Scams targeting older people who have saved money for years are becoming more common. According to the FBI’s 2023 Elder Fraud Report, the agency’s Internet Crime Complaint Center reported that total losses from scams targeting people ages 60 and older were $3.4 billion – an 11% increase from the previous year. In addition, according to a recent AARP study, 12% of people ages 55 to 64 and 11% of people ages 65 and older reported being victims of fraud in the past year.
While all types of fraud are concerning, scams that affect retirement funds can be financially devastating, with the potential to wipe out a lifetime’s savings. Seniors need to be especially vigilant to protect themselves from these growing threats.
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Types of retirement savings fraud
There are several types of retirement scams, some of which are quite sophisticated.
According to a New York Times report, “Fraudsters pose as government officials, technical support representatives or mistresses. They tell their victims how to circumvent financial institutions’ fraud prevention measures, and they use manipulative psychological tactics – isolation, a sense of urgency or exploiting people’s willingness to trust or commit – to keep the scam going.”
In a recent scam, victims were tricked into investing their retirement savings in gold.
As Yahoo! Finance reports, investors in several U.S. states, including California, Florida, Tennessee and Washington, have alleged that the now-defunct Oxford Gold Group—a company that supposedly specialized in helping individuals invest in precious metals through retirement accounts such as IRAs—misused their retirement funds.
Greg Dahl, one of the victims, was promised by Oxford Gold Group that his retirement savings would be invested in physical gold coins held in a Utah depository through a third-party service called Equity Trust. However, after receiving a letter stating that Oxford Gold Group and Equity Trust had ended their business relationship, Dahl called the depository to ask about his gold. Unfortunately, he discovered that the depository had no record of the transaction.
As other victims had similar experiences, it became clear that Oxford Gold had left many investors in the same boat. The company has since vacated its office on Wilshire Boulevard and is no longer operational.
The California Department of Financial Protection and Innovation has warned of the risks of precious metals trading, pointing out that seniors are often targeted because of their high retirement savings.
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What to do if you lose your retirement savings to a fraudster?
Bill Ryze, a Tennessee certified financial advisor (ChFC) and board advisor at Fiona, said, “Losing all your retirement savings to a scam is painful. I advise you to take the following four steps immediately to get the money back and avoid such incidents in the future.”
Report the incident to the local police and your bank
Ryze said you must first report the incident to your local police department or sheriff’s office.
“I also advise you to report the incident to your bank,” he said. “They can assist you with further investigations and refer you to the relevant authorities. Please explain the incident to the police in detail. Criminals usually follow a set procedure. Give the police as much information as possible so they can identify the people behind the fraud.”
Take steps to protect your identity in the future
The second step is to protect your identity, Ryze said.
“Many people would recommend it as if you were locking the door after the horse ran away. However, protecting your identity can help prevent you from becoming a victim again,” he said.
It also helps if you accidentally shared personal information like your social security number or bank account details,” Ryze explained. “I also recommend placing a fraud alert on your credit file or requesting a free security freeze.”
Block access to your financial accounts
Once you’ve fallen victim to a scam, you need to be extra vigilant, Ryze said.
“Take the necessary steps to block unauthorized access to your financial accounts, including access to your smartphone, PC or laptop,” he explained. “I suggest enabling multi-factor authentication (MFA) for additional security.”
Consider legal action
“If you suspect tax fraud in your retirement plan, I encourage you to submit a request for information (Form 3949-A) to the IRS,” Ryze said. “I also recommend consulting a tax advisor if significant amounts of money are at stake.”
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This article originally appeared on GOBankingRates.com: 4 Things to Do If You Lose Your Retirement Savings to a Scammer
