A Booming Problem: Senior Financial Fraud

Seniors are often targeted by fraudsters because they are perceived to have more wealth and presumed to be less knowledgeable about navigating online. - Adrienne Vickery, Associate VP at TD Bank Group?

Financial fraud targeting seniors has been a problem for decades, but it has only picked up steam due to the proliferation of online identities. In 2020, the IC3 reported $966 million in fraud losses for seniors; but in 2022, losses skyrocketed to a staggering $3.1 billion.

The IC3 has an eye-opening chart comparing demographic data:?

This shows that while Millennials (age 30-39) see more total instances of fraud as a group, when it comes to the value of these fraudulent activities, seniors are defrauded for much, much more.

What’s worse is that it’s likely that these figures are actually underreported as the shame or embarrassment of being scammed can prevent seniors from reporting fraud to the authorities. One study by True Link Financial suggests that seniors’ true losses to criminal fraud could reach nearly $13 billion each year.

How Seniors Get Scammed

While criminals are always coming up with new and innovative ways of stealing from seniors, the most prevalent scams are evergreen. In 2022, these five scams were responsible for the highest losses among people over 60.

Investment Scams

This common scam always follows a similar script: a scammer enters into contact with a senior, gains their trust, and offers them the “opportunity of a lifetime”: a so-called investment that seems low-risk and high-reward. Scammers often target seniors for their retirement savings and home equity, and use fancy buzzwords like “cryptocurrency” to trick them. They aim to convince the senior to hand over their credit card information or personal information – and then they cut and run, using either the credit card information or the personal information to commit credit card fraud. This leaves the senior devastated, and sometimes destitute. According to IC3, seniors over 60 lost almost one billion dollars to this kind of fraud in 2022.

Tech Support Scams

There’s a mysterious pop-up on Grandpa’s computer saying he needs to call a number to fix his device. It’s a scam. Scammers exploit seniors' lack of tech know-how by creating fake messages that prompt them to call a phone number. Once on the line, they demand a fee or ask for remote access to the device to steal credit card information. IC3 reported that people over 60 lost almost $600 million to tech support scams in 2022.

Business Email Compromise (BEC) Scams

A Business Email Compromise (BEC) scam is an offshoot of phishing in which scammers use email to trick their victims into sending them credit card information or other personal information that they then use to access the victim’s credit card for fraud. The scammer poses as a trusted organization or person and asks for the senior to divulge their personal information as a “confirmation” of their identity or to pay a fake bill by credit card. According to IC3, BEC scams defrauded people aged 60+ out of almost half a billion dollars in 2022.

Confidence/Romance Scams

Confidence and romance scams are meant to take advantage of lonely and dependent older adults. They adopt fake identities that gain their victim’s trust and affection, and then use them to manipulate the senior into divulging their credit card information. Once they have the credit card information in hand, they can begin defrauding their target.?

With elaborate fake profiles, scammers prey on seniors with little understanding of online dating, eventually asking for credit card details to fund a "visit." In what’s known as the “grandparent scam,” a scammer calls a grandparent, saying something along the lines of, "Grandpa, guess who?" When the grandparent responds with the name of a grandchild, the scammer gains their trust and asks for credit card or other personal information. The “grandchildren” often plead for secrecy, making it even more devious. These types of scams were responsible for the fourth-highest losses among seniors in 2022.

Government Impersonation Scams

Imagine getting a call from the IRS, Social Security, or Medicare, demanding that you pay your bill or the service that you depend on will be cut off. Scary, right? Scammers prey on seniors by pretending to be from these agencies, often using "spoofed" phone numbers to look legitimate. They make threats or create confusion to coerce seniors into handing over their credit card information in order to keep their benefits.

Once the scammers have their victim’s credit card information, they are free to commit fraud – and the IRS, Social Security Association, or Medicare office is none the wiser. These governmental scams represented more than 100 million dollars in losses in 2022. Remember: these government agencies will never call anyone asking for payment over the phone. They prefer to communicate the old-fashioned way: snail mail.

Tips to Protect Yourself or a Loved One from Senior-Focused Fraud

• Never give out credit card or personal information, and warn your loved ones about doing so.
• Learn to recognize common scams and talk to your loved ones about them.
• Encourage older friends and family to keep an eye on their finances and ask for help if needed.
• Speak to your older friends and family about tools and strategies for fraud protection.

If you or your loved one may have been scammed, don’t panic! Here’s what you can do:

• Have the phone numbers of local police, your bank, and Adult Protective Services readily available.
• Report scams to the FTC online, or help your loved one do so.
• Connect with trusted loved ones for help and support.
• Reach out to your credit bureau and/or the SSA to limit damage to you or your loved one’s credit scores.

You Can’t Teach an Old Dog New Tricks: Why Existing Anti-Fraud Tools Don’t Measure Up

Many tools exist to help seniors and their families avoid fraud. These tools include advanced card encryption technologies and AI fraud warning systems. While they are helpful, they don’t protect against scams that exploit human vulnerabilities. It is difficult to protect seniors against fraud because they are so many fraud attempts made against this group, and because seniors are less likely to easily adapt to new technologies. In short, friction increases fraud.

However, EVC (Ellipse Verification Code) technology offers a promising solution. This is a new type of credit card “chip”. It allows users to change or hide a payment card’s security code at-will, which protects the card efficiently and seamlessly. EVC-ready cards work like any other card: you swipe, tap, or dip them in stores or at ATMs without any extra steps or checks. This allows EVC to protect everyone, even those who have trouble grasping the newest technology.

So as fraudsters get craftier, it’s crucial to stay informed and vigilant. By understanding the common types of scams targeting seniors and employing protective measures, you can help safeguard yourself and your loved ones.