Fraudsters and scam artists are nothing new, but changing tools and technology make it easier for scammers to target their victims, especially seniors. To protect your aging parents (or yourself) from these financial scams, it's crucial to equip yourself with the knowledge of how these scams work and what your loved ones need to know to keep their assets and emotions safe.
In this two-part series, we'll explore four of the most recent and insidious financial scams that have surfaced, shedding light on their tactics and providing you with practical steps to shield your parents from potential harm.
One of the most challenging parts about being the victim of a scam is the emotional and mental stress it usually causes. Scammers intentionally use urgency, alarm, or guilt to trick victims into making hurried decisions to send money to someone who needs "help."
In the new "Grandparent Scam," fraudsters will call or text senior adults pretending to be their grandchild. The scammer will claim that they're in trouble. They need the grandparent to send them money immediately to bail them out of jail, buy a ticket home from a dangerous location, or pay for damages caused by a car accident.
In these scenarios, the scammer will usually ask the grandparent, "Grandma, do you know who this is?" to trick the grandparent into revealing their grandchild's name so the scammer can use that name for the rest of the phone call. The scammer will then ask the grandparent to wire money to "help" the grandchild and ask that the grandparent don't tell the grandchild's parents for fear of them getting upset.
Some scammers even use AI to disguise their voices while on the phone with the grandparent to sound more convincing. This scam preys on our parents' love and concern for their children and grandchildren and can easily cause young or tech-savvy parents to fall victim.
To protect your parents from being victimized by this scam, talk to them about the importance of never disclosing personal or financial information or the names of their loved ones in a text, phone call, or email. Instead, instruct them to ask who the caller is and to wait for the sender or caller to respond. If in doubt, the senior should ask the sender personal questions that only their real grandchild would know, but a scammer wouldn't. Most importantly, encourage your parents to contact you before wiring or transferring money to anyone for any purpose, no matter what.
One strategy we particularly love is to have a family code word or phrase. For example, your code phrase may be "Cosmo is a spotted dog." Everyone in the family would know that code phrase so that if anyone is contacted in an emergency, the person could ask what's our code phrase, and the person calling, texting, or emailing either knows it or doesn't. And, if they don't, it's a no-go for help.
The cryptocurrency world perhaps brings new investment opportunities for those willing to try it out, but new risks and safety measures come with this new financial arena.
You will need a digital wallet to store cryptocurrency, as that's the safest way to hold your cryptocurrency. Your cryptocurrency wallet doesn't actually "store" money like a traditional wallet; instead, it stores passcodes, known as keys, that allow you to send and receive digital currency to and from the wallet.
Wallets come in two forms: hot and cold. A "hot" wallet stores your cryptocurrency in a location connected to the internet—exchange-based, desktop, and mobile wallets. Because they're connected to the internet, hot wallets are the most convenient and vulnerable to hacking.
Conversely, a "cold" wallet stores your cryptocurrency in an entirely offline location. Ironically, the most secure type of wallet for storing digital currency is a cold "paper" wallet. Paper wallets involve printing out your keys and storing them in a secure location. While paper wallets are the most secure option, if you lose the codes, it's the same as losing paper currency—meaning there is no way to recover your investment.
But no matter what kind of wallet your loved one keeps their crypto in, anyone with the "key" to that wallet can access and steal the funds - no hacking required.
To access your wallet, scammers will lure you into giving them your wallet's key by pretending to be representatives of a cryptocurrency company like Bitcoin or Coinbase or by portraying themselves as a crypto broker. Once the scammer has your keys, your cryptocurrency is vulnerable, even if kept in a "cold" offline wallet.
With the keys, the scammer can move your crypto out of your wallet and disappear forever. Since the cryptocurrency market is not attached to the banking system, there is no way to recover cryptocurrency once it's stolen.
To help protect your parents from these financial scams, talk to them about the importance of never sharing their wallet keys with anyone besides you and any other trusted family members. This is essential to keep your parents' crypto investments safe.
In all cases, whether your loved ones have crypto in a hot wallet, paper wallet, or directly in a crypto exchange, make sure they've given you the details of where their crypto is stored and how to access it if they're incapacitated or die. Otherwise, it's completely lost.
If you don't know how to find and access your parent's cryptocurrency in an emergency or don't know how best to plan for your crypto, please talk with us so we can guide you on including your crypto information in your estate plan.
Your parents' financial security is a priority that demands proactive measures, especially in the face of emerging scams that exploit their vulnerability. By remaining vigilant and arming yourself with knowledge of these scams, you can effectively shield your family from falling prey to these fraudsters.
But remember, communication is critical. Talk openly with your parents about these potential risks, and encourage them to contact you or a trusted professional before making any financial decisions.
As your Personal Family Lawyer firm, we're here to guide you through the intricacies of safeguarding your family's financial future. We can make it even easier to protect your parents by helping them establish estate planning tools to record and pass on digital assets like crypto, Powers of Attorney to help manage their assets—trusts to protect everything they love for years to come.
To learn how we can help you protect your parents from these scams, schedule a call with us today by clicking the button below, and stay tuned for the next installment of our series, where we'll dive into two more financial scams you and your senior parents need to know about.
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