With the development of technology, more diverse and sophisticated ways of defrauding have appeared, as well. Scam strategies and particular methods have emerged to be the most efficient in tricking unwary investors. One particularly vulnerable group is senior citizens. 

In this article, we’ll discuss the key elements of the retirement scam: how it unfolds, how to recognize it, and what to do to protect yourself. In the worst-case scenario, you’ll also need knowledge of what to do after it’s already happened. So stay tuned and educate yourself to stay protected and enjoy the products of your life-long journey the way you decide, not how some stranger tries to convince you out of greed and pure malice. 

What is a Retirement Scam?

A retirement scam is an elaborate operation perpetrated by greedy, selfish, and merciless individuals who wish to get rich by stealing from others (usually senior citizens) instead of working hard like the rest of us. Like in any other case of thievery, the financial fraudsters are ruthless in their trickery. They can pose as certified investment professionals, reputable traders, and financial advisors in order to get access to the person’s pension funds and snatch them. 

In essence, this type of money extortion, manipulation, and cruelty doesn’t differ much from any other form of financial crime, as millions of people get robbed every year. For example, the infamous Australian Retirement Trust scam occurred in 2022, when a sophisticated network of cybercriminals impersonated the company and ripped off a single person for more than 200,000 AUD. The collective loss amounted to millions. 

Warnings Signs of a Pension Scam

As with any type of sham, pension scams are conducted in a certain manner. Studying this and educating yourself on the key points helps you acquire knowledge about it and recognize it in time. Here are some major warning signs explained:

• Being contacted out of the blue is a spot-on warning sign about the potential fraudulent intentions of the caller. Unexpected phone calls, letters, or email addresses by an alleged financial advisor, your bank, or any other institution questioning you about your pension are signs you’re being targeted. 

Since January 2019, the UK government has officially banned the pensions cold-calling. That means that unless you’ve asked to be contacted about your pension, it is officially illegal to be contacted by anyone else about it. Naturally, scammers will find a way around it and do it in a way that would border legal activities, so you should still be careful.

• Con artists usually prefer to cover their tracks in order to avoid legal repercussions. That is why they will avoid sharing their contact information or provide wrong contact details. This lie is easy to detect once you ask for their contact and express the will to get in touch with them later on. 
• Another common tactic used is pressuring targets to invest. Not being left time to think through and make an educated decision about the proposal is how cons lead their targets into the trap. They present their offer as a lifetime opportunity that is soon to end and will urge you to make an impulsive investment decision.
• Cyber thieves promise alleged tax reliefs and savings, high returns, and exaggerated potential profit on investment that could double or multiply your fund many times. What is usually said about such offers is that if they sound too good to be true, that’s because they are. 
• The greedy bunch will put on a very convincing act, impersonating financial advisors or investment professionals. Most commonly, they will impersonate reputable legal organizations and individuals. However, as previously noted, legitimate companies and institutions will not contact you unless previously requested.

How to Avoid Retirement Fraud?

Now that we’ve elaborated on some of the techniques used to attract potential victims, it is only natural to point out proper strategies for evading the financial disaster you’re being lured into. Here are several steps you can take to avoid catastrophe.

If you take your caller by surprise and start asking questions they do not expect, you can potentially see through their plan before it’s set in motion. Majority of them rely on the fact that most of the people will not ask too many questions, won’t do prior investigation and will simply fall for their alluring deal. 

Needless to say, always do your homework. Investigating the company, caller, or whoever has contacted you first is crucial. Gather all the knowledge you can, contact the alleged company’s representatives, and make sure you know who has contacted you. Regulated money services business and investment organizations could be found in databases like EDGAR, FCA, and similar.

As convincing as these people are able to sound, do not trust anything they say based solely on their words. They may attempt to prey on your fears, aim for the weak spots, and manipulate you mercilessly to jump into an unconfirmed investment. Take your time to evaluate the proposal, and do not make rushed decisions. 

As soon as you realize something is wrong, cut off all contact with the suspicious individual and do not hesitate to report them to the authorities responsible for combating such crimes.

Reporting Pension Fraud

Various online websites set up by government institutions contain detailed instructions on how to act in the case of a pension scam and how to report it. Therefore, we encourage you to never think twice when it comes to protecting your savings, funds, and financial future as a whole – report the occurrence as soon as you identify it. 

Some of the most helpful sites for reporting such crimes are The Pensions Regulator, FCA, and Financial Ombudsman for UK citizens. Victims of the most common 401k scam from the US can refer to the Federal Trade Commission, while Australians can rely on the Australian Government’s National Anti-Scam Centre.

Generally speaking, every jurisdictional financial regulator primarily aims to reduce illicit activities and counter criminal actions of this type. Therefore, feel free to refer to your country’s government or financial crime combating branch.

How to Protect Yourself From Any Kind of Financial Fraud?

The key to staying safe in today’s world, full of false advertising and alluring investment options, is keeping up to date with new knowledge and information in general. Being educated on a certain subject makes you immune to petty fraudulent attempts that sell hopes and dreams of quick riches.

Furthermore, do not let your momentary emotions push you into acting impulsively without prior investigation. In the end, it will cost you more than you were initially willing to invest. Lastly, if you fall victim to any kind of financial trickery, please refer to our chargeback experts for proper legal support.