Jerry Yu: Fraud against seniors has reached epidemic proportions in 2024; know how to protect yourself and your loved ones.

Approximately one in six Americans are now 65 or older, a percentage that is only going to increase in the coming years. This demographic shift has resulted in many challenges, particularly when it comes to financial issues. Financial exploitation of older adults, many of whom hold significant assets and economic decision-making power, is now a prime focus of fraudsters. Every day, seniors are defrauded of substantial amounts of money and, in turn, their independence, health, and overall well-being.-Jerry Yu

by Jerry Yu, Reign Financial

Cause for Alarm

According to the FBI, more than 90,000 older victims of fraud were reported in 2021, resulting in losses exceeding $1.7 billion—a 74% increase from the previous year. However, these figures likely underrepresent the true extent of the problem since many victims do not report fraud due to embarrassment or lack of awareness.  Financial exploitation is a prevalent form of elder abuse, often perpetrated by those within the victim’s social circle, such as family members, caregivers, or friends, though strangers also frequently target seniors.

Who is vulnerable?

Research has shown that older adults tend to be more susceptible to deception for various reasons. Cognitive decline, social isolation, and emotional factors all play significant roles in this increased vulnerability. A decrease in cognitive function often leads to a reduced ability to detect false news, phishing emails, or other scams. Additionally, adverse social and emotional influences, such as loneliness and low mood, exacerbate susceptibility to scams.

Moreover, the COVID-19 pandemic has heightened these risks by increasing social isolation and reliance on digital platforms, where older adults with lower digital literacy are more vulnerable to online scams. Physical and mental health can increase a person’s vulnerability. For example, individuals with a gene variant linked to Alzheimer’s disease are more susceptible to financial exploitation.

The fraudsters’ favorite schemes.

Con artists employ various tactics to deceive older adults. Typical schemes include email phishing, tech-support scams, romance scams, online shopping swindles, and investment frauds. In 2023, tech-support scams were the most frequently reported type of elder fraud, while investment scams resulted in the highest financial losses. Fraudulent call centers also target seniors, using advanced technologies like AI to create convincing voice-cloning scams and deepfake videos.

There’s a devastating human cost to fraud.

The impact of financial exploitation extends beyond monetary loss. Many victims experience trauma, shame, and self-doubt, which can harm their relationships and erode trust in others. This emotional toll can also negatively affect their mental and physical health, further diminishing their quality of life.

Research and Prevention

Despite the growing prevalence of elder fraud, research on this issue remains limited. Psychologists at the University of Florida are working to fill this gap by studying social cognition and decision-making in older adults. Their research aims to identify factors that contribute to vulnerability and develop tailored interventions to prevent exploitation.

One promising approach involves using machine learning algorithms to identify high-risk deceptive messages and provide real-time warnings to potential victims. Additionally, training programs that enhance financial, health, and digital literacy and address social isolation can help reduce vulnerability.

Practical tips for seniors

If you are a senior or have senior relatives or friends, you should be aware that education and awareness are the best tools for combating fraud. The FBI offers several tips to help seniors protect themselves:

• Be cautious of unsolicited contact: Avoid responding to unsolicited phone calls, mailings, or door-to-door service offers.
• Verify information before engaging: Before engaging with a person or business, search online for their name, email, phone number, and address to verify their legitimacy.
• Protect personal information: Never share personal information, money, or valuable items with unverified individuals or businesses.
• Update security software: Ensure your computer’s antivirus and security software are up to date. Consider adding a virtual private network, especially if you are online a lot.
• Trust your gut: If something feels off, it probably is. Don’t hesitate to end communication or seek advice from trusted sources.

What should you do if a scammer victimizes you?

If you fall victim to a scam, you must act quickly:

• Protect your identity: Contact your financial institutions, credit card companies, and other accounts to secure them and monitor for suspicious activity.
• Report the crime: Notify your local FBI field office or submit an online tip. Provide detailed information about the scam, including names, dates, and methods of contact.
• Seek support: Talk to trusted individuals about your experience. Support groups like the AARP Fraud Watch Network can offer valuable assistance.
• Consider professional help: Sometimes, the emotional impact of fraud is too overwhelming to handle on your own. If you’re feeling stressed about your situation, consult a counselor or therapist.

A special note about IRS Scams

Recently, the Internal Revenue Service (IRS) identified a concerning trend. Fraudulent actors are increasingly targeting unsuspecting individuals, particularly senior citizens, by masquerading as IRS agents.

These fake IRS agents pressure victims into making immediate payments under the pretense of resolving fictitious tax liabilities or securing false refunds. Scammers sometimes demand unorthodox payment methods, such as gift cards or wire transfers. Fraudsters use various techniques to create credibility, including manipulating their caller IDs to seem legitimate. Here are just a few examples:

• Impersonation of known entities: Fraudsters often pose as representatives from well-known government agencies, including the IRS, Social Security Administration, and Medicare. They may pretend they work with others in the tax community or represent familiar businesses and charities. By spoofing caller IDs, scammers can deceive victims into believing they are receiving legitimate calls.
• They tempt victims with promises of prizes: To create a sense of urgency and add pressure, scammers frequently fabricate scenarios, such as outstanding debts or promises of significant prize winnings. They may tell their victims that they owe the IRS money or that they have an unclaimed tax refund. Scammers may say they need to verify accounts or that their victim has to pay a fee to claim their prize.
• Fraudsters may ratchet up the pressure.  They often try to create a sense of urgency, demanding that victims take immediate action without allowing time for questions or research. Common tactics include threats of arrest, deportation, license suspension, or computer viruses, all designed to coerce quick decisions.
• Specific payment options: One way to spot a scammer is that they often attempt to make themselves untraceable by demanding unconventional payment methods, including cryptocurrency, wire transfers, payment apps, or gift cards. They may also require victims to provide sensitive information like gift card numbers.

What cautions can you take to avoid IRS scams?

If you get an unexpected call from someone saying they are from the IRS, but you have not been notified by mail about any issues with your IRS account, you should hang up immediately. The call is likely to be fraudulent.

• Do not return the call: Don’t use the phone number a scammer leaves on a voice message or the one on your caller ID to return the call.
• Contact the IRS: If you are uncertain about the legitimacy of any IRS communications, you can contact IRS customer service for verification at 800-829-1040.

Check your IRS online account: To view all the details about your tax account, log into your IRS online account. If you don’t have one, set one up by following the steps on IRS.gov.

Report scams: Electronic scams are also on the rise, with scammers sending malicious emails and texts posing as IRS representatives to steal personal information. Remember, the IRS does not initiate contact through emails, texts, or social media regarding your taxes. Report any call or electronic scam by visiting the Hotline page of the Treasury Inspector General for Tax Administration and using an IRS Impersonation Scam Reporting form or by calling 800-366-4484.

Remaining vigilant and informed about these scams can help protect taxpayers from financial loss and identity theft.

About the National Elder Fraud Hotline.

In March 2020, the government introduced the National Elder Fraud Hotline to address fraud targeting elderly Americans and support affected individuals. If you have experienced elder fraud, you can contact the National Elder Fraud Hotline at 833-FRAUD-11 (833-372-8311).  The hotline operates Monday through Friday, from 10 a.m. to 6 p.m. Eastern Time, and is available in English, Spanish, and other languages.

Conclusion

The dramatic rise in fraud targeting seniors is a serious issue that demands immediate attention. If you are a senior, you can protect yourself by understanding the factors that contribute to vulnerability and implementing tailored prevention strategies. Education, awareness, and timely intervention are vital in reducing the impact of this modern epidemic. Avoiding fraud helps ensure that you can enjoy your retirement years with greater security and peace of mind.