Help Your Parents Avoid These New Financial Scams - Part 1
Protecting Your Parents from Modern Scams: Part 1
Fraudsters and scam artists have been around for ages, but today's technology makes it easier than ever for them to target victims, especially seniors. To safeguard your aging parents (or yourself) from these con artists, it's crucial to understand how these scams operate and what your loved ones need to know to keep their assets and emotions safe.
In this two-part series, we’ll delve into four of the latest and most insidious financial scams, explaining their tactics and providing practical steps to protect your parents from potential harm.
1. The Grandparent Scam
One of the most distressing aspects of falling victim to a scam is the emotional and mental strain it causes. Scammers exploit urgency, alarm, or guilt to trick victims into making quick decisions to send money to someone who supposedly needs “help.”
In the "Grandparent Scam," fraudsters call or text seniors pretending to be their grandchild. They claim to be in trouble and urgently need money to get out of jail, buy a ticket home from a dangerous location, or pay for car accident damages.
The scammer typically starts by saying, “Grandma, do you know who this is?” This prompts the grandparent to reveal the name of their grandchild, which the scammer then uses for the rest of the conversation. The scammer asks the grandparent to wire money and to keep it a secret from the grandchild’s parents to avoid upsetting them.
Some scammers even use AI to disguise their voices to sound more convincing. This scam preys on the love and concern grandparents have for their grandchildren and can easily ensnare even tech-savvy individuals.
How to Protect Against This Scam:
Educate: Discuss the importance of never disclosing personal or financial information or the names of loved ones in unsolicited texts, calls, or emails.
Verify: Instruct your parents to ask the caller to identify themselves and to verify their identity by asking personal questions only the real grandchild would know.
Family Code Word: Establish a family code word or phrase, known only to family members, to verify identities in emergency situations.
Consult: Encourage your parents to contact you before wiring or transferring money to anyone for any reason.
2. Pick-Pocketing Your Crypto Wallet
The rise of cryptocurrency has introduced new investment opportunities, but it also brings new risks.
To store cryptocurrency, a digital wallet is necessary. This wallet doesn’t actually store money like a traditional wallet; instead, it holds passcodes, or keys, allowing you to send and receive digital currency.
Types of Wallets:
Hot Wallets: Connected to the internet (e.g., exchange-based, desktop, mobile wallets). These are convenient but vulnerable to hacking.
Cold Wallets: Offline storage (e.g., paper wallets). These are more secure but if you lose the keys, the currency is irrecoverable.
Regardless of the wallet type, anyone with the key can access and steal the funds.
How the Scam Works: Scammers may pose as representatives from cryptocurrency companies or as crypto brokers, tricking you into giving them your wallet’s key. Once they have it, they can transfer your crypto out of your wallet and disappear with it. Since cryptocurrency markets are detached from traditional banking systems, recovering stolen crypto is impossible.
How to Protect Against This Scam:
Guard Keys: Advise your parents never to share their wallet keys with anyone except trusted family members.
Documentation: Ensure your parents have documented where their crypto is stored and how to access it in case of incapacity or death.
Taking Steps to Protect Your Loved Ones
Your parents' financial security requires proactive measures, particularly against emerging scams targeting their vulnerability. By staying vigilant and educating yourself about these scams, you can effectively protect your family.
Communication is Key:
Talk openly with your parents about potential risks and encourage them to reach out to you or a trusted professional before making any financial decisions.
Stay tuned for the next installment of our series, where we’ll explore two more financial scams that you and your senior parents need to be aware of.
This article is a service of Zarda Law, S.C. We do not just draft documents; we ensure you make informed decisions about life and death, for yourself and the people you love. That's why we offer a Legacy Planning Session, during which you will get financially organized and make all the best choices for the people you love. You can begin by scheduling a Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.
