By David Ver Eecke
Per the National Adult Protective Services Association (NAPSA), one-in-20 seniors has indicated some form of perceived financial mistreatment. As criminals abandon more traditional types of crime and turn to cyber crime, financial offenses are continuing to grow at an alarming rate, thanks in large part to Internet access making it possible for offenders to reach the masses. Unfortunately, cyber criminals often target one of the most vulnerable populations: the elderly.
Why Focus on the Elderly?
Elder fraud is most commonly committed through mass marketing fraud, which is defined as the use of deceptive practices to induce victims to provide personal information or transfer funds through mass communication media – the Internet, telephone, social media, etc. False promises of cash or services are made in exchange for fees or purchases requested up front.
To make matters worse, once a person has been victimized, criminals often create and sell financial hit lists – sometimes called a “suckers list” – containing victims’ information, making it more likely these same people will be targeted again in the future.
Members of the elderly population are frequently targeted for a number of reasons. They are mostly retired and spend a great deal of time at home, making them easily accessible. Many live alone, may be widowed, and they may be suffering from loneliness for these reasons. Elderly people have often accumulated at least some degree of wealth, and they usually have excellent credit and the ability to access and spend their money immediately.
They also come from a generation very trusting of other individuals, which makes it easy for criminals to take advantage of them, and they pose less risk to criminals, because they are less likely to report fraud due to embarrassment, they may not be able to accurately recall the details of the crime, and they do not understand the nature of the technology being used to target them. Lastly, some members of this generation may be financially inexperienced, such as a widow whose husband has recently passed away.
The Most Common Types of Elder Fraud
While there are many different types of mass marketing scams (MMS), three types are used most frequently to target the elderly.
Government impersonation schemes, also known as intimidation schemes, involve criminals posing as government officials and using intimidation tactics to coerce victims into sending money. Criminals typically threaten arrest, legal action or monetary fees if victims refuse to comply. There has been a recent uptick in criminals posing as representatives from the IRS or Social Security Administration.
Romance scams target individuals searching for romance or companionship online. Criminals troll Internet chat rooms, dating sites and social media platforms in search of victims. Once a relationship develops, scammers will request financial assistance or ask victims to reship packages, or perhaps even to use bank accounts to cash worthless checks or accept funds transfers. This type of scam is believed to be especially under-reported due to embarrassment.
Finally, grandparent scams exclusively target the elderly population. While this type of scam is not new, it has become more sophisticated over time. Scammers search the Internet for personal details about the victim, then use the information to either impersonate the grandchild or pose as a doctor or police officer. The criminal convinces the grandparent his or her grandchild has been arrested in another country and is in need of money or some other type of assistance, creating a sense of urgency so the victim does not have a chance to confirm the story with anyone else.
How to Detect Elder Fraud
While seniors as a general population are targets for elder fraud, some individuals are more at risk of becoming victims. Seniors with little understanding of technology-assisted crime or how computer viruses work may be at higher risk, as are individuals that have difficulty recognizing spam or junk mail.
Suddenly being secretive about a new friend, phone calls or emails is a sign that someone is being targeted. Opening new bank accounts, wiring money or using overnight mail are also telltale signs, as are abrupt problems paying bills or borrowing money. For romance scams specifically, potential victims may lie about their involvement with his or her significant other or become engaged quickly and secretively.
How to Prevent Elder Fraud
Credit unions can take three steps to help prevent their members from falling victim to elder fraud. First, help educate members about the warning signs:
- Unsolicited offers or those that appear too good to be true
- Payment for goods/services is required in advance
- Personally identifiable information (PII) is requested over the phone from someone the member does not know
- High-pressure sales techniques
Second, take the following action to avoid fraud:
- Consult with trusted friends and family
- Conduct basic internet research
- Conduct due diligence before sending funds
- Never do business with anyone who asks for PII over the phone or requests advance fees
- Never deposit unsolicited checks into your bank account
- Do not allow others to use your personal bank account
- Last, but certainly not least, report scams when they occur. Scams can be reported to the local police and/or the FBI’s Internet Crime Complaint Center (IC3). Depending on the scam, the FBI’s local field office may also be able to assist.
To Be Effective, Fraud Must Be Reported
In October 2017, President Trump signed the Elder Abuse Prevention and Protection Act, which identified a need for more data on elder abuse and helps prevent and improve the nation’s response to elder abuse and exploitation. It also increases the penalty for crimes against the elderly. The law, however, will only be effective if instances of elder fraud are reported by victims.
David Ver Eecke is a Senior Fraud Product Manager at PSCU. David knows that the cooperative nature of credit unions provides a unique advantage when it comes to stopping fraud. When he isn’t working on products to increase payment security for credit unions and wage war against fraudsters, he finds time to write about topics on risk and fraud. David has worked in the financial services industry focusing on fraud and risk for over seven years.