Almost all commemorative coins — the ones in those ridiculous American Mint commercials — are a scam. These insidious coin sellers push the idea that buying their product is a good investment, since the value of the gold in said product (and it being limited edition) will inevitably increase with time.
My colleague Adam Elder, alongside financial lecturer Andrei Andreev, previously explained one reason why these commercials mostly target the elderly:
“‘That’s no accident, says Andreev. ‘My mother, in Russia, buys gold like crazy,’ he says. This is old-school, the product of old habits. Older people, who have lived through wars, the Depression and the sky-high interest rates of the 1970s remember that each time, gold was a hedge against inflation. In gold’s defense, it’s portable (more so than, say, a house, at least), it’s storable and everyone recognizes its value, so you can trade anything for it. You see this sort of thing play out in other ways elsewhere with hyperinflation. ‘Like any commodity, if you’re in Venezuela and inflation is 1 million percent, you go and you buy a TV,’ Andreev says. That’s how they hedge against a currency whose value will be worth less tomorrow than today.’”
So older people have a tendency to scoop up these coins because they believe the gold in them will increase in value (which is debatable). But in reality, many of these coins are worth nothing more than the value of the coin itself, which means you can easily end up spending $75 on a fancy quarter.
The reason I bring up this scam in particular is because my grandmother is completely hooked on buying these commemorative coins, and no matter what my family says, she refuses to stop buying them (she even sends me coins every once in a while, so now I have a massive bag of them sitting in my closet). But the thing is, she only started falling for these coin scams a few years back, when she really began hitting old age.
This is no corner case, either: Recent reports show that adults over 65 lose an estimated $2.9 billion each year due to financial scams, and statistically speaking, one in every 10 Americans over 65 will fall victim to some sort of financial abuse. This has become such an issue that the FBI even released advice to help protect seniors against these scams, explaining that seniors are often targeted because they tend to be sitting on more cash than younger people, and “con artists know the effects of age on memory.”
Which brings me to the first reason older people are more susceptible to these scams: When we get older, at least as far as scientific studies are concerned, we become more likely to experience several forms of cognitive decline, including memory loss (dementia and Alzheimer’s are also increasingly common the older we get). This is helpful for scammers, since, as that FBI advice explains, “The victims’ realization that they have been swindled may take weeks — or more likely, months — after contact with the fraudster. This extended time frame makes it even more difficult to remember details from the events.” Combined with the fact that many of these scams involve dealing with cell phones and the internet — things that older people tend to use less frequently, despite oftentimes being perfectly capable — and you have someone who can be even more easily scammed.
Another thing to consider along the same lines as the technological divide is that, as the FBI also says, “People who grew up in the 1930s, 1940s and 1950s were generally raised to be polite and trusting. Con artists exploit these traits, knowing that it is difficult or impossible for these individuals to say ‘no’ or just hang up the telephone.”
Now, I want to emphasize that this doesn’t apply to everyone. Generally speaking, age does take a toll on our brains, and the older we get, the less likely we are to be up on the times, so to speak. But many older people can still see right through these scams.
Here, too, though, lies a problem, because there’s another reason older people may be more easily scammed — one that resonates whenever I talk with my grandmother. “My sense is that, as we get older, we feel that we’ve been around the block a few times and can spot frauds, and we think we aren’t so easily taken in,” says psychologist Jeanette Raymond. “That part of us clashes with another part that wants to take every opportunity to do well for ourselves, so that when we reach a time of poorer health and control over ourselves, we have a treasure trove — a way of trying to be in control of our last days while we can. This latter part of us is desperate to find something that gives us hope, some sort of promise and mostly flatters us when claims are made about what good judgement we have if we invest in *blank* [in this case, stupid commemorative coins].”
“In a sense, we unconsciously try to deny our end, our cognitive decline, our terror of losing our minds and bodies as we hurtle to old age and death,” Raymond continues. “Scams focus on that fear and hit the spot where customers are most vulnerable, but they also flatter their good sense and prudent ways — the best combo ever.”
All of which is to say, grandma, I think you have great judgment whether or not you buy those silly coins. But also, please stop buying them, so you can spend your hard-earned money on something much, much better.