Social Security fraud was already a problem when the global COVID-19 pandemic hit the United States early this spring. But now fraudsters have added brand-new
ploys involving the public health crisis to exploit unsuspecting victims. Financial advisors can help their clients, and the public, by using their esteemed
positions in the community to distribute information about the prevalence and occurrence of these types of frauds.
The novel coronavirus pandemic has led to a new wave of fraudulent attempts in recent weeks capitalizing on people’s anxieties and fears. Social Security
officials issued a warning to the public in late March about fraudulent letters that threaten suspension of Social Security benefits as a result of coronavirus-
related office closures. The letters contain phone numbers that, when dialed, direct victims to provide personal information or make payments using gift cards,
wire transfers, or cryptocurrency or even by mailing cash to restore benefits. This, of course, is all false. The federal agency has closed its offices to
in-person visits to thwart the spread of COVID-19, but benefits continue to be processed as usual and questions can be handled via the phone.
The current public health crisis isn’t the first time authorities have raised alarms about people being swindled out of money or assets by fraudsters
claiming to be with the Social Security Administration. The agency received more than 250,000 reports of fraudulent attempts since November, when it launched an
online portal to report fraud attempts. And those were just the complaints that people took the time to report. In 2019, victims lost $153 million to people posing
as government officials, the bulk of which were impersonations of Social Security staff, according to the Federal Trade Commission.
Remember that older and isolated people are especially at risk. Frauds that involve impersonation of government agents are especially effective with older adults
because of vulnerabilities they have at that age and how much they depend on the retirement benefits that are a financial lifeline in later years. Many at later
stages of life are not as adept as they once were at picking up on scams because of cognitive declines or tendencies to be trusting of those they encounter. Older
people who are isolated are especially at risk, as they are less likely to run the scenario by a trusted friend or family member.
For more information on the scams, as well as suggestions for how advisors can educate their clients, in this article from the Journal of Accountancy.