According to the U.S. Department of Justice’s latest data on elder financial exploitation, the elderly are defrauded out of more than $3 billion every year. This estimate may be low. Most incidents of elderly scams go unreported. Often, victims choose not to report the crime, whether out of embarrassment, fear or simply not knowing how to get help.
Isolation during the COVID-19 pandemic worsened the problem, leading to an increase in elder scams and theft. The Consumer Financial Protection Bureau received over 62,000 reports of suspicious financial activity in 2020 and 72,000 in 2021. More than 35% of the reports came from older adults.
No one likes to think they could ever fall for a scam, but data shows it is a common problem and older adults are most vulnerable. Here is an overview of common elderly scams to watch for and some fraud prevention tips that can help protect anyone from financial exploitation.
Two Primary Types of Elder Financial Exploitation
The Financial Crimes Enforcement Network (FinCEN) recently released an advisory clearly defining elder financial exploitation and the severity of the problem. FinCEN defines it “as the illegal or improper use of an older adult’s funds, property, or assets.”
The advisory classifies incidents of elder financial exploitation as theft or scams. Here is how the two differ and how to spot them.
What Is Elder Theft?
FinCEN classifies elder fraud as theft when the victim knows the theft perpetrator. A trusted person often commits the fraud, whether a friend, financial advisor, caregiver, neighbor or family member. Elder theft comes in many forms, including:
- Theft of Social Security and other checks
- The transferring of property and other assets into the fraudster’s name
- The exploitation or power of attorney arrangements or legal guardianship to access funds
- Maxing out credit cards in the victim’s name
- The liquidation of retirement accounts or other savings
What Are Elder Scams?
When the perpetrator is unknown to the victim, the fraud is classified as an elder scam by FinCEN. Often, the elderly victim is contacted by the scammer via email, phone, text, an app or social media and tricked into providing the fraudster with personal and financial information, including account numbers and passwords or a social security number. Some victims are coerced into sending payments under false pretenses.
Common Elderly Scams and How They Work
Here is a quick overview of some common elderly scams. Staying aware of scams and how they work can help you spot and avoid them.
Government Imposter Scams
The scammer impersonates an official from a U.S. government agency, such as the Social Security Administration or the IRS, and claims accounts have been suspended or threatens account seizure for supposed crimes committed by the victim. The victim provides financial information to correct the problem.
A fraudster sets up fake profiles on online dating apps and sites to establish a close or romantic relationship with older adults and eventually request money.
Grandparent scams are classified as emergency/person-in-need scams. The fraudster makes the victim believe that a relative, often a grandchild, is in an emergency situation and needs immediate funds.
Lottery and Sweepstakes Scams
The scammer tells the victim they have won a prize but must pay a shipping and handling fee to claim it. The victim never receives the prize, and their bank information is used to defraud them of more funds.
Fraud Prevention Tips for Avoiding Scams
While the elderly might be most vulnerable to scams, anyone can fall victim. Staying up to date on common financial scams and knowing how to spot them can go a long way in protecting your money and identity. Using the following online safety practices can also help:
- Learn to spot indicators of fake texts and emails, such as prizes for contests you did not enter or notice of a suspended online service or account, such as Amazon or Netflix.
- Do not give personal or financial information over the phone, by email, text or through an app. A financial institution nor a government agency will request information from you in these ways.
- Do not click on links in an email or text from an unknown sender.
- Call your financial institution immediately if you believe you’re the victim of a scam.
We Can Help
Your financial security is vital, and we are here to help ensure your financial safety. If you have any concerns about possible fake emails or calls from InterBank, don’t hesitate to contact us immediately. No one from InterBank will ever call, text or email you asking that you share your banking information. If you think your accounts have been compromised, contact us or make an appointment with a banking representative who can assist you.