Elder Fraud: A Guide for Seniors, Caregivers, and Relatives
Published: May 21, 2021
Elder financial abuse or exploitation is defined in the Older Americans Act as:
“The fraudulent or otherwise illegal, unauthorized, or improper act or process of an individual, including a caregiver or fiduciary, that uses the resources of an older individual for monetary or personal benefit, profit, or gain, or that results in depriving an older individual of rightful access to, or use of, benefits, resources, belongings, or assets.”
This guide explains more about elder fraud, why the elderly are targeted, and what you can do to prevent elder fraud.
Older Americans lose an estimated $2.6 billion or more annually due to financial abuse and exploitation, funds that could be used to pay for basic needs such as housing, food, and medical care.1 With large numbers of Baby Boomers aging into retirement, experts predict the problem is only going to get worse.
Why are Elders Targeted?
The number of seniors in the U.S. who have experienced some form of financial abuse is estimated to be as high as 37 percent. In other words, if you have three living grandparents or two older parents, there’s a good chance at least one of them has been a victim of financial abuse, and they may not even know it.2 Additionally, it's estimated that 38 percent of all fraud cases target the elderly.3 Why is the rate so high? There are a few main reasons:
It’s easier to phish information from people if you know what their problems are. Seniors tend to share common concerns, such as medication costs, proper health care coverage, financial security as retirement funds run out, and providing for loved ones left behind. From a criminal’s standpoint, it makes sense to craft phishing emails on a small number of topics that a large percentage of recipients will be interested in.
Many cases of elder fraud wouldn’t have occurred at all if the victim had spoken to a friend, family member, or carer about what was happening. The problem is that many seniors are isolated and don’t have anyone to run things by.
Most people over 30 today have memories of a world without the internet, and seniors would have spent most of their lives without using email. That can lead to confusion over how reliable email is, and how much trust to assign it.
It’s not uncommon to experience some level of diminished mental capacity as we age. That can tax our decision-making abilities and lead to poor choices.
Recognizing Elder Fraud
Sometimes it can be painfully obvious when fraud has occurred. A suddenly empty bank account can make it pretty clear that you’ve been scammed. In other cases, the fraud can be more of a long-term process during which small amounts of money are siphoned off over time. If you’re vigilant, you may be able to spot the signs of elder financial fraud happening to yourself or to a loved one.
How to Spot Elder Fraud Happening to You
While we’d all like to think we’re savvy enough not to fall victim to any type of fraud, criminals can be surprisingly clever and persuasive. In many cases, the fraud is happening in plain sight and someone is asking you to hand over money. However, in other cases, it could be happening without your knowledge. Here are some tell-tale signs that someone is trying to use you for their financial gain without contacting your directly:
You have unexplained charges on your credit card.
It’s prudent to review your credit card and bank statements at least monthly. If you see any unexplained charges, you should report them to your bank or credit union right away. Even very small charges should be explained. When credit card numbers are stolen, it’s common for the thieves to put through a small initial charge to ensure the card is still valid. This can increase the value of the credit card details on the black market.
You get an alert from your bank.
Many credit card companies and banks have default fraud alert systems, and some will allow you to set up your own activity alerts. This will let you keep track of banking activity in real time rather than waiting for monthly statements. You’ll likely be able to set up online access to your accounts as well to monitor account activity.
You credit report looks odd.
Credit monitoring companies are required to provide free credit reports at least annually. Ensure you take advantage of that and review your reports, looking for accounts that you didn’t open. And look for a change in your score that indicates someone may have been racking up bad debt in your name. USSFCU members can review their FICO score for free through their CU AnyHour+ Online Banking Portal.
How to Spot Elder Fraud Happening to Someone Else
It can be very difficult to detect elder fraud unless you’re in frequent contact with the victim. As a caregiver or family member, you may be able to detect telltale signs that things are not normal. Some signs can be:
A change in daily habits that could indicate a loss of money.
People who know they have been scammed are sometimes embarrassed to admit it, but changes in their behavior may help you spot financial struggles. For example, changes in spending habits or out-of-character comments about not being able to afford certain things could be signs.
If you have authorized access to their mail and banking documents, you may find unpaid bills, returned checks, or unusual payees on statements.
Outright complaints from the victim that they are missing money.
Someone who is confused or may be operating at a diminished mental capacity may not know they’ve been scammed and just can’t figure out where their money is going. Or it’s possible that the victim does know they’re being defrauded somehow, but just can’t figure out how it’s being done.
Extravagant family members or friends.
Caregivers or other people close to the victim who seem to have items or a lifestyle above what you would expect to be affordable can be a red flag. They may just be good savers, or they may be supplementing their income in other ways.
Preventing Elder Fraud
One of the less obvious things you can do to prevent fraud is to be socially active. If you maintain a group of friends or stay close to your family, you’ll have a peer group to bounce ideas off. If something seems suspicious, you’ll have someone to talk to. Also, you’ll have people in your life who know your day-to-day lifestyle and may be able to recognize if something is wrong. Other steps you can take to prevent fraud include:
Never give out any information or money based on an email.
Email is an insecure means of communication and is used in a wide variety of scams. It’s easy to craft an email to make it look like it came from a trusted entity. There should be no reason to send anyone money based solely on an email request, even to people who appear to be friends or family.The same goes for personal information. If someone asks for your full name, phone number, address, date of birth, social security number, or account information over email, this should raise flags.
Before considering a response, do some research into the company or person making the request. Always follow up email requests with a phone call or some secondary method of communication to ensure it’s a legitimate request. That said, avoid calling numbers that are included in a suspicious email. Instead, use a search engine to look up the real number for the company or person involved.
If emails become more frequent or have a sense of urgency, these should not be seen as signs that you should comply. Rather, they are big red flags indicating that this is a scam.
Never give out information or money based on a phone call unless you know and trust the person.
This sounds similar to the previous point, but it is slightly different. Criminals use email because it’s possible to hit an extremely large number of potential victims with almost no effort. But, that doesn’t mean all criminals are lazy. Some will take the time to identify victims and make telephone calls instead of sending emails. The scammer is not able to hit as many victims over the phone as he could over email, but the personal touch of a phone call makes the success rate higher.
If you do agree to send money to someone you know over the phone, ensure that they are who they purport to be.
- The information or amount of money being requested seems out of line with the reason for it.
- The story behind the purpose of the information or money seems outlandish.
- The caller indicates that there a sense of urgency.
- The caller tells you that you shouldn’t inform anyone else about the request.
One way to spot a fraudulent caller is to ask lots of questions. In some cases, they will simply hang up. Others are well-prepared and will try to use their answers to convince you further, but multiple probing questions will often reveal holes in the story.
Designate a trusted person for your financial advisor to talk to.
Financial advisors are in a good position to spot fraud attempts. If your money is invested and managed by an advisor, then fraudsters have to attempt to deceive the advisor, which is (hopefully) hard to do.
In the event that your advisor does spot fraud but is unable to work with you directly due to illness or advanced age, the advisor should be able to work with someone else on your behalf. Your advisor generally won’t have the legal authority to disclose your financial information to anyone else unless you’ve specifically designated someone in advance. If your advisor doesn’t ask you to fill out an authorization form for this purpose, ask how you can do that.
Set up powers of attorney and other legal documents in advance.
The key phrase here is in advance. We don’t always see problems coming and if you suddenly become too infirm to deal with financial matters, it may not be possible to set up powers of attorney at that time. Much like designating a trusted person for your financial advisor to talk to, you should designate a trusted person to have your powers of attorney before you need them.
Online Elder Fraud
One common way that seniors are targeted over the internet is through email. General phishing techniques are used against a large number of email addresses with messages aimed at seniors. This content often falls into the following categories:
- Medical or health including discount prescriptions and health coverage
- Financial support for example, home equity or retirement savings
- Friendship or camaraderie
Other schemes are more targeted and may involve emails or phone calls that are very personal and specific in nature. Targeted attacks often use information gleaned in general phishing attacks to help dupe the victim into going along with the scam.
Here are some common examples of online elder fraud:
Monetary scams aimed at elders are attractive to criminals for two major (very different) reasons. On the one hand, many seniors are living on fixed and inadequate incomes and could use more money to live on. On the other, many elderly people have sizable cash nest eggs (on average more than six times as much as younger people). Plus, with large amounts of equity in their homes, they have access to lots of money.
Fraudulent investment schemes seek to bilk money out of people with the promise of some greater reward down the road. While it can be grisly to consider at the time, it’s always important to think of how much time is left for an investment to mature. By and large, older people would be looking at short-term investments, so this is where many fraudsters will focus their efforts.
In this scheme, a fraudster calls a senior on the phone and claims to be their grandchild in need of help.
The caller who is posing as the grandchild typically asks for money to be sent quickly to help them out of some emergency. They often tell the senior not to tell anyone about the situation as the grandchild would get in trouble.
While it sounds unlikely that someone would believe a stranger is their relative, there is usually some well thought out excuse as to why they sound different. Plus, the senior may be hard of hearing or simply feel panicked enough that they don’t become suspicious. A criminal convicted of carrying out these scams claimed that around one in 50 people fell for his scheme.
In one recent case, a woman was scammed out of more than $20,000. She thought she was sending bond money to get her grandson out of jail. In this instance, the caller was someone posing as a law enforcement officer, so it was even easier to persuade the woman to send money. In other cases, the caller may pretend to be some other person in a position of authority. For example, they may claim to be a lawyer acting on behalf of the grandchild or a member of staff in a medical center where the grandchild is supposedly receiving treatment.
Lottery scams are targeted at people of all ages and older people are no exception. The basic framework of a lottery or sweepstakes scam is to tell the victim they’ve won a large prize of some kind, but some smaller amount of money has to be paid in order to claim the prize.
The money to be paid is usually attributed to non-existent things like “international transfer fees” or something equally silly. It is safe to say that if you’ve never entered a lottery, you can’t win it, so claims like this out of the blue are a red flag. Legitimate lotteries are tightly regulated to ensure there is no fraud. It is extremely unlikely that a real lottery organization would contact the winner by email to begin with.
Charity scams typically involve a fraudster impersonating a representative from a real charity or fabricating a fake charity in order to scam victims out of money. Contact might occur via phone, email, text, or mail, or it might even be in person.
These schemes tend to be more common (and successful) during or following major events, such as natural disasters, health crises, or global political movements. People tend to be more giving during these times and more likely to hand over money.
Some fake charities are difficult to spot as the scammers will create a professional-looking website to back their scheme. That said, you can find out if a charity is legitimate by checking online: IRS Tax Exempt Organization Search tool.
If you do find that a charity is legitimate and you wish to donate, it’s best to do so via the charity’s official website, instead of through a questionable representative.
It’s no secret that thirty-somethings don’t tend to need a lot of prescriptions. As we age, that changes, and by the time we reach our elder years, most people routinely take prescriptions of some sort. Depending on the type of drug and the available health care benefits, medication bills can add up. This creates a rich environment for scammers to prey on.
The National Association of Boards of Pharmacy (NABP) found that 96 percent of the online pharmacies it reviewed appeared to be operating against the law or against standard practices.
Government and industry organizations alike warn against purchasing drugs online for a variety of reasons, most of which boil down to a lack of accountability. There is no reasonable way to ensure that:
- You will receive the drugs
- The contents are as labeled
- The medication is of the correct dosage
- The drugs are not expired
Wondering if a pharmacy email is legitimate? While there are some legal online pharmacies, almost none of them would bother to send unsolicited emails. This is partly because they would get lost amongst the onslaught of spam promoting illegal pharmacies. If you’re going to order drugs online, the following guidelines are recommended:
- Only use websites that belong to a verifiable “brick and mortar” pharmacy with a street address.
- Don’t purchase drugs from a pharmacy that will sell you prescription drugs without a prescription.
- Don’t purchase drugs from a pharmacy that will issue you a prescription based solely on a questionnaire on the site.
The NABP is spearheading a movement called Safe Pharmacy to help customers identify legitimate pharmacy sites. Only legitimate pharmacies should be able to purchase “dot pharmacy” domains, meaning sites with that extension are safe to visit.
A very large, ongoing scam that targets seniors is the IRS scam. It has been going on for years and specifically tries to identify seniors as victims. The caller pretends to be from the IRS and states that you have a tax debt that must be immediately paid in order to avoid arrest. In reality, the scammer is after money or personal and banking information.
These scams involve criminals capitalizing on someone’s death by duping their grieving spouse. As horrible as it sounds, fraudsters will scan obituaries looking for their next target.
They will contact widows or widowers and use some guise to get them to hand over money. For example, they may say that they were owed money by the deceased spouse, or claim to be representing a financial institution associated with the deceased.
These victims are at their most vulnerable after the passing of their loved one, making this form of fraud particularly heinous.
This is another type of online fraud that often targets older people, in particular those who have lost their spouses and may be seeking companionship. Romance scams heavily target women over 50 but men are often victims too. Some seniors have lost hundreds of thousands of dollars in these schemes.
Romance scams generally follow a similar pattern. The perpetrator poses as a potential love interest or companion and earns the victim’s trust. Eventually, the criminal asks for a small amount of money followed by larger sums.
While it seems unlikely that someone will fall for this type of scam, in the US, people lose more to romance scams than any other type of online fraud.
Tech Support Schemes
In this type of scam, a fraudster poses as a tech support representative, often purporting to be from a large company such as Microsoft. This scam usually takes place over the phone. You might receive a call or be prompted to make the call yourself via an email, text, or on-screen message (the latter resulting from malware).
These schemes can play out in a variety of ways, but often the representative (scammer) “fixes” your (fake) computer issue and requests payment. When they request payment, they might simply be after your money, or they could be seeking to obtain personal and banking information for later use in fraud.
The fix might be as simple as explaining how to remove malware from your system yourself, but often it will involve allowing them remote access to your device. In the latter case, there are lots of things they can do, including secretly installing spyware on your computer, such as a keylogger that will help the fraudster learn your usernames and passwords for your online accounts.
They could even configure the remote access software such that after being granted access the first time, they can enter your system whenever they choose. They can use this access to snoop or to install additional malware, such as spyware or ransomware.
Below is a list of national resources that can help seniors protect and recover from financial abuse.
Agingcare.com: Provides news and information about financial issues important to seniors.
ElderCare.gov: Connects you to community services for older adults, including housing, transportation, and financial services.
U.S. Postal Service Inspection Service: Enforces laws designed to protect the U.S. Postal Service and its users from dangerous or illegal activity and provides assistance to victims of mail fraud, identity theft and other crimes.
National Center on Elder Abuse: The NCEA is a national resource center that provides elder abuse information, resources and training to the public and community-based organizations.
Department of Health & Human Services: The U.S. Department of Health and Human Services builds awareness of elder fraud, allows for fraud to be reported and provides support for victims and their families.
Women's Institute for a Secure Retirement: WISER aims to improve the long-term financial security of women through education and advocacy and provides useful tools and information related to elder financial abuse.
The National Association of Senior Advocates (NAOSA) was founded to protect our senior population from unethical business practices, scams and businesses who attempt to target and take advantage of not only seniors but all consumers. Please visit their website at www.naosa.org to take advantage of their resources.
The content on this page provides general consumer information. It is not legal advice or regulatory guidance. We do not endorse or guarantee the accuracy of third-party information. Contributing sources: 1 NCEA. 2 Medicareadvantage.com. 3 Comparitech.