It is unbelievable what some thieves are up to. We just have to chuckle at the number of strange and weird heists that happen around the globe. In France, 61 beehives that held over 25,000 bees worth approximately $83,000 were stolen; in the German town of Bad Hersfeld, bandits pilfered 5.5 tons of Nutella with a street value of no more than $20,000; using fake work documents, robbers in the Czech Republic dismantled a pedestrian bridge for scrap metal valued at $6,000; and burglars stole 10 million pounds of maple syrup worth $30 million from a warehouse in Quebec.1 A growing number of scams affect our nation, particularly those who are 55 or older, with an estimated loss of about $3 billion a year.
Scam artists are at work in practically every aspect of our society and lifestyle. Here are a few of the most common scams:
Romance scammers charm potential victims then ultimately ask for money for an airfare ticket to come and visit. In 2012, this cost Americans who are 50 and older a minimum of $39 million ($34 million for women and $5 million for men). The average financial loss from romantic schemes is over $10,000 per individual.2
Unscrupulous, unlicensed contractors will turn up at your front door claiming that they noticed certain house repairs or the need for paint refurbishing while passing by. Unfortunately, they often do shoddy work such as applying motor oil to recoat driveways, or they complete legitimate repairs but at exorbitant prices. Some demand upfront payment for materials and then vanish with the money while others continue to recommend more renovations until the homeowner is bled dry.3
Most people will step up to help others if needed and older folks are usually the first to open their hearts and wallets. Everyday in the mail or over the phone these scam artists will feign aid for destitute and sick kids, victims of recent local and overseas disasters, and local groups such as veterans, police, and firemen. Never entrust credit card information to telephone solicitors and stick with well-known and reputable organizations.4
These come in a variety of practices. One of the common methods is to persuade individuals over the phone that their absolutely 'no risk' products are the best investments whether they are stocks, rental properties, valuable metals, or gas and oil drilling operations. Others mail invitations to a free-lunch workshop where the speaker peddles questionable financial products or legitimate ones that are inapt for seniors. A recent study indicated that elderly investors who fall for these financial products lose an average of over $140,000.5
Some fraudulent promoters who claim to have trading expertise offer to either set up or manage your portfolio. Without the legal safeguards of a registered broker this often leads to substantial stock losses and the theft of the initial principal. The most often seen financial scam is the Ponzi scheme with its telltale red flag—the promise of a high return with very little risk and a plausible-sounding justification of why this is a terrific investment.6
If you should fall prey to a scam, don't be like the 60 percent of fraud victims who never report the crime out of sheer embarrassment. Go to the U.S. Justice Department's website, stopfraud.gov, and it will guide you through the complaint process. If losses cannot be recovered due to circumstances, reporting the situation to the authorities will at least be therapeutic.
Beware of Identity Theft
If identity theft hasn't happened to you, consider yourself fortunate. In 2013, according to the Department of Justice, there were over 16 million reported cases of identity theft which accounted for more than $14 billion in losses—more than all the vehicle thefts and home burglaries that year. We have heard the recent stories about Bank of America, Sony, and Target being hacked. According to the San Diego–based Identify Theft Resource Center, it takes six hundred hours to clean up the mess after an identity has been stolen.
To avoid getting scammed, the biggest challenge is remembering a host of IDs and passwords. According to Harris Interactive, 60 percent of Americans use a basic variation of a single code such as 'baseball' or 'letmein,' and only 40 percent have memorized a minimum of ten passwords. Our unsatisfying reliance on these codes for protection has introduced the new phrase termed, "password fatigue," which is the feeling of being overwhelmed by and inundated with keeping track of passwords.
Experts tell us to make passwords longer and more complicated by using more complex symbols, capital letters, and at least one number and one symbol, all jumbled together to make a password mnemonic. Unfortunately, these types of passwords are actually easy for a machine to crack but hard for us to remember. For best protection against identity theft, create passwords that are easy to remember but hard for a machine to crack. This can be done by making a really long password. For example: Iliveinalargehousewithabrownpooch.
This is easy to remember but exponentially harder for a hacker to break. A 10-character password takes a machine about 10 hours to crack. Add another single digit and it takes about 15 days to crack. Just add five more digits and finding the password takes two-and-a-half million years for a computer to crack.8 We can assume that we will be in heaven by then and will no longer need our accounts.
Finally, additional ideas that might prove helpful include: never clicking on email links that you are unsure of, disposing of your old computer rather than giving it away, and always using the same credit card when shopping online.
1Samantha Grossman, "Sticky Situation: $30 Million in Maple Syrup Stolen from Canada's Strategic Syrup Reserve," Time, September 2, 2012, accessed March 30, 2015, http://newsfeed.time.com/2012/09/02/sticky-situation-30-million-in-maple-syrup-stolen-from-canadas-strategic-syrup-reserve/#comments.
2Sid Kirchheimer, "How Scam Artists Target Their Prey," AARP Bulletin, January/February 2014, p. 13.
Picture originally found here
6Matt Bell, "Think You Could Never Be a Victim of Financial Fraud?" Sound Mind Investing, August 2014, p. 121.
7Jean Sahadi, "Fake IRS Phone Calls Tops List of Tax Scams," CNN Money, January 22, 2015, accessed March 30, 2015, http://money.cnn.com/2015/01/22/pf/taxes/irs-tax-scams/.
8Hanson McClain, "A Particle Physicist's Guide to Smart Passwords," January 20, 2015.