Watch Out for These Financial Scams Targeting Seniors!

With people making more online transactions during the Covid-19 pandemic and people generally always wanting to make more money, especially in this uncertain time, we’re even more likely to come across scams now. You’ve probably also heard a lot of news about senior citizens being cheated by scammers, or know of older family members or friends (or are a senior yourself!) who’ve been scammed.

Studies say there are many reasons why seniors are easier to scam, from changes in the brain of older adults to generally being more trusting or wanting to make extra cash to leave behind for their loved ones, and just not knowing enough about scams.

So, we’ve rounded up some of the common scams targeting seniors to help you or your family/friends to avoid getting scammed:

1. The fake criminal charge
   How they hook you in: The victim receives a call supposedly from a government agency telling them that they have unsettled bills.
   • The scammer connects the victim to their partner acting as a police officer from another state who may tell the victim that they are wanted for money laundering.
   • The victim is told to provide their bank account details for auditing and investigation.
   • The scammer also gets the victim to make payments in several bank accounts for “legal fees.”

The end game: The scammer fails to update the victim on the status of the “investigation,” takes the victim’s money, and disappears.

2. Requesting for your OTP
   How they hook you in: The victim receives a call from someone asking for an OTP (one-time password) that was sent to the victim’s phone number by mistake.

• • The victim may give the OTP to the scammer.
  • The OTP enables the scammer to access the victim’s account and transfer the money out.

The end game: The scammer steals all the victim’s money by withdrawing it from the victim’s online banking account.

3. The foreign exchange investment scam
   How they hook you in: The victim is attracted to an advertisement on a social media platform such as Facebook. The advertisement offers lucrative investments involving foreign exchange with free guidance.

• • The victim contacts the scammer to take part in the investment scheme.
  • To register for the “investment scheme,” the victim is told to submit personal documents such as a copy of their IC, driving licence and bank statements. The victim is also told to pay a registration fee.
  • Another scammer then pretends to guide the victim in managing their investment through another app. The victim pays the scammer, purportedly for investment purposes.
  • The victim finds out that they are scammed when they do not receive lucrative returns and when the scammer stops calling them.

The end game: The scammer runs away with the victim’s money without paying back the victim’s initial investment or any returns.

4. The fake loan scam
   How they hook you in: The victim sees an advertisement on social media for a loan, usually promising fast processing or requiring little documentation.

• • The victim decides to apply for a loan and answers the ad.
  • The scammer asks the victim to send their personal documents in order to process the “loan.” The scammer calls the victim to inform them that their application was successful.
  • To get the money, the victim is told to make payments for processing, insurance and agreement fees, which can reach hundreds of thousands of ringgit! In one case, a victim ended up raising the money for these fees by borrowing from friends and relatives and selling their car.

The end game: The scammer runs away with the victim’s money without providing them with the loan.

5. The honey trap

How they hook you in: The victim, who is using a dating app, receives messages from a prospective partner to invest in something such as gold.

• • The victim expresses an interest in their prospective partner’s investment scheme.
  • The scammer gets the victim to transfer money for the investment into several accounts, in return for a big profit. To make it seem realistic, the scammer issues a fake receipt to show that the profit was deposited into the victim’s bank account.

The end game: When the victim tries to withdraw from their account, they find out that no money was deposited into their account. The scammer disappears with the victim’s money.

 

What you need to remember:

What to do:

• If it sounds too good to be true, it probably is. Returns of over 15% are highly unlikely.
• Before deciding to invest, check information from established sources such as:
  • Semak Mule (by the Royal Malaysian Police), where you can check if the bank account number given to you is associated with a scammer
  • Bank Negara Malaysia (BNM) Alert List
  • Security Commission (SC) and SC’s Investment Alert List
  • Bursa Malaysia’s ‘Be an alert investor’ useful links
  • Ministry of Domestic Trade and Consumer Affairs (KPDNHEP)
• Do a background check on the company involved with the investment scheme and see if it is registered on the Companies’ Commission of Malaysia’s (SSM) website. If it’s not, it’s fraudulent.
• If your investment advisor claims to have deposited your profits in your account, always check to see if you received the money. Try to withdraw your money. If you can’t, then it could be a scam.
• Keep all records of your transactions and communication, so that if you get scammed, you’ll have proof to show the authorities.

 

What not to do:

• Never transfer money to an individual or any account which doesn’t actually belong to the organisation the scammer says they’re from, like a government agency or the policy.
  • The police or government officers will not call you to request for payment. Usually, the police or government agencies will send registered letters to your address. If someone claiming to be from them calls you asking for payment, they are probably a scammer.
  • The police and government agencies will not ask you to transfer money to an unknown bank account not associated with their organisation.
• Do not engage investment advisors without a licence. Providing investment advice without a licence from the SC is an offence, whether they’re formal analyst reports or through social media platforms.
• Never share your OTP with anyone! When you make an online transaction, your bank will send an OTP to your phone for you to complete the transaction. Only use the OTP yourself and for your own transactions. Note that some scammers can still access your bank account online even without your OTP, but as long as you know you shouldn’t share your OTP, you can at least have one layer of safety if anyone ever asks you for it!
• NEVER give your personal information over the phone unless you are absolutely sure who you’re speaking to.
• If the caller gives you a phone number to call, do not call the number they give you. It could be a scammer connecting you to their accomplice. Hang up and call the organisation the caller claims to be from to check if their story is true. Look for the organisation’s phone number online.
• Don’t trust strangers on dating apps to manage investments on your behalf.

 

What can you do if you’ve been scammed?

• Contact your bank to report the scam. Keep records of communications and transactions as proof.
• You can file a report with the Royal Malaysian Police (address: Head Office, Royal Malaysian Police, Bukit Aman, 50560 Kuala Lumpur). You can also contact them at:

  Tel: 03-2266 2222
  Email: rmp@rmp.gov.my

• If you suspect you’ve been the target of an investment scam, you can email the Securities Commission at aduan@seccom.com.my or call 03-6204 8999/8777.
• You can also call Bank Negara’s hotline, BNM Fraud Alert at 1-300-88-5465 or email them at bnmtelelink@bnm.gov.my.

 

We’ve previously written about Covid-19 related scams. You can read it here.

If you want to know more about making investments, check out our investment guides, or are interested in making a secure long-term investment, consider contributing more to EPF.

If you’re looking at investing in stocks but don’t know where to start, consider investing in ETFs.

 

References:

Jotham Lim, Cover Story: Consumers more vulnerable to scams during pandemic. The Edge Markets (Nov 2020).

Social Work Today. Brain Changes Make Some Older Adults More Vulnerable to Scams

Olivia DaDalt, Why Older Adults Are So Susceptible To Financial Fraud. Forbes (Dec 2016).

Jingjin Shao et al. Why are older adults victims of fraud? Current knowledge and prospects regarding older adults’ vulnerability to fraud. Journal of Elder Abuse & Abuse (June 2019)

Selangor Journal. Online investment scam: Retiree suffers RM109,000 in losses (Dec 2020).

Sarban Singh, Retiree loses over RM340,000 in loan scam. The Star (Oct 2020)

The Star. Clerk loses close to RM700,000 to scammers (Dec 2020).

The Malaysian Insight. Retiree loses RM1 million to scam via OkCupid match (Nov 2020).

Manjit Kaur. Retiree loses RM22,700 in an hour in phone scam. The Star (Jun 2020).