from friends and make sure contractors have insurance and proper licenses. I never pay up front for work but will make progress payments if it is a larger project.

Maybe I am just paranoid, but it seems we have far more fly by night and crooked people than we had years ago. The current labor shortage seems to exacerbate that problem.

John

Rick Connor
Rick Connor
7 months ago

Terrific article. Thanks especially for the link to the govt fraud site. I took care of the finances for my mother, mother-in-law, and my wife’s widowed aunt. My biggest concern was elder fraud. The aunt, especially, was open to lots of charities, and carried too much cash.

The stories you tell ring so true. I have a good friend whose brother and his wife goth their parents to sing over the best land of the family farm. The remaining siblings get basically nothing.

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