Sunday, October 4 , 2015, 7:06 pm | Partly Cloudy 59º

DA’s Office Offers Financial Abuse Prevention Tips for Seniors

Investment seminars touting a 'free' lunch and 'free' advice are among common scams

By Vicki Johnson for the District Attorney's Office |

According to the California Attorney General’s Office, the financial abuse of seniors is so rampant that it’s being called the crime of the 21st century. What’s at stake is everything our senior citizens have worked a lifetime to earn.

It is estimated that 70 percent of Californians older than age 50 have been solicited by individuals intent on defrauding them, with losses totaling more than $3 billion a year.

Each day, active, informed seniors are victimized by predators who steal their money and property. The weapons employed by these criminals are the telephone, mail, door to door solicitation, and the manipulation of close, personal relationships. Scams include fake lotteries in which the victim “winner” is asked to send a check to cover administrative fees, door to door solicitors offering repair services with the immediate payment of a check to cover “materials” and identify theft.

The amount stolen from elders nationwide as a result of these various financial scams totals about $50 billion per year, according to the National Center on Elder Abuse and the U.S. Census Bureau.

A particularly popular vehicle for separating seniors from their money is the investment seminar offering a free lunch along with free financial advice. These seminars are often promoted by out-of-town organizations and are held at local country clubs or restaurants. The fliers will advertise free information about living trusts, retirement planning, tax relief, Medi-Cal eligibility and other financial concerns. The real goal is to obtain personal contact and financial information for the purpose of selling the attendee an insurance product, such as an annuity, which nets the seller a large commission.

These products are often inappropriate for a senior’s needs, with a payout date 15 to 30 years in the future, and a substantial surrender charge if money is withdrawn sooner. An annuity often contains annual administrative fees, which the agent fails to mention. Seniors should be suspicious of sellers using any of the following predatory sales tactics:

» 1. “I’m a registered senior specialist” or “I’m a certified elder planning advisor.”

» 2. “This is a free seminar. My services are paid directly by the insurance company. I receive no commission for my sales.”

» 3. “You don’t need a lawyer. They will charge you thousands of dollars for the information I’m giving you for free.”

» 4. “The annuity is the safest place to have your money. No one has ever lost money on an annuity.”

» 5. “You better act fast to get the discounted price.” 

» 6. “This is the last day this particular annuity will be available, and I’d hate for you to miss out on this opportunity.”

In fact, an annuity is a complex financial product, confusing to even the sharpest investor.

Before you consider purchasing one, make sure you understand the terms and what charges and fees you will pay. And before you invest, always discuss the purchase with someone you trust, such as a financial advisor, attorney, accountant or responsible family member.

If you do attend one of these seminars, you would be well advised not to give the agent your contact information. Ask for the agent’s card, and tell that person you will contact them if you have any further interest in their products. State emphatically that you never make a financial decision without first consulting with your financial advisor.

If you believe that you, or a loved one, is being victimized, the Santa Barbara County District Attorney’s Office may be able to help. The District Attorney’s Office received a grant from the California Department of Insurance for the purpose of protecting consumers of life insurance and annuity products. The grant provides funds for community outreach, victim advocacy services, and the prosecution of perpetrators of insurance and annuity fraud in our community.

An advocate can assist the victim in reporting the fraud to the appropriate law enforcement agency, provide help in navigating the legal system, and work as a liaison between law enforcement, the department of insurance and the District Attorney’s Office.

Remember, there is no such thing as a free lunch.

— Vicki Johnson is a senior deputy district attorney for the Santa Barbara County District Attorney’s Office.

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