Start a Conversation: Why do criminals frequently succeed when targeting older individuals?

In my career, I observed the evolution of financial crimes successfully targeting older adults. I do not write this article to outline fraud schemes, tools or methods, as government websites adequately cover this field and, perhaps more importantly, fraud schemes, tools and methods continually evolve. Nor do I write to outline a universal risk mitigation strategy for older adults, as each individual presents their own unique risks and must tailor mitigation efforts to those risks. Rather, I write from experiences to outline 8 primary reasons I observed that explain why criminals frequently succeed when targeting older adults. By understanding these reasons, the reader will hopefully achieve a greater understanding of their own fraud risk and/or the fraud risk of older family members and start a conversation that results in meaningful and practical steps to mitigate this risk.

Reason 1: Criminals target older victims who do not display signs of diminished cognitive abilities.

Most of us imagine the stereotypical older fraud victim as a frail individual with significantly diminished cognitive abilities. These victims certainly exist, but only as a part of the much larger universe of older victims. 

Studies show that, as we age, we slowly lose our ability to make intelligent financial decisions and criminals target older individuals regardless of any noticeable signs of cognitive impairment. Targeting older adults who can otherwise effectively manage their basic affairs presents significant barriers to the protection efforts of others.

When an older family member displays no obvious signs of diminishing cognitive ability, the family may see little reason to engage in a potentially difficult conversation with the older family member concerning the older family member’s increasing vulnerability to fraud risk. Unfortunately, if a criminal targets that family member, the family’s lack of engagement may result in a large financial loss.

Banks have only limited tools to prevent a seemingly competent individual from doing what they want with their money. The bank may have a candid discussion with the victim, deny certain transactions based on BSA/AML/OFAC or similar concerns, make a referral to a local adult protective services agency (“APS”), file a suspicious activity report with the government or even exit the relationship. Unfortunately, most of these actions represent mere speed bumps to fraudulent activity.  

Many APS agencies lack the willingness to interject themselves into a situation involving an otherwise competent older adult who displays no signs of physical abuse or diminished cognitive ability. If APS gets involved, they possess few tools beyond reaching out to the victim’s family or repeating the bank’s prior conversation with the victim. 

Prosecutions generally trail the fraudulent activity and may only occur after the victim has suffered a significant and irreversible financial loss. In the absence of clear and convincing evidence of criminal activity, law enforcement will generally not take action to restrict an otherwise competent victim from voluntarily giving the victim’s money to a suspected criminal.

As explained further herein, the seemingly competent victim will completely accept the criminal’s lies and become the criminal’s staunchest ally. The victim brushes aside any concern raised by others, demands access to their funds and finds a way to put those funds in motion to the criminal.

Reason 2: The risk environment for older individuals has dramatically changed over the last 25 years.

Twenty-five years ago, older adults faced a vanilla set of risks, primarily from those with physical contact to the victim. While these risks remain and have expanded, a new and highly skilled player has entered the field dramatically altering the risk landscape.

Organized criminal rings recognize older individuals possess wealth and vulnerabilities. These criminals develop sophisticated and cleverly camouflaged schemes to fool seemingly competent people. They understand modern financial products, how they work and the fraud opportunities they present. They understand technology and how to use it to their advantage. They possess patience to slowly groom a victim. They understand how to move funds quickly in ways that do not easily trigger detection by third parties. They learn from their failures to continually improve their schemes. When they develop a scheme that works, they pursue it until stopped. Once stopped, they simply shift certain elements of the scheme to continue its success.

For both online criminals and criminals in physical contact with the victim, new banking products and services designed to make life easier make crime easier as well. On-line banking, if compromised, may result in an immediate and significant financial loss. Money moves faster and with less human interaction today than it did even 5 years ago. The criminal relies on this speed and anonymity as delay and human interaction increases the potential for detection.  

All of these factors contribute to the dual realities that more older individuals will find themselves targeted for fraudulent activity and the criminal has a higher probability of success when this occurs.

Reason 3: Social media enables a criminal to create an imaginary bond with the victim. 

Social media allows us to reconnect with people and places from our past, stay current with friends, announce our adventures and express our opinions on everything from politics to the best way to clean a BBQ grill. Social media also has found its way into the hearts of criminals who love it for the wealth of useful information it contains. 

Obvious criminal uses of social media include learning details about the victim needed to steal the victim’s identity. A more subtle criminal use of social media exists as well.  Criminals use information from social media to introduce themselves, physically or electronically, to the victim by identifying themselves as someone who holds similar opinions on politics, sports or religion, likes or dislikes the same things, shares a common background or shares the same values and ethics. This familiarity allows the criminal to create an imaginary bond with the intended victim in which the intended victim slowly accepts the criminal as “someone they know”, a person “like them” and someone they trust. This bond disarms the victim’s natural defenses to offer the criminal openings for fraudulent activity.

Reason 4: Criminals research their victims to meet them where they are with a scheme tailored to that victim.   

Whether a shadowy figure sitting at a computer terminal 3000 miles away or the smiling phony contractor meeting the victim in person, a criminal takes the time to research the victim. 

While criminals do not only target the rich, they research the victim’s wealth and liquidity. This allows the criminal to frame a financial expectation for that victim and to weave that expectation into the scheme. 

The criminal also probes the victim’s cognitive ability. If the victim has lost significant cognitive ability, the criminal may simply trick the victim into giving the criminal access to the victim’s on-line banking. If the victim continues to possess reasonable cognitive abilities, the criminal may use a more subtle and sophisticated scheme to slowly lure the victim into a trap. 

Perhaps most importantly, the criminal discovers the victim’s needs, sympathies, fears and interests to tailor a scheme to that victim. For example, the potential victim looking for employment receives an employment scam, the potential victim with financial concerns receives a something for nothing scam, and the potential victim seeking a social outlet receives a romance or companionship scam. A criminal with physical contact to the victim may fill a currently unmet need for companionship. Criminals looking for a quick money grab may forgo detailed research and simply default to basic fears everyone shares such as a call from the “IRS” demanding immediate payment on an allegedly owed delinquent tax and threatening imminent arrest if not paid.

By learning the target’s needs, sympathies, fears and interests, the criminal presents the victim with a scheme that appeals to that victim from the outset and contains alleged facts the victim will view as reasonable and plausible. 

Reason 5: The criminal builds an unusual and dangerous level of trust with the victim.

The trust a criminal develops with the victim goes far beyond simple trust and may represent the most important and frustrating reason why criminals frequently succeed when targeting older individuals. 

The criminal knows who may reach out to the victim to express concerns over the victim’s actions and builds into the victim reasons why the victim must discount these concerns. A family member expressing concerns only expresses concerns because that family member wants to inherit or even steal the victim’s money. The victim’s bank questioning a transaction is only concerned about itself and compliance with government regulations that have nothing to do with the victim. APS has aligned itself with the victim’s evil family members and wants to deprive the victim of the freedom to act. Law enforcement is overzealous, mistaken and does not understand the victim’s legitimate needs or desires. The criminal will convince the victim to lie to these parties, withhold critical details or even limit/discontinue further communication. By doing this, the criminal insulates the victim from those who could potentially stop the fraudulent activity.

The criminal who successfully builds this level of trust convinces the victim that the criminal, and the criminal alone, shares the victim’s interests. The victim frequently ends up trusting the criminal and no one else. In situations in which the criminal has physical contact with the victim, this trust may extend to dependence for common needs such as transportation, groceries and help paying bills. In many cases, when the victim receives an expression of concern from a third party, the victim immediately reports that communication to the criminal. The criminal expects this and has ample talking point ready to invalidate the concern, discredit the party raising the concern and assure continued access to the victim’s funds. Once the criminal achieves this level of trust, others have little chance to protect this victim.

Reason 6: Significant barriers diminish the efforts of those seeking to protect the older adult from fraud risk.

Our society values freedom and will not unnecessarily restrict an older person’s ability to look after their own affairs. When an adult loses the ability to adequately handle their financial affairs, the law may appoint a guardian to take control of the adult’s finances. Bringing a guardianship action against a loved one in the absence of a catastrophic medical condition represents an extremely difficult and emotional decision. Guardianship proceedings cost money, take time, create stress and anxiety for the subject and may irreparably fracture family relationships. As such, many families avoid seeking a guardianship, even when necessary.

An older adult who anticipated their future vulnerability to fraud may have wisely appointed a trusted family member to act as agent under a power of attorney. Such an agent possesses tools to protect the older adult, however, powers of attorney generally remain revocable as long as the grantor remains competent. The criminal may neutralize the agent simply by having the victim revoke the power of attorney. 

Privacy laws may prevent well-meaning parties such as family members, banks, APS agencies and law enforcement from easily or quickly sharing critical pieces of information necessary to fully assess the situation in time to take meaningful action. 

Law enforcement faces significant difficulties in prosecuting criminals who target older individuals and may look to other parties, such as the victim’s family, to protect the victim.

Banks monitor accounts for suspicious activity and focus significant efforts on detecting unauthorized transactions. Unfortunately, many schemes targeting older victims convince the victim to perform the banking transaction. This requires banks to engage in the more difficult task of timely detecting and investigating fully authorized but unusual/suspicious activity. Criminals understand common detection methods and construct means to obtain funds that do not immediately appear unusual or suspicious.

In the absence of a trusted party legally assuming control of the older individual’s finances, these barriers and others assure the older individual remains subject to some fraud risk.

Reason 7: The victim overestimates their own abilities to spot fraud.

Many older individuals understand basic fraud risk but overestimate their ability to spot a scheme targeting them. Unfortunately, the media inadvertently contributes to this over confidence by focusing attention on stories of obvious fraud schemes targeting older individuals with diminished cognitive abilities as opposed to more cleverly camouflaged schemes that trap otherwise competent seniors. The potential victim fails to credit the criminal’s sophistication. They fail to understand how the scheme targeted for them will escape their detection because the criminal understands them, chose a scheme tailored to them and has successfully used this scheme on individuals just like them. They fail to understand how the criminal will earn their trust and neutralize the good faith efforts of others to protect them. They fail to understand that, once the criminal successfully engages them in a dialogue, they will volunteer information the criminal needs to defraud them.  

By overestimating their ability to detect fraud, the older individual may inadvertently allow the criminal into their life and, once there, the risk to that older individual increases dramatically.

Reason 8: The window of opportunity to mitigate fraud risk closes without notice.

Some studies suggest the ability to make sound financial decisions declines gradually after the age of 50. Most will not notice their own gradual cognitive decline and no one knows the actual date when this decline will intersect with a fraud scheme. Pride tells the potential victim they remain sharp and do not currently need a to intentionally mitigate their fraud risk. They believe they will recognize when the time comes to start this process and they do nothing now. Unfortunately, this delay only benefits the criminal. As outlined herein, once a criminal targets an older victim, the criminal begins a process in which the victim slowly aligns their behavior to the criminal’s scheme. Indeed, many older victims will then focus their efforts on finding ways to get money to the criminal and avoiding the interference of others. For this victim, the window to effectively mitigate fraud risk has effectively closed.

Conclusion

Understanding the primary reasons criminals can successfully target older individuals hopefully allows the reader to appreciate this risk in a way that allows them to begin formulating a strategy to mitigate this risk in themselves and/or their older relatives. As indicated the outset, each individual presents their own unique risks and must develop a risk mitigation strategy tailored to those unique risks. Notwithstanding, all individuals can start the process with some common sense steps upon which they can then develop their unique risk mitigation strategy. I will follow this article with a second article outlining some of those common sense steps.

Ken Krach

June 2020