Senior Citizen Fraud Scams and How to Stop Them

Listen to: Senior Citizen Fraud Scams and How to Stop Them (11mins):

The Human Face of Senior Citizen Fraud Scams

I’ve worked in the financial services industry since I was 20 years old. Throughout these years I’ve gained a strong understanding of the nuances of financial fraud. I also make sure my family members understand how fraudsters pull off their scams. Family awareness of fraud trends became my household’s mantra. 

Unfortunately, despite my years’ worth of warnings and reminders, my grandmother fell victim to a romance scam. She connected with someone who she thought had developed feelings for her and was happy to send them money to meet in person. Unfortunately for my grandmother, the person she thought was genuine was just a con artist.  

How could this happen? Especially when a family member is making such a concerted effort to keep his loved ones safe from fraudsters? My grandmother – like a lot of other older adults – was trusting and lonely. This made her the prime target for a romance scam.

If there’s a lesson to be learned from my personal anecdote, it’s this: even with a family member constantly reminding them of the risks, elderly people remain targets for con artists. If it can happen to me – a guy who has spent the better part of two decades studying and warning everyone he knows about fraud threats – it can happen to your family and your bank customers, too.

Elder Fraud 101

Bank robber Willie Sutton is credited with responding “because that’s where the money is” when asked why he robbed banks. Unfortunately, this same principle is why many con artists employ senior citizen fraud scams.

The senior citizens targeted by such scams have accrued financial savings over their lifetimes, hold valuable assets like a home, and have built up strong credit. In other words, they have money and resources available to them. Fraudsters also count on elderly victims to be trusting and agreeable. Con artists also look to exploit senior citizens who are more likely to be suffering from a decline in their mental capabilities in some cases. 

According to the latest figures from the FBI, elderly fraud can cost senior citizens in the United States approximately $3 billion per year. But that’s just the fraud that we know about. Many elderly fraud victims are uninclined to report fraud, according to the FBI. Victims are often ashamed or embarrassed by the deception. They might also be concerned that their family could lose confidence in their ability to manage their finances – and might seek to claim power of attorney as a result.

A List of Elder Fraud Scams

Fraudsters employ a wide range of tactics to scam elderly victims out of their money. The most common scams used to target senior citizens include:

Romance scams

In a romance scam, a fraudster will pretend to be interested romantically in their victim. They then trick victims into sending them money or buying valuable items on their behalf.

Tech support scams

In this type of scam, fraudsters either call or email victims posing as technical support staff. They claim there is a (non-existent) issue with the victim’s computer to gain remote access to the victims’ devices and sensitive personal information. 

Grandparent scams

This scam preys on elderly victims who have grandchildren. Fraudsters contact the victim pretending to be their grandchild claiming to be injured in an accident or in jail and ask to send money quickly. Fraudsters can learn the names of the grandchildren and other relatives by scanning social media feeds or reading obituary notices. 

Government impersonation scams

Fraudsters pose as officials from government agencies like the Social Security Administration or a Medicare representative. They claim that social security payments were overpaid and threaten the victim with jail time if they don’t pay a fine to resolve the issue.

Charity scams

In this scheme, fraudsters pretend to represent a legitimate (or fake) charitable organization and solicit donations. They might also claim the victim won a lottery or sweepstakes that they can collect after paying a fee. 

Caregiver scams

Unfortunately, some of the worst scams targeting the elderly are perpetrated by the people they trust the most. This includes family members, friends, or trusted medical professionals charged with an elderly person’s well-being. Dishonest caregivers deceive their victims into transferring money to them or commit financial abuse by using their relationship or power of attorney to access the victim’s bank account and financial resources.

How Financial Institutions Can Protect Senior Citizens

These are just a few examples of how con artists target senior citizens with elaborate fraud scams. Unfortunately, new scam types will likely emerge as fraudsters look for more ways to prey on vulnerable individuals.

Banks and financial institutions (FIs) have a responsibility to be vigilant on behalf of their elderly customers, especially as older populations face threats on multiple fronts. Here’s what banks can do to keep older customers safe.

Connect the dots

The first step banks can take to protect their elderly customers is to review transactions and recent activity. Is a money transfer going to an unfamiliar bank account? Does the recipient have a familial relationship with the account holder? Does the recipient have multiple bank accounts and are they receiving funds from multiple sources? These are warning signs that a romance scam or grandparent scam is underway. The fraud analysis team can review patterns that the customer can’t see – and warn the customer if they suspect foul play. 

Here’s another scenario. Let’s say a victim receives a text message from someone claiming to be their grandson or granddaughter. The message says they are in another country and were injured in an accident. They need money right away to pay a large hospital bill. Their phone is unfamiliar because they claim they are borrowing someone else’s phone as theirs broke in the accident. Banks can review the phone activity to see if the device is indeed located overseas or if the grandchild in question has any travel alerts on their accounts that would support the claim they are currently traveling internationally. These insights can give a clearer idea of whether fraud is occurring.

Ask if the transaction makes sense

In addition to reviewing historical data, banks should also consider whether recent activity makes sense for an elderly person’s lifestyle. There’s nothing suspicious about an auto loan application for a motorcycle purchase. But if the request came from an older woman in her late 70s, bank staff will want to consider digging a little deeper. Activities like this are a warning that a fraudster – or possibly a family member – has filled out an auto loan application in the victim’s name.

Review the evidence 

Elder fraud scams rely heavily on trust. A grandmother trusts her granddaughter with her PIN and bank card to withdraw money from the ATM down the street. But weeks later the grandmother learns that her granddaughter abused her trust by withdrawing more than she had requested. The granddaughter has even been stealing the ATM card and making multiple withdrawals over the course of several weeks. If an older customer contacts a bank asking about multiple withdrawals from their account, FIs can review call center logs and video surveillance footage from ATMs to determine who was making withdrawals using their customer’s card and PIN. After learning who has been making withdrawals from her account, the grandmother could decide to involve law enforcement.

This type of fraud can have serious consequences for perpetrators. A few years ago, a New York man was arrested for stealing over $4.5 million from his mother’s bank account. An investigation revealed the man spent the money on lavish items, including Super Bowl tickets, private jets, hotels, nightclubs, and more. He received a nine-year prison sentence for his crimes.

Educate customers

Customers are the first line of defense when it comes to fraud prevention. FIs should educate customers on the different types of senior citizen fraud scams that target elderly customers and their families and offer advice on how to avoid them. FIs should also encourage their customers to review their bank and credit card statements regularly to look for unfamiliar transactions and report them immediately. 

Train staff to be vigilant

If customers are an FI’s first line of defense against fraud, employees are next in line. Agencies like the Consumer Financial Protection Bureau (CFPB) require banks to have policies tailored to elderly customers’ needs. FIs should train their staff to look for suspicious patterns to protect their customers from scams. Banks can develop scripts to approach customers directly and explain why they think a fraudster could be scamming them.

These steps can protect elderly bank customers from scams. If it can happen to people like my grandmother, it can happen to anyone. Banks need to take extra care to ensure their elderly customers are protected from fraudsters.

Scams are a global threat. Download our how-to guide How Feedzai supports fraud scam detection and advises on operational execution to learn why fraud has increased, types of scams that are increasing, and how Feedzai detects scams.