Stock market scams and how to avoid them – How the elderly are scammed?

Remember Yes Bank’s AT1 bonds that were written off when the RBI forced a reorganization of the bank in 2020? Many elderly people lost their retirement savings in AT1s.

AT1 bonds are pseudo-equity bonds. They pay higher coupons than regular bonds or FDs. However, when a bank suffers losses, AT1 bonds are the first ones to take a hit, even before equity. Depending on the size of the losses, they may be written down or written off.

The senior citizens who had invested in these AT1 were baffled as to why their FDs had gone to zero value. They were mis-sold the risky AT1 bonds in the name of FDs.

Senior citizens are often an easy target for mis-selling and scams owing to their age or general lack of tech-savviness. While mis-selling is despicable, scamming is outright criminal.

How do scammers approach senior citizens?

• By phone calls, text messages, or emails
• Scammers pretend to call from the bank, stockbroker, government agency, or the police.
• The tone is usually urgent and rude, often to catch the senior citizens off-guard and not give them time to think.

The context of such communication generally revolves around

• Updating KYC
• Some issues with the bank account/government records
• Erroneous payment in the senior citizen’s UPI app – A scammer might send a small amount to the senior citizen and then call them to get it back. When the senior citizen tries to return the money, the scammer empties their bank account.
• Upfront tax payment for fake lottery winnings

The scammer might ask for bank account numbers, passwords, OTPs, or payments to resolve such issues.

What happens when senior citizens share such information or pay the scammers?

• They willingly pay and lose money to scammers
• Funds from bank accounts may be stolen
• Personal data could be used for identity fraud
• Scammers might take loans that the senior citizen might become liable to pay.

Other ways scammers use to dupe senior citizens or gullible people

• Guaranteeing high returns and getting senior citizens to invest in a “Ponzi scheme.”
• Visiting a senior citizen at home as a salesperson, repairman, or charity worker. They offer a product with “special deals” for senior citizens. It turns out to be fake or of poor quality.
• Selling a fake health insurance policy as a “fantastic” plan at a “very low cost” covering a wide range of illnesses without co-payments.
• A senior citizen looking to get their laptop repaired might click on homoglyph websites of popular laptop brands run by scammers. They might fix the laptop but steal personal information or sell fake subscriptions.

Senior citizens may not be aware of the new technologies, systems, or products. They need help. How to alert the senior citizens around you?

• Never react in a hurry. Do not yield to pressure tactics. Never share your passwords or OTP.
• Use strong and long passwords. Enable two-factor authentication (2FA) on your phones, laptops, emails, and banking and trading apps.
• Guaranteed returns are almost always a lie. Investments are subject to risk.
• Always verify with the caller or sender of the message asking for information. Offer to visit the branch or office in person.
• Avoid clicking on links or opening attachments from suspicious emails and messages.
• Avoid posting personal details like your date of birth, addresses, and family names on social media.
• Legitimate lotteries do not require upfront fees. Never send money out of excitement.
• Avoid storing passwords and sensitive documents in unsecured places.

The ways and methods of scamming will keep evolving. The tech-savvy younger ones in the family should take up the responsibility of educating the older ones. The elders should seek help from a trusted friend or relative. They can also share information and experiences with family and friends to increase awareness.

This is the fourth and the last post in the “Stock Market Scam” series.