Elder Financial Abuse is on the Rise; Learn How to Avoid the Popular Scams Targeting Seniors
Elder Abuse: The Warning Signs of the Scams Targeting Elders
Elder Financial Abuse is on the rise. How can you keep yourself or your loved ones safe? CFS has got you covered.
The likely underreported crime of elder financial abuse and fraud costs older Americans between $2.9 billion to $36.5 billion annually, according to the Consumer Financial Protection Bureau, who also report that the average loss suffered from fraudsters or abuse is $34,200. In 2017 alone, there were 63,500 reports that year, which is four times as many as in 2013. So, what is elder financial abuse and fraud, and what can you or your loved ones do to protect yourself from it? How do these scams happen?
Over 90% of all reported elder abuse is committed by an older person’s own family members, most often their adult children! Followed by grandchildren, nieces, nephews, and others; according to the National Council on Aging (NCOA).
The Types of Scams
Phone Call Scams
“If you answer the phone and hear a recorded message instead of a live person, it’s a robocall,” says the Federal Trade Commission (FTC). Most of these calls are scams, and if you’re getting a lot of them, maybe even illegal.
Let’s make something clear: The IRS does not call you. Period. The IRS does not do correspondence over telephone. If you get a call claiming to be from the IRS, it’s fake and a scam. Read the IRS’ five easy ways to spot a scam phone call.
Furthermore, even if the number says it’s from the IRS, and is the correct IRS phone number, it’s still a scam! Scammers can use a technology called number spoofing, so that they can make it look like the number calling you is any number they want! Sometimes, even your own phone number! So, scammers can make the number look like it’s from your area code, or from the IRS’ actual phone number. In sum, do not rely on the number displayed as a way of verifying the authenticity of the call.
The Grandkid Scam
Other scam phone calls include the insidious “grandkid scam,” whereby a caller will ring you up claiming to be your grandkid, and they’re in some kind of emergency and need immediate financial assistance, and for this transaction to be kept a secret from their parents. Usually, they’ll browse your social media beforehand to get information on who your grandkids are and use key pieces of information to piece together a believable story, as well as an excuse for why their voice sounds different.
This sinister scam preys on grandparents’ love for their grandchildren, making it hard for an elder to say no in the heat of that moment. But nonetheless, you must not believe them. Ask for some kind of proof, such as a FaceTime video call.
Furthermore, don’t post revealing information online regarding your location, and keep your Facebook settings strictly private, or even feel free to delete your Facebook account entirely if you don’t use it – Facebook is notorious for being a violator of privacy, and if you can manage you might be best off without it.
According to the FBI, “People who grew up in the 1930’s, 1940’s, and 1950’s were generally raised to be polite and trusting. Con artists exploit these traits, knowing that it is difficult or impossible for these individuals to just say ‘no’ or just hang up the telephone.”
The warning signs of telemarketing fraud include phrases such as
- You must act “now”, or the offer won’t be “good”
- You’ve won something “free”
- You “can’t afford to miss” this opportunity
- You “must” send money
- You “don’t need to” do any vetting of them as a company
The Social Security Impersonation Scam
This is a scam where the caller will impersonate a Social Security Administration (SSA) official and make a claim such as your Social Security Number being linked to a crime, and the only way to resolve this issue is to send payment or personally identifying information (PII). Once again beware that number spoofing can be used to make the number calling you look like the legitimate SSA number. The actual SSA, however, would never call you like this. This is the number one most-reported scam to the U.S. Senate Special Committee on Aging’s fraud hotline, replacing the previous number one most reported: IRS impersonation scams (discussed earlier).
Only in select few situations, usually already known to the individual due to previous direct contact from the SSA, will an SSA employee ask for the confirmation of personal information over the phone. If you’re unsure if the person you’re talking to is a legitimate SSA employee, tell them to call you back later, and then call the SSA Inspector General’s toll-free number: 1-800-772-1213. If you think you’ve been the victim of a Social Security impersonation scam, you can fill out this form on the SSA Inspector General’s website.
In some versions of this scam, you’ll actually receive an email instead of a phone call but do note: the SSA will not send you emails asking for PII. Any such emails are scams.
Also, important to note: the way scammers often ask to be paid is, curiously, in gift cards. They’ll ask you to buy gift cards in x amount of dollars for y stores, and have you read them the gift card numbers over the phone. This is because it’s untraceable, and this tactic is used in many of the scams discussed in this paper. Someone asking you to pay them in gift cards is undoubtedly a scammer and asking for payment in gift cards is the tell-tale sign of such.
How to Beat Phone Call Scammers
There is a simple but effective way to protect yourself or an elder you know from phone call scams: place a script next to their home telephone telling them what to say. Have a script that says you never buy over the phone, and you need everything in writing before you ever give a stranger money. Ask for the caller’s name, number, business address, business identity, applicable license numbers, so on and so forth. Grill them. A scammer’s plot will fall apart quickly under scrutiny. A real professional would have no problem answering the questions or mailing out written correspondence.
The “Do Not Call” List
You can also sign up for the FTC’s National Do Not Call Registry, to avoid getting these types of calls in the first place, along with other tertiary do not call lists, as well as robocall blocking services like Nomorobo.
Google’s “Screen Call” Feature
Additionally, you could consider getting a Google Pixel as your next smartphone, because of Google’s wonderful “Screen Call” feature. Scammers prey on the fact that American seniors were raised in a time when saying “no” and hanging up on someone was rude, and they’re reluctant to do so – this politeness is something scammers take advantage of. Google’s Screen Call feature means you don’t even have to talk to them yourself, breaking free of the social obligation to be polite and listen. Furthermore, Google also recently added the feature to automatically decline known robocalls, based on Google’s own database.
Click here to read how it works, but essentially what happens is you get a call, and you have the normal options to either accept or decline the call, but you also have a third option: screen call. Hitting that pulls up a live transcript feed of the call, and your Google Assistant will tell the caller “Hi, the person you’re calling is using a screening service from Google and will get a copy of this conversation. Please state your name and why you’re calling.” Then, whatever they say back will be transcribed onto your phone screen in real time, and you have the option to have Google Assistant ask follow-up questions such as “Could you repeat what you just said?” (for use in the case they aren’t speaking clear enough for the voice recognition to coherently transcribe) or “I’ll call you back,” etc. In my anecdotal experience, spam callers hang up automatically at this point, saving you the hassle, while legitimate callers will state what they’re calling about, letting you easily weed out what’s important and what’s not. Click here to learn more.
Fake Product Scams
Con artists will often try and sell seniors fake products, such as anti-aging products, or pills and supplements they claim you need or claim will do x, y, or z magical thing for you – snake oil, essentially.
Here’s what to do: Don’t buy any supplements, pills, home remedies, or any such thing without asking your doctor first. Always ask, always get their opinion. Otherwise you may find yourself in a situation where you find out you’ve been paying a lot of money for something your doctor tells you is pointless, fake, or overpriced.
Fake Home Repair Scam
Another type of fake product scam is the one that offers a fake service. Sometimes con artists, typically after some local natural disaster or severe weather event, will show up at your door offering to do some kind of home repair or yardwork related to those recent weather events, and ask for payment up front. Then… they leave. Maybe they’ll claim they’ll come back tomorrow, but point is they’re gone, and they have your money with you.
Here’s how to avoid this: don’t hire home repair people who show up unsolicited and ask for an upfront fee. Never ever!
Elder financial fraud and abuse is highly underreported and not well-studied. Only an estimated 1 in 45 cases of fraud or abuse are reported to the authorities. Furthermore, only a mere 5% of victims ever partially or completely recover the losses from their fraud or abuse. If elder financial abuse were a disease, it would be an epidemic. According to the National Council on Aging, 1 in 10 Americans age 60 and older experience some form of elder abuse over the course of a single year – that’s 5 million seniors annually. For adults with dementia, it’s even worse: nearly half of them face abuse or neglect, NCOA reports. Financial abuse is the most common form of elder abuse. Yet, it’s also very underreported: only 1 in 45 cases of elder financial abuse get reported. On top of this, it’s also an under-studied phenomenon, as opposed to other types of abuse such as domestic or child.
Victims of elderly financial exploitation lose at least $2.9 billion per year, as reported in a widely cited 2011 MetLife study coming to a conservative estimate. In New York state alone, the estimated losses are between $352 million per year on the low end, to $1.5 billion per year on the high end – and that’s not including the cost to the public elder financial exploitation has (in New York state alone, the costs of investigating and intervening in cases of elder financial abuse is estimated at $14.5 million), nor the negative health consequences to the exploited, including a higher risk of mortality.
While the elderly are often a target because of their accumulation of wealth, counterintuitively, it’s actually the poor who get exploited the most, according to a 2014 New York study. This is because the elderly poor still have things thieves might want, such as an apartment to live in or regular Social Security benefits. Furthermore, as mentioned, it’s family members who are the most common perpetrators of the abuse, and poor folks are more likely to live with family than alone, thus increasing their risk. And lastly, it’s possible it’s an inverse relationship: the people studied were poor precisely because they had been financially exploited. It’s a complicated yarn to unravel, but the takeaway is that you could be a target for abuse regardless of economic class.
Why the Elderly are More Vulnerable to Scam Artists
“Cognitive decline is a key factor that makes the elderly more susceptible to financial exploitation,” says the SEC’s Office of the Investor Advocate in their 2018 report on Elder Financial Exploitation. While you may be nominally healthy, the aging brain is associated with a decline in what is called “fluid intelligence,” which is what enables us to hold multiple distinct pieces of information in our mind and to apply rules or logic to them to reach a decision. A decline in this type of intelligence leads to a decline in the ability to judge trustworthiness and riskiness, making the individual more susceptible to scams and fraud.
Seniors are more likely to have crystalline intelligence than their younger peers, which is essentially one’s store of knowledge – their wisdom. And, seniors are more financially educated than their younger peers on average. But despite this, the natural decline in fluid intelligence the aging brain experiences makes people more prone to mistakes and poor decisions, despite them knowing more on paper.
Furthermore, about 15-20% of persons 65 or older experience mild cognitive decline, or MCI. This is not something that interferes with daily living or independence, making it difficult to even notice. Yet, the ability to manage finances is one of the first skills to take a hit as a result of MCI. Additionally, the risk of dementia rises with age, and nearly half of those over the age of 85 have Alzheimer’s disease or another kind of dementia, putting them at substantial risk of financial exploitation.
This natural decline in our brain’s decision-making abilities comes about at the same time as we’re taking on more financial responsibility, as we trend away from employer-managed defined benefit pension plans, and towards individual investor-managed defined contribution retirement plans, such as 401(k)s. Additionally, more and more seniors are taking on student loans on behalf of their grandkids, increasing the financial burdens they’re facing.
And on top of all of this, the elderly are more likely to have more financial assets than their younger counterparts, making them a more enticing target for scammers and fraudsters to begin with.
So, what can you do to protect yourself or an elder in your life from financial scams?
Types of Financial Scams, Abuse, and Exploitation
“Catfishing” refers to being seduced online by someone who is not who they claim to be. Catfishing can be one of the most financially and emotionally devastating ways for an elder to be abused. Seniors are more likely to be socially isolated and alone, and the prospect of Internet love is inviting. Someone might message you out of the blue and say, “Remember me from second grade?” or some other plausible way they claim to know you. Regardless of their pickup line, less tech-savvy elders are more likely to miss the warning signs that something’s not quite right (as well as the discussion about fluid intelligence discussed earlier). You’ll be encouraged to send gifts, gift cards, expensive watches, or money to your ‘lover,’ and one day they’ll simply disappear to leave you wondering how you ever fell for it.
For friends and family members of seniors, here’s the things to look out for in the seniors in your life:
- Unusually giddy, acting “in love,” etc.
- Bills piling up despite sufficient income to cover them (i.e. they must be diverting it elsewhere)
Seniors can often be too embarrassed or scared to report such an incident to the authorities. We encourage you to not be embarrassed, and to report the incident to the authorities or a trusted confidant.
Phishing is the act of a hacker sending out a message, usually an email, saying something along the lines of “You need to change your Google password.” Then, you click on the button to do so, it takes you to a website that looks just like Google’s, and you’re asked to input your current password and then select a new one. But guess what: the website isn’t Google, and instead of changing your password, you’ve just handed over your current one to a hacker. This very method is how hackers breached the email server of the Democratic National Committee, by simply sending John Podesta a Google phishing email like the one described above. I myself almost fell for a PayPal phishing email, until I noticed that the URL of the landing page it took me to was not PayPal.com. And that sort of attention to detail is precisely how you combat phishing: look at the email that sent it to you and the URL of the link it’s trying to take you too. If it’s not official, report it as phishing (most email clients have an option to do this; you also have the option to report it directly to the FTC) and move on.
Phishing emails often try to capitalize on an emotional response; they make you think your account is in danger – usually the reason for a password change, they say, is because someone else tried to access your account – when in reality everything is fine, and only by going along with the phish will you actually be putting your account in peril.
If you realize you fell for a phishing email after giving it your information, go to the legitimate website and quickly change your password. This is also why it’s very important to have two-factor authentication (2FA), preferably 2FA via a mobile authenticator app (we’ve discussed why in a separate blog post you can read here).
As with most of our scam-avoidance advice, the biggest tip is to be weary, skeptical, and pay attention to the details.
Tech Support Scams
Another type of scam trying to capitalize on those who aren’t especially tech-savvy is the infamous tech support scam. This is a scam where an unscrupulous scammer masquerades as a legitimate tech support officer from Microsoft, or other relevant company. They’ll claim your computer has a virus, and you must call them and give them remote access to your computer for them to fix it, and it’ll all be free of charge – the perks of being a loyal Windows customer. But it’s a sham. There is no virus, and instead of helping you, the scammer will install malware, adware, or ransomware onto your machine. Alternatively, instead of trying to access your computer at all, they’ll just extort money from you, claiming they’ll fix some egregious issue your computer has.
Occasionally you may find YouTube videos of tech-wizzes outsmarting these scammers, and while they can be fun to watch, your best option is to simply not fall for the bait. Your Windows Defender antivirus program can already handle itself, and Microsoft never reaches out to customers with alerts to viruses on their computer. Don’t fall for it!
Great news! You’ve won a prize! Just please send us this small processing payment to receive it.
Yeah right. This is a scam whereby the scammer claims you’ve won some kind of amazing prize, and all you have to do is send them a few hundred dollars to claim your magnificent prize worth thousands, or a few thousand dollars to claim your price worth millions, etc. Often, they may even legitimately send you a check to deposit into your bank account, but by the time it bounces (because of course it will), the scammers have already run off with the “processing fee” they’ve extracted from you.
There are other variants of this same scam, but in sum, don’t believe anyone who claims you’re getting some great prize and all you have to do is give them a “small” fee or piece of personal information in return. It’s a trap!
This is one of the most reported and insidious types of scams out there, and it can be one of the most devastating, often convincing people to hand over their life savings for the promise of a great prize just over the horizon. According to the U.S. Senate Special Committee on Aging, in July 2019, Angela Stancik of Texas testified at a Committee hearing on phone scams, and she explained how her grandmother committed suicide after losing her life savings in a sweepstakes scam.
Live-in caretakers are often the people an elder will interact with the most on a daily basis, and the caretaker will have intimate knowledge of the elder. Because of this, they have significant influence and know how to manipulate the elder they’re supposed to be taking care of, even being able to convince them to keep their dealings a secret from the rest of their family. This can take the form of the caretaker spinning a tale about how they need x amount of money from the elder, and how they need to keep this transaction a secret. Of course, if a caretaker genuinely has some kind of life problem and a senior sincerely, of their own volition, wants to help them out, that’s perfectly fine and a generous thing to do. But make sure the caretaker isn’t just swindling you and discuss with your family about it first.
Only hire caregivers who are with an agency, are licensed, bonded, insured, and have undergone a background check. Also, see if your homeowner’s insurance covers contracted employees working within the home.
If you’re a friend or family member of an elder, make it clear to them that they should not keep secrets with their caretakers because of the risk of manipulation.
Tips to Combat Scammers and Abusers
There are many ways friends, family, and seniors themselves can protect themselves from abuse and con artistry.
Resources for Reporting Abuse and Getting Help
- At the end of the Fraud Book, there are helpful tip sheets that you can cutout and put near your telephone
The FBI’s Internet Crime Complaint Center (IC3).
- Getting a daily money manager
- Getting a fiduciary financial advisor
- Ask your bank about protective services they offer
- Get a monitoring service
- Setting up a trusted family member with read-only access to your bank accounts, so they can monitor your finances and alert you of suspicious activities
- Engage in cybersecurity activities
- While your operating system’s antivirus software is likely sufficient, it couldn’t hurt to install another one; we recommend MalwareBytes (and its browser extension)
- Create and manage secure passwords with a password manager, such as LastPass or Dashlane
- Protect yourself from malicious ads and links with a combination of uBlock Origin ad-blocker, EFF’s PrivacyBadger tracker blocker, and HTTPS Everywhere to keep your connections secure – if all that’s a bit too much, you can always just use Firefox as your default browser, which has many of these features as standard defaults.
- Read more about best cybersecurity practices that anyone can pick up from our blog post here.
- Get a paper shredder and be sure to shred any documents with any personally identifying information on them
- Get all important correspondence electronically or by Certified Mail, so that none of your mail will be stolen by mailbox thieves, who could then use the personally identifying information on it to hack or scam you
- When sending mail, if your mailbox isn’t secure, consider dropping off letters at USPS Blue Boxes or at the Post Office itself
Tips for concerned friends and family to look out for the elders in their life:
- Regularly visit the seniors in your life
- Don’t feel too polite to ask potentially invasive questions about an elder’s personal life and finances, otherwise you won’t act on the warning signs of elder fraud and abuse
- Tell elderly family members not to keep secrets with their caretakers
- Bring up scams and fraud in casual conversation, to keep the topic on their mind and maintain their healthy skepticism
Cross, Miriam. 2020. "Watch Out for Elder Fraud Web." Kiplinger's Personal Finance, January: 6.
Deane, Stephen. 2018. Elder Financial Exploitation: Why it is a concern, what regulators are doing about it, and looking ahead. Office of the Investor Advocate, U.S. Securities and Exchange Commission, Washington, D.C.: U.S. Securities and Exchange Commission, 40. https://www.sec.gov/files/elder-financial-exploitation.pdf.
n.d. Elder Abuse Facts. National Council on Aging. https://www.ncoa.org/public-policy-action/elder-justice/elder-abuse-facts/.
2019. Protecting Patients from Elder Abuse Scams. October 1. https://www.aafp.org/afp/2019/1001/p438.html.
n.d. Robocalls. Federal Trade Commission (FTC). https://www.consumer.ftc.gov/articles/0259-robocalls.
Senator Susan M. Collins (R-ME), Chairman, and Jr. (D-PA), Ranking Member Senator Robert P. Casey. 2020. Fighting Fraud: Senate Aging Committee Identifies Top 10 Scams Targeting Our Nation's Seniors. Washington D.C.: United States Senate Special Committee on Aging. https://www.aging.senate.gov/imo/media/doc/Fraud%20Book%20%202020.pdf.
Skiba, Katherine. 2019. Older Americans Hit Hard by Financial Fraud. February 28. https://www.aarp.org/money/scams-fraud/info-2019/cfpb-report-financial-elder-abuse.html.
Valerie Keene, Esq. n.d. Elder Abuse: Financial Scams Against Seniors. https://www.nolo.com/legal-encyclopedia/elder-abuse-financial-scams-against-29822.html.
—. n.d. Reporting Financial Abuse Against Elders. https://www.nolo.com/legal-encyclopedia/elder-abuse-financial-scams-against-29822-2.html.
Wong, Penelope. 2019. 3 Critical Ways to Prevent Elder Financial Abuse. February 22. https://www.consumerreports.org/elder-fraud/ways-to-prevent-elder-financial-abuse/.
2017. "World Elder Abuse Awareness Day." USC Center on Elder Mistreatment. University of Southern California. Accessed February 11, 2020. https://eldermistreatment.usc.edu/weaad-home/.