Senior Citizens Lost $1B To Scammers Last Year — A Look At The Most Common Elder Fraud Schemes
Millions of elderly Americans become the victims of some kind of financial fraud or internet scam each year. Just last year, for instance, senior citizens in the country lost $1 billion to fraud. That’s an increase of roughly $300 million compared with what was reported by victims over 60 in 2019, according to a recent Federal Bureau of Investigation’s (FBI) Internet Crime Complaint Center’s (IC3) Elder Fraud Report. Criminals know there is a high likelihood that this demographic has significant sums stored away in retirement funds, savings accrued from a lifetime’s worth of work, and that they also probably own a home and have good credit.
So, they typically work towards gaining the trust of their victims, or even use intimidation tactics and threats to take advantage of them. If scammers succeed once, they will likely keep that scheme or several others going because of the prospect of larger gains. Another reason why fraudsters go after seniors is because the elderly may not know how to report a fraud, or may even be ashamed they they’ve been defrauded and be less inclined to report such cases. The FBI says some may even be concerned that their relatives could lose confidence in their ability to manage their own financial affairs, and hence, they may refrain from reporting it.
But it’s not only the elderly who fall prey to fraud as we established in our piece last week on phone scams, and in earlier pieces on moving frauds and real estate wire frauds. Even the most prepared among us could be a potential victim of frauds and scams. That said, there are definitely ways to protect yourself, as a senior citizen, from becoming the victim of a scammer. One is to learn about the typical modi operandi of scammers, so that you can keep an eye out for them. In today’s piece, we take you through the most common types of elder fraud schemes, and what they usually entail.
Common Elder Fraud Schemes
It always helps to know what kind of scams fraudsters typically try to pull off in order to safeguard yourself from them. When it comes to elder fraud, these are some of the common scams that you need to watch out for:
These include all kinds of schemes designed to tug at a victim’s heartstrings. In 2020, the IC3 received reports from 6,817 elderly victims who lost over $281 million to confidence fraud/romance scams. It accounted for the highest losses reported by seniors during the year. In these cases, criminals typically pose as interested romantic partners on social media or dating websites to capitalize on their elderly victims’ desire to find companionship. They adopt fake identifies to gain a victim’s affection and confidence. Often, such scams involve the use of religion to garner trust. It’s important to remember that con artists can be, and are, present on most dating and social media sites. And they are experts at what they do. So, they will come across as genuine, caring, affectionate, and believable. Their goal usually is to establish the relationship as quickly as possible. Some may even propose marriage or make plans to meet in person with the victim, but that will never happen. The end result is the same, though, as most will eventually ask the victim for money. The IC3 report says many romance scam victims reported being pressured into investment opportunities last year, especially utilizing virtual currency.
This category of elder fraud is closely associated with romance and confidence scams. Under this, the modi operandi involves criminals and scammers posing as a relative — usually a child or grandchild — claiming to be in immediate financial need. In this type of fraud, criminals make it seem like the loved one is in dire, urgent need to induce panic and make their victims fall for the scheme.
Online shopping scams
Many seniors all over the country had to shop online for the first time ever due to the Covid-19 pandemic. An increasing number of the elderly also got on to social media platforms to connect with others, much like everyone else. But this combination of being relatively new to online shopping and social media has created an easy window of opportunity for scammers: false advertisements. Many victims report ordering items from links advertised on social media and either receiving nothing at all or receiving something completely unlike the advertised item, the IC3 report says. Non-delivery of products was the second most reported fraud among seniors last year according to IC3. This kind of fraud extends to fake products, too. Even something as seemingly low-risk as counterfeit personal products listed online, which are common, can actually cause long-term harm to customers. Government and industry studies and testing have discovered dangerous ingredients within such cosmetics, the IC3 report says. Fraudulent cosmetics may contain poisonous substances and dangerous levels of bacteria from unknown sources, and some have even caused serious health conditions, the report adds.
This category also includes charitable organization-related fraud. It basically involves scammers claiming to work for legitimate charitable organizations to gain victims’ trust, and trick them into making “donations” to charity. Or they claim their targets have won a foreign lottery or sweepstake, which they can collect for a “fee.” The initial contact in a lottery/sweepstakes scam is often a call, an email, a social media notification, or a piece of physical mail offering congratulations for winning a big contest, lottery, or sweepstakes that the victim did not enter. The catch? They require “winners” pay an upfront fee, or taxes, to collect the prize. Often the payments are required to be made via wire transfers or prepaid cards, transactions that are tougher to reverse when the scam is discovered. To make matters worse, scammers even ask for the victim’s bank details to “transfer their winnings.” Inheritance scams can also be included under this category, with scammers falsely contacting victims to claim that an unknown, distant relative has left a large inheritance to the victim. In such cases too, the victim is asked to pay taxes and fees upfront before the “inheritance” can be transferred.
Tech support scams
This was the third most reported fraud among senior citizens last year. Under this category, criminals typically pose as technology support representatives and offer to fix non-existent computer issues. The scammers gain remote access to victims’ devices and sensitive information. Elderly victims accounted for 66% of the total reports of tech support fraud to the IC3 last year, and 84% of the total losses. Initial contact can happen in various ways ranging from a phone call to advertising a fake number on internet search results that victims end up calling to emails, as well as pop-up messages. IC3 said it saw a large increase, in 2020, in the number of complaints involving criminals posing as customer support for financial institutions, utility companies, or virtual currency exchanges. Many reported an upsurge in the impersonation of popular online shopping companies and e-commerce companies.
Possibly one of the toughest fraud situations to deal with emotionally for seniors is those committed against them by a caregiver or relative. In such cases, relatives or acquaintances of an elderly victim take advantage of them or otherwise get their money somehow.
Some other kinds of schemes that fraudsters use to swindle from seniors could include outright extortion, investment scams, government impersonation fraud, TV/radio scams, home repair fraud, etc. Extortion is used in various schemes reported to the IC3, including email extortion attacks, hitman schemes, government extortion, and sextortion. Virtual currency is commonly demanded as the payment mechanism because it provides the criminal an additional layer of anonymity when perpetrating these schemes. While government impersonation is not reported as often, millions of dollars are still lost by the elderly to criminals impersonating government officials.
This is the first piece in a series Biometrica will be doing on elder frauds. Up next in the series will be a post on tips to prevent yourself from becoming victims of such scams.