Elder fraud is a serious multibillion-dollar problem. Millions of senior Americans fall victim to financial fraud each year. Unfortunately, the fraud trends show an increased number of victims and increased financial impact.
Since Florida is one of the most popular destinations for retirement, it’s not surprising that the FBI’s 2021 “Elder Fraud Report”(1) indicated that the state ranked second in the U.S. for the number of fraud victims over the age of 60 and the amount of financial loss—there were over 9,600 reported elderly victims sustaining a total loss of $224,205,716. Many crimes go unreported because the victims are embarrassed, scared, or do not know whom to contact.
The three most prominent fraud types include:
1. Confidence Fraud/Romance Scams
Love is not just for the young. Some might find it surprising that this fraud accounts for the highest losses reported by over-60 victims. Sadly, these scammers often exploit the loneliness regularly experienced by seniors. The con artist often uses a fake online identity to gain the victim’s affection and confidence. The victim will eventually be asked for money or pressured into investment opportunities, especially utilizing virtual currencies. Criminals might also impersonate a loved one such as a grandchild, a niece, or a nephew, claiming to be in serious trouble and need money immediately.
2. Technology Fraud
Sophisticated scammers target businesses and individuals by trying to compromise their email accounts to conduct unauthorized funds transfers. Another popular scheme involves a criminal claiming to provide customer, security, or technical support or service in an attempt to defraud seniors.
3. Investment Fraud
The perpetrators range from professional investment advisers to persons the victim trusts and interacts with daily such as a neighbor, sports coach, or a friend from the same religious or ethnic social groups. They often offer low or no-risk investments with guaranteed returns, overly consistent returns, complex strategies, or unregistered securities with “get rich quick” promises.
A Tale of Caution
While the example of a romance scam below might sound like something you would read in a novel or see in a movie, this fraud happens frequently. Read on to see how easily someone can fall victim to this situation.
Lula meets a handsome and charming man named Rick on a popular seniors dating app. They have numerous conversations and discover that they both have a love for traveling. Rick tells Lula about a group trip he is organizing to Dubai. The cost of the trip is $3,000 per person. He invites Lula to go, and she gives him the money for the trip. Lula receives an email from Rick confirming her spot in the group trip was secured. Rick continues to woo Lula with nice dinners and gifts. They talk often about their upcoming trip. A month later, Rick calls Lula to explain that the hotel the group is using is overbooked and that he would need an additional $1,000 to secure better accommodations. Lula, feeling a bit uneasy about shelling out the extra funds, asks for the details regarding the new hotel. Rick provides her with a brochure of a high-end boutique hotel and the travel itinerary. Feeling better about paying the additional money, Lula gives Rick the money for the trip. A week later, Lula tries calling Rick only to find out that his number is no longer in service. She calls the number on the itinerary, and it is a number to a bakery in another city. Lula tries to contact Rick via the dating app only to find that his profile is no longer active.
How could this have been prevented?
Avoiding Elder Fraud
- Be cautious with posting your personal or financial information online. Criminals use these details to better understand and target you.
- If someone or something sounds too good to be true, it probably is.
- Never send money to anyone you have only communicated with online, by phone, or do not know well.
- What to do About Tax-Related Identity Theft” for information on how to freeze your credit.
- Do not click on links in emails and text messages unless you are 100% certain that they are legitimate.
- Go slowly and ask lots of questions. Resist the pressure to act immediately. Legitimate customer, security, or tech support companies will not initiate unsolicited contact with individuals and demand immediate payment or require payment via cash, prepaid cards, gift cards, or wire transfers. Never give unknown, unverified persons remote access to your devices or accounts.
- Stop and talk to someone you trust, such as a family member, a close friend, or financial advisor, about what is happening. They might be able to point out the red flags and help you realize a scam.
- Do not invest in anything you are not sure about. Working with a financial advisor with reputable credentials helps lower the risk of investment fraud and unauthorized fund transfers. For instance, Resource Consulting Group (RCG) verbally confirms with the client when the requested disbursement amount reaches a certain threshold.
- To help your aging parents avoid elder fraud, consider holding family financial meetings regularly, establishing power of attorney on key accounts, setting up a system to pay all bills electronically and automatically, and helping them monitor their account activities and credit reports.
- Check out the resources below to learn more about the detail of each type of fraud, as well as some additional tips and tricks on how to avoid it.
Reporting Elder Fraud
If you or someone you know has been a victim of elder fraud, call the U.S. Department of Justice’s National Elder Fraud Hotline at 833–FRAUD–11 or 833-372-8311. To report fraud or file a complaint in Florida, visit MyFloridaLegal.com or call 1(866) 9NO-SCAM or 866-966-7226.
(1) Federal Bureau of Investigation (FBI): Elder Fraud Report 2021
This information is for educational purposes only and should not be considered investment advice or an offer of any security for sale.