Elder financial abuse, elder financial exploitation, or elder fraud is the usurpation of financial resources that harms an elderly victim. In most cases, it occurs in a relationship where the perpetrator holds a privileged position or is highly trusted.
FBI concluded as the elderly population keeps increasing, elder fraud has become a growing problem. As a result, the financial damage ascends to 3 billion USD annually. But those reported cases don’t represent even the tip of the iceberg.
Given the severity of the issue, this article digs deeper into the subject of elder fraud. Today, you’ll know what elderly fraud is, why the elderly are such a juicy target for scammers, and how you can help the seniors around you stay safe from con artists.
A quick overview of how to avoid elder fraud
Common elder fraud types – Quick list
- Fraudulent investment plans. The elderly need investments that pay fast. That’s how they get defrauded.
- Insurance fraud scams. Even legitimate, licensed insurance agents have been known to practice this scam.
- Grandparent scams. An alleged grandchild calls grandpa or grandma to ask for some money urgently.
- Lottery frauds. The fraudsters convince you about winning some lottery that you had not noticed.
- Charity-justified fraud. Even fraud can happen for the sake of a seemingly good cause.
- Health-related scams. The increased need for health services and resources, like the elderly, allows scammers to come in.
- Identity theft. The ultimate hacker currency are alternate identities.
- IRS-related schemes. A scammer calls impersonating an IRS officer. Fear does the rest.
- Reverse mortgage systems. These are not scams, in theory. They are legitimate financial instruments. However, they can escalate so quickly as to break the user.
- Widow schemes. Probably the most inhumane scam, it takes advantage of the confusion a recent mourner experiences after the loss.
- Romance scams. Loneliness in the elderly makes them vulnerable to the abuse of persons pretending to have a romantic interest in them.
- Tech support frauds. An impersonator tries to gain remote access to your system and manipulate it to steal information in the future.
- Anti-aging products scams. Vanity is a terrible reason for suffering a fraud, but it happens.
What is Elder fraud?
Elder fraud refers to fraudulent activities specifically aimed at senior citizens. Such online scams may either come from strangers or include people known to the victims as family or friends. If the attackers are strangers, the scam executes either online or via phone calls.
Email is a typical route to establish contact with an elderly victim. The perpetrators send numerous phishing emails to addresses held by seniors, with messages related to,
- Health or medical issues (discount prescriptions and health coverage included).
- Financial support (retirement savings, home equity issues, and more).
- Friendship or camaraderie.
But these aren’t the only ones. More carefully devised schemes may involve personalized emails or phone calls. The intelligence that allows for such a sophisticated approach to the victim comes from the victim’s information in phishing attacks.
The losses that result from a “successful” elder fraud can run as high as an average of 34,200 USD per case, thus imparting a devastating hit to the victim’s financial stability.
Today, this subject is particularly relevant because the protracted COVID-19 pandemic has changed the world in many ways. Unfortunately, fraud against the elderly has also risen because of the pandemic, and the trend keeps growing inexorably.
Wondering how the pandemic contributes to elder fraud? It’s by offering bogus COVID-19 products (vaccines, air filters, and other worthless therapeutics) and services (testing, contact tracing). Unfortunately, the criminals are adaptative and imaginative, and Covid has given them wings.
The promises of those spurious services or products have been enough for the wrongdoers to persuade seniors out of money or out of their personal information, such as Social Security Numbers, insurance, and other critical details. They can then use this information either to attack them right away or to craft a more elaborate scam for the future carefully.
Why do scammers target the elders?
As fraud victims go, seniors are by far the favorite target of the swindlers. For example, 10% of all US seniors became fraud victims in 2018, facing an average of 38% of all frauds in general.
Wondering what makes this incident rate exceedingly high? Following are some prominent reasons.
- Chronic problems. A little empathy goes a long way, especially for an information phisher. If you know the problems the target group of people faces (such as medication prices, appropriate health care coverage, financial security, depleted retirement funds, and concern for their descendants and family members, in the case of elders), phishing on them becomes much easier. This knowledge allows a scammer to develop a phishing email that hits several sensitive areas in a given population segment, thus drawing the recipients’ attention.
- Isolation. A pleasant conversation with a trusted friend would suffice to prevent many elder fraud cases. However, since many senior citizens spend their lives alone, they cannot discuss any idea before acting on it.
- Trusting. Most of our elderly fellows have spent a large part of their lives without the internet. So, naturally, they are unfamiliar with emails and can’t figure out how reliable emails can be. Thus, elders are likely to believe in every message in their mailboxes.
- Poor decision-making. Age can deteriorate the brain’s executive functions. That’s no secret, even in the healthiest individuals. While younger adults are more “famous” for lousy decision-making, older adults are prone to make those mistakes.
13 most common types of elder fraud
A heartbreaking reality in elderly scams is that the criminal often includes someone a victim trusts, such as family members or carers. According to the Office of Financial Protection for Older Americans, the victims knew the perpetrator in 36% of the cases as an acquaintance, friend, caregiver, fiduciary, or family member. At the same time, strangers are responsible for a little over 50% of elder fraud cases.
Most often, these cases start with online contact through email, social media, and other digital methods of communication.
Online elder fraud comes in many guises. Here are some of them.
1. Fraudulent investment plans
The senior citizen population has a strong polarity regarding financial resources. On one side, you have many older adults who live on a fixed income insufficient to meet their needs. So they won’t mind some extra cash for a better living.
In contrast, some other elders sit in sizable cash cushions. On average, an older adult would likely own about six times more cash than younger people. Some even have significant equity in their home that grants them access to large sums of money.
So, while both sides of the coin exhibit opposite features, they are equally attractive for scammers.
A fraudulent investment scheme will try to cheat money out of people by promising a greater return in the future. But, in the case of older citizens, one has to ask, how long will it be before the investment returns a profit? Yes, it may seem a cold and grim consideration, but that factor could prevent many frauds from happening.
Older people will not entertain buying Bitcoin and sitting on it for ten years. Instead, they need short-term investments that will increase their capital quickly. Fraudsters know this, so that’s what they will offer.
2. Insurance fraud scams
Insurance scams won’t promise the victim to grow rich by investing money pulled out from their insurance policy. Instead, it’s something of an emotional blackmail operation. The scammer plays with the victim’s wish to have those he leaves behind something to help them.
It’s worth noting that a legitimately licensed agent can still incur fraud against the elderly, even if everything looks squeaky clean. For example, the case of David Pickett has become notorious. He’s an actual insurance agent in the US who has been arrested for fraud three times already.
3. Grandparent scams
It is a scheme in which a fraudster calls a senior on the phone, posing as a grandchild needing help. We can understand if you are surprised to read that such an evidently trick works. But it often works, and the grandparent scam is surprisingly frequent.
In this scenario, the “grandchild” calls, asking for a sum of money to help him out as soon as possible. Secrecy is essential, too. The “child” explains to his “grandpa” that he must keep the secret about this problem or he will get in serious trouble.
How can a grandparent not hear that it’s not his grandchild’s calling? The scheme includes an excellent reason for the “child” to sound differently. Also, do not underestimate the power of the panic that the grandfather can feel about his descendent’s security – it can easily be enough to turn them tone-deaf. And many among the elderly are hard of hearing, too. A seasoned criminal convicted for using the “grandparent scheme” says this trick works in one out of every fifty trials.
Wondering how far can this go, taking into account the urgency factor? In a recent well-documented case, a woman gave away 20.000 USD to pay for a “bond” to have her grandson released from prison. This scheme instance was slightly different as the caller didn’t claim to be related to her but a law enforcement officer. That gave the scammer the aura of authority and credibility needed to complete the job.
In similar scams, the caller may pose as some other authority, like a lawyer representing the grandchild or hospital staff allegedly treating the child.
4. Lottery frauds
This scam is not specifically tailored for the elderly. Instead, it targets all demographic segments, including older citizens.
It works like this: the victim gets a communication of some kind informing him that he’s won a large prize. The payment, however, can only be released if the “winner” puts forward a “small” sum of money immediately. The attacker justifies such payment with apparently “fair” things like “international transfer fees” or similar.
But this begs one evident and straightforward question: how can you win a lottery for which you bought no ticket? The answer is that you can’t; that alone should be a red flag.
Additionally, the lottery organizations rarely know the winner’s precise details. All they know is the winning number. Therefore, they can’t send such emails about lottery wins to anyone.
Maybe by now, you have noticed a pattern emerging here: the victim’s own wishful thinking plays a role in facilitating the fraud. And the cognitive decay our older citizens often suffer makes them more vulnerable to making mistakes. So, if something seems too good to be true, play it safe and assume it is.
5. Charity-justified fraud
In this scam, the fraudster poses as someone from a charity organization (real or fake) asking for money as charitable donations.
Such scams often emerge occasionally; fraudsters exploit seasonal events or sudden happenings like political unrest to trick victims. They don’t even spare sensitive moments, such as natural disasters or health crises, as they exploit the public emotions in such situations. For instance, in 2020, following the devastating bushfire in Australia, numerous scams emerged online, seeking donations.
Most professional scammers in this category also create compelling websites to back their fake campaigns. So, authenticating a “cause” here gets tricky.
However, you shouldn’t fall for such scams. Many countries have a list of legitimate charities. For instance, the US has the IRS Tax Exempt Organization Search Tool, the UK has the Charity Register, and Australia has the ACNC Charity Register.
While you shouldn’t step back from donations for good causes, make sure to do it correctly. That is, visit your charity’s official website and find out how you can collaborate. Don’t trust someone showing up at your doorstep or emailing is working with them.
6. Health-related scams
Generally, the number of medical prescriptions you take at any given time of your life is proportional to your age. That’s because the older you are, the more medical attention you need. Consequently, older people spend much more money on health issues than their younger counterparts, making them vulnerable to falling for scams claiming to help them.
So, how often can we find health scams going on? Well, the National Association of Boards of Pharmacy reviewed the land’s pharmacies, finding that 96% were going against standard practices or downright against the law.
Take this example: CanadaDrugs.com (the domain is seized, so don’t bother checking) was caught (allegedly) selling unapproved and counterfeit drugs.
Remember that nobody recommends buying medications online, neither the government nor medical practitioners or the pharmaceutical industry.
The primary reason to avoid such a website is accountability. You can’t be sure if you will get the drugs you paid for if the contents are as labeled, if the dosage is correct in your medication, or if the expiration date is due.
So, if you get an unsolicited email from an online pharmacy, know that it’s fake. Since legal online pharmacies seldom send unwanted emails, please delete such messages.
How do you identify scam pharmacies?
If you need to purchase some medicines online, consider the following precautions.
- Choose a website belonging to a physical pharmacy that you can verify with its street address and telephone number.
- Avoid dealing with an online pharmacy that offers to sell prescription drugs without a prescription.
- Don’t buy from an online pharmacy that issues you a prescription only because you answered their online questionnaire.
The NABP is trying to bring awareness about online pharmacies to the general public through the Safe Pharmacy movement. It aims to educate customers to identify good, reliable online pharmacies.
Last but not least, the domains ending in “.pharmacy” are reserved for legitimate pharmacies. A website with this type of domain is supposed to be safe.
7. Identity theft
Most of us take a genuine identity for granted, so we don’t stop to think about it in terms of commercial value. But the fact is that identity allows you to apply for credit cards, open bank accounts, get email accounts, and many other things online and offline. So, since identities are valuable, scammers want to steal them.
Of course, you can’t steal an identity by becoming another person. However, you can pretend to be somebody else to obtain money fraudulently or other goods and services.
Usually, identity thieves prefer to steal older people’s identities over younger ones. Why? Those identities typically belong to persons with higher savings, better credit scores, more assets in their name, and higher net worth. Hence, those identities are valuable to steal.
Thankfully, many online identity theft prevention services exist today to help keep your identity safe.
8. IRS-related schemes
This one has been around for years and still works because the IRS can inspire such fear in the hearts of men (and women).
The victim gets a phone call from an individual claiming to represent the IRS. He informs about a tax debt that must be immediately fulfilled unless the “debtor” prefers to be arrested.
The caller, of course, has nothing to do with the IRS and just wants to get some money quickly or acquire your personal banking information.
So, keep up with your accountant. There’s no need for anybody to fall for this.
9. Reverse mortgage systems
Reverse mortgage systems are not a scam, technically. But they’re always such a terrible idea that everybody should avoid them.
The notion of reverse mortgage systems is for older homeowners to borrow from their home’s equity. The problem with this financial service (yes, it’s legitimate) is that it’s so expensive that if you consider the principal and the interest together, it’s not too long before you owe more than the house’s value.
10. Widow schemes
It is among the most despicable and morbid fraudulent strategies on our list.
Everything starts with an evil fraudster reading the day’s obituaries, looking for a new set of targets. Next, he calls the widow or the widower of one recently departed. Then, the caller takes advantage of the general sense of loss and confusion in which the mourner is submerged to claim that the deceased spouse owed money to this or that institution. The caller poses to represent the said institution and needs the reimbursement to occur immediately.
This strategy works because a recent widow(er) is temporarily out of their wits and doesn’t have the presence of mind to put the scam in perspective. While every con on our list is a terrible thing to do or experience, this is probably the worst.
11. Romance scams
Men and women of a certain age likely have lost their partners. As a result, many of them are looking for companionship, making them vulnerable to romance scams.
The main target of romance scammers is women over 50, but they will defraud men if they can.
The scam proceeds like this: the offender pretends to have a romantic interest in the victim, eventually winning the victim’s trust. After a while, he asks for a small sum of money. Then, the attacker would repeat such requests at intervals, gradually increasing the amount.
Since this scam seems very obvious, you could probably doubt that people will fall for it. But they do. This scam costs more money in the US.
12. Tech support frauds
In this scam, somebody will call you, posing as a tech support representative from a recognizable brand, such as Apple or Microsoft. You could also get a prompt to call yourself via email, SMS, or on-screen message. (If it’s a message, it additionally means that the scammers have infected your computer with malware).
This scam is quite flexible, but often, the fraudster representative offers “fixing” the non-issue supposedly suffered by your computer. Of course, then, you’ll have to pay. But there’s more. The attackers may not be interested in your money but in banking information or personal data.
Let’s say that the issue is the removal of malware from your system. You could do this yourself if the scammers give you a set of precise instructions. But they won’t. Instead, they will ask for remote access to your computer. Once obtained, they can do whatever they want right under your nose, like installing spyware, malware, keyloggers, or more. Those bugs within your system can figure out all your logins and passwords.
Also, the attackers can track everything you do on your computer. They can even reconfigure your remote access settings to let them return as they wish.
Let’s take a moment to keep things real. Have you ever contacted Microsoft’s customer service? Have you got any idea about how busy it is? About how hard it is to get help, even if you are the one initiating the contact? It’s such a frustrating process that people only do it if their problem is essential and they have no other resources whatsoever. So, no, you will never get tech support from any of those companies by their initiative. They simply don’t have the time, the staffing, or the interest.
13. Anti-aging products scams
Everybody wants to stay as beautiful as possible, even when being “young” is no realistic option anymore. So, many older citizens are willing to spend money on trying out new treatments and medications that will help them look younger.
The anti-aging business is abundant, from false Botox treatments to utterly empty homeopathic remedies. It’s even become the financial support of some fringe political movements.
The worst risk here is not only the money people can lose without getting any value for it. In addition, ingesting supposedly miraculous products of fishy origins can be a massive health risk. Especially for the elderly, who usually already suffer from previous conditions and are more fragile than the rest of the population, it’s dangerous.
Preventing elder fraud
Experts keep sharing guidelines to help prevent elder abuse in general. If you want to know one thing to help with this issue, you can just become more socially active. Yes, it’s not an obvious option, but it’s effective.
If your social sphere (a group of friends or your family members) is close to you, you will always have many people to discuss ideas with. So, whenever you suspect something, you will have somebody to listen to you. And you will have people around you who know your regular habits and routine so that they can spot when something is going south.
And there’s more you can do to prevent fraud; see the following subsections.
1. Never share sensitive and money-related information via emails
Unless you have a secure, encrypted, anonymized email account, your email is an insecure communication method. Period. And it’s how most scams get started.
Of course, you need to have an email account. But emails are the criminal’s friends, not yours, regarding fraud.
And be jealous of your personal information. For example, is somebody asking you to share your full name, phone number, address, birthday, social security number, banking details, and other such data over an email? There will never be a good reason for you to provide anybody with that information over that medium. It’s a huge red flag; you need to acknowledge it immediately.
You should never answer such requests unless it’s somebody you know personally and trust completely. However, if you think you need to consider answering, do your homework first. Do some research about the person and the company in question. Make sure the request is legitimate by confirming with other communication methods. In other words, call them on the phone. But no, don’t use the number in the email. Instead, search the web for the company’s webpage and use the numbers you can find there.
If those emails become more frequent or start sounding more urgent in their language, these are not good signs. Instead, they are more like scam hallmarks.
2. Avoid sharing information about money via phone calls
This point could look the same as the previous one. It’s not.
Emails are the starting point for many scams because they’re cheap, easy to send in great numbers and take minimal effort. As a result, emails are the lazy conman’s favorite tool. However, not every con artist on the internet is that lazy.
Some of them take their time and prepare for their work. For example, they identify their potential victims with more detail and use phone calls instead of emails. Of course, these fraudsters can’t try to abuse many people simultaneously as with emails. But they know their trade. They understand that the phone call itself gives the scam a personalized touch, increasing the probability of success because they are ready to manage the call and guide it as they wish.
Make no mistake. The phone scammer is a more dangerous beast because it has a better craft and is more dedicated to hand tasks. And they value their time, so you should expect them to make the utmost effort to get their way.
But let’s say that you do agree to send money. It’s not a stranger but a friend or a family member, somebody you know for sure. Well, make sure they are who they say they are. Consider the following red flags:
- They are requesting either information or an amount of cash that doesn’t resonate with the reason provided with their request.
- The reason they are asking you for money is obviously far-fetched.
- The sense of urgency in the caller seems excessive.
- The caller asks you to keep the secret.
Just go ahead and ask your caller a lot of questions. A legitimate call will proceed well enough in that way. Otherwise, the caller could simply become fed up and hang up. Even if the scam caller tries to persist, the answers he will provide will sooner or later reveal chinks in their armor.
3. Have a trusted person to whom your financial advisor can talk
Financial advisors can be exceedingly helpful in spotting fraudulent activities. If your financial assets are in the hands of an advisor, then the scammer will have to persuade him to do as he wants. Hopefully, that should be nearly impossible for them to achieve.
If your advisor does spot an attempt at fraud but can’t work with you because of health issues or just age-related reasons, then you need to designate somebody to work with him in your stead. Otherwise, your advisor has no legal authority to discuss these issues with a third person. Again, you’ll probably need to fill out an authorization form for this; ask your advisor.
4. Have powers of attorney and other legal documents ready
“In advance” is the thing that will make a difference. If by the time you need to deal with any pressing issue involving your financial well-being, you’re already too weak, ill, or incapacitated, then it will be too late for you to take any of those steps.
5. Use a Virtual Private Network (VPN)
A VPN encrypts all your incoming and outgoing traffic on the internet. It prevents any third party from monitoring your digital activities because all they can see is a stream of seemingly random white noise. A VPN is crucial if you are often online through free public WiFi hotspots, typical for older people living in assisted living homes.
Spotting elder fraud as it happens
Fraud has a way of making itself painfully obvious sometimes. A zero bottom line in your bank account can hardly leave any doubts about your scammed status.
But things can be much more subtle at other times. For example, if you’re slowly drained of smaller amounts of money, and the scam is more of a long-term scheme, it could take more time and effort to realize what’s happening.
In either case, constant vigilance will reveal the signs of elder financial fraud as it happens to yourself or somebody you love.
Elder fraud spotting: Somebody else’s case
Minding the welfare of an elderly relative needs frequent contact with the person. If you wish to detect elder fraud in a timely way, this contact is even more critical. Fortunately, a fraud victim can exhibit some telltale signs that you can see if they come as a change to typical behavior:
- A shift in the daily routine indicates a reduction in financial resources. Being a scam victim doesn’t make people proud. Instead, the victims feel embarrassed, and it’s hard for them to admit it openly. But a change in habits can’t lie or hide reality. So, if you notice a shift in spending habits or priorities, it may point to a financial struggle. You could also catch an unusual comment about the inability to afford something previously “mandatory.”
- Suspicious documents. If you are authorized to their mail and bank statements, and you find unpaid bills, returned checks, or unusual payment recipients on statements, that’s a red flag.
- Straightforward complaints from the victim about missing money. A person whose cognitive state has deteriorated far enough can remain unaware of the scam it went through. So they could not understand why they couldn’t have the money they were used to. Alternatively, the victim may be aware of the scam without understanding how it happened.
- Flush friends or family. Caregivers to the victim or close family members who suddenly seem to be living above their usual resources can be a red flag. Are they just very good at managing their finances? Have they an additional income source? Try to answer these questions, and you’ll spot the fraud.
Elder fraud spotting: Your own case
You’re wrong if you believe yourself too smart and savvy about world affairs to fall for such evident elderly scam tactics. Some fraudsters practicing those scams are true professionals. They’re intelligent, resourceful, experienced, persuasive, and sometimes even charming and have the incentive. Let’s face it: it can happen to anybody.
Frauds can be blatant sometimes. For example, somebody asks you for money aloud and in plain sight. But it can be more subtle, too. It could be happening even though you haven’t noticed it yet.
If a fraudster is victimizing you, some of the following things could be happening to you:
- Your credit card statement includes unexplained charges. You should review your credit card statements carefully at least once a month. Do you see any charges you don’t recognize? Tell your bank about it right away! Even the most nominal charge must make sense to you. Credit card thieves know their business. So, they might charge small amounts to the compromised card to ensure it remains valid and their activity remains under the radar.
- Your bank alerts you. Several banks and credit card corporations have fraud precaution measures online. Some will empower you to set up your own alerts. These tools allow you to monitor your financial activities in real time through the statement instead of once a month.
- There’s something off about your credit report. Credit monitoring companies must provide you with at least one annual free credit report. Exercise your right to know your credit status and review your information. Did you find any accounts there that you never opened? Is your credit score lower for no good reason? Try to find the answers to these questions.
Reporting elder fraud
Elder fraud is illegal in most of the world’s jurisdictions. That means that you can call the police on scammers! And some countries even have specialized agencies to help with this type of problem.
Australia
ACORN manages cybercrime reports in Australia. Also, each state handles those incidents at the local level.
Canada
Elder abuse is the responsibility of the Royal Canadian Mounted Police. Contact them directly or reach out to your local police force.
The United States
There is an Adult Protective Services agency in each state of the union. Each agency is autonomous, but you should locate them quickly with a simple Google search.
The AARP (previously known as the American Association for Retired People) has many helpful resources, such as a list of agencies that can help.
Cybercrimes can also be reported through IC3.
The United Kingdom
The local police forces deal with fraud cases in the UK. And there’s a number available for the Action on the Elder Abuse hotline.
Action Fraud is the UK’s national fraud and cybercrime attention center, and you can call it if you need guidance.
