When Financial Fraud Becomes Elder Abuse

When Financial Fraud Becomes Elder Abuse

Elder abuse goes beyond physical violence or deprivation of basic necessities. In some severe cases, it involves harm to the mental and financial well-being of older adults that can result in loss of savings or a broken heart.

Americans aged 60 and over are generally considered a vulnerable group. With age comes a host of concerns about physical health, mental agility, and general safety. While it is important to consider the physical safety of the potential victim when addressing elder abuse, financial abuse can often be just as damaging.

Traditional financial abuse of the elderly typically involves a close acquaintance taking advantage of their relationship with the victim to take possession of their property or money. This abuse may involve manipulating a vulnerable person into obtaining expensive jewelry or convincing them to divulge bank codes that allow the illicit actor to empty the victim’s accounts.

Although these are crimes, they are of course easier to detect and protect against than other types of financial fraud. In fact, bank employees are now encouraged to look for signs of this type of manipulation and take active steps to prevent it. However, less traditional financial abuses are becoming more of a concern.

Fraudulent thefts are exploding (losses are expected to climb to over $10 billion in 2023, up from $2.4 billion in 2019). The rapid pace of this growth is likely to put people (especially those in more vulnerable situations, such as the elderly) in a more defensive and skeptical position. Indeed, older adults are disproportionately vulnerable to this more complex and harder-to-detect type of theft.

In its 2023 report, the FBI’s Internet Crime Complaint Center (IC3) indicated that people under the age of 20 were the most affected demographic. less affected by scams and fraud with only 18,000 victims reported, while those aged 60 and over saw over 101,000 victims reported.

Understanding the Root Cause of Elder Fraud

To better understand the problem some seniors face, we must first look at the cause. Desperation and greed are among the reasons why scammers have multiplied schemes to get quick money from elderly victims. Scammers also look for the lowest-risk options. So, when they plan to commit crimes, they consider seniors as prime targets for several reasons, including:

      • They assume that older people are more likely to have disposable income or savings. While younger people are starting their careers and are just beginning to earn money, older people have had time to accumulate savings and often have disposable income that they can use and invest.
      • Older people are often less informed about the complexities of technology, especially new investment methods. This lack of understanding of recently developed technology platforms makes it easier to manipulate the victim. This includes platforms like dating apps or digital currency platforms.
      • As the population ages, they are more likely to be retired, widowed, or single. This often leads older people to seek companionship or friendship. Sometimes, finding these connections online can open up a whole new world of (unverified and anonymous) people to connect with.
      • Older adults also tend to hold more conservative beliefs, keep their finances to themselves, and avoid seeking help. So, during manipulation and even after a financial loss, older victims often find themselves in a situation where they are less likely to speak up. This makes reporting, prevention, and follow-up more difficult.

This spring, several government agencies—including the Financial Industry Regulatory Authority (FINRA), the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), and AARP (formerly the American Association of Retired Persons)—all took notice and issued warnings or advisories about the rise in financial crime among the elderly, a stark reminder of this widespread problem.

In fact, FinCEN found that between June 2022 and June 2023, it received 155,415 reports under the Bank Secrecy Act (BSA) related to elder financial exploitation (EFE) and associated with more than $27 billion in reported suspicious activity, which can include actual transactions and attempted transactions. It is important to note that this is only the number that was reported. reported and does not account for cases where people did not realize they were being scammed or where the loss was not reported for other reasons. Additionally, an AARP report states that more than 40% of Americans (about 141.5 million adults) report having lost money to scams or having sensitive information obtained and used fraudulently.

While it is easy to count how much money is lost, it is not so easy to count the number of people who suffer from depression or even suicide attempts as a result of being scammed.

Seniors are now facing many sophisticated scams that aim to exploit them in a more meaningful way. In 2023, the top 5 scams reported to IC3 were: tech support scams, personal data breaches, romance and confidence scams, product scams (non-payment or non-delivery), and investment scams. IC3 reports that losses from investment scams alone totaled over $1 billion in 2023.

There is another factor that most people don’t even consider after a huge financial loss. While it is easy to count the amount of money lost, it is harder to count the number of people who suffer from depression or even suicide attempts as a result of a scam. For example, a 74-year-old retired teacher from Tennessee who was scammed out of nearly $100,000 ended up committing suicide. In this case, the scammers were arrested, but it shows how seriously these crimes need to be taken.

Eva Velasquez, a former investigator with the San Diego District Attorney’s Office who now serves as president and CEO of the nonprofit Identity Theft Resource Center, said the organization’s most recent study noted a sharp increase in the number of fraud victims who reported having suicidal thoughts after being scammed.

It is clear that it is important to educate older Americans about the use of new technologies and the red flags they will inevitably encounter, especially online. It is also important to continue to report and track these financial scams targeting seniors in order to try to prevent them in the future.