Understanding Financial Scams Targeting the Elderly
1. Introduction to Financial Scams Targeting the Elderly
2. Factors Contributing to Elderly Vulnerability
3. Common Types of Financial Scams
4. Impact of Financial Scams on the Elderly
5. Preventative Measures and Interventions
1. Introduction to Financial Scams Targeting the Elderly
Every day, unscrupulous individuals are targeting elderly citizens in what has become one of the fastest-growing areas of crime. And we know that those victimized often don't tell family, friends, or caregivers about what happened - if they tell anyone at all. As an FBI special agent recently told the Senate Special Committee on Aging, "Our general belief is that for every case reported, at least four more occur that are never reported."
This hidden nature of elderly financial abuse makes it all the more difficult to have accurate and comprehensive statistics to better understand the full scope of the problem. But it is clear, even with limited formal study in this area, that millions of elderly Americans are defrauded in one way or another every year. According to a survey by the American Association of Retired Persons (AARP), frauds reported most often by older Americans include "work at home" and lotteries or sweepstakes. Another scam reported to AARP is solicitation of funds for a fake charity. Other surveys have estimated that "boiler room" operations cheat elderly Americans out of more than $40 billion per year. As the financial remains of the World War II generation increase, the likelihood of even greater fraud grows. The impact of this fraud is felt not only by those who directly lose money, but many others fail to assess and properly quantify the social impact of the fear experienced by the elderly victim population, as well as the additional pressure placed on social services.
2. Factors Contributing to Elderly Vulnerability
Social and economic factors contribute to the vulnerability of some elderly, all too well known by the criminals that target them. Many elderly individuals live alone and are isolated from family members and potential support. Additionally, health problems, which are frequent among the elderly, often create a need for costly medications and treatment. At the same time, pension funds may be drained due to the expense of costly health care for a spouse or even mortgage payments on a family home. Financial hardship may lead to a lack of understanding of both financial matters and the limits of their resources, which facilitates the search for miraculous investments and other scams. Many of today's elderly lived through the depression and to them, a person (or the news) on the phone or a person at the door are trustworthy entities with an attractive, and not necessarily risky, suggestion. The elderly are often overly trusting of others and may depend on a son, daughter, or another family member for financial assistance. Many would likely not seek legal advice if it were suggested. Finally, the elderly are often not a group with which the regulatory and enforcement entities have spent much time working or may not even know how to develop elder-targeted enforcement mechanisms.
There is no measurement system for benevolence or criminal propensity, but rather, there may be the measured trait, the direction in which it is exerted, and the strength. The impact of virtually any measured or manipulated variable is likely to be conditional, and the success or failure of attempts to cure or contain elder victimization is a result of those moderating and mediating factors. The goal of this study is to add to our common and specialized understanding of the conditions, personality corridors, and patterns among elderly financial fraud victims.
3. Common Types of Financial Scams
Explaining what a scam is might sound too basic, but we wouldn't be discussing it unless there was something to be learned. A financial scam is the same thing as a scam - an act of deceiving someone so they give you money or something else of value. The fraud does not have to be committed for personal gain, but there is often some type of incentive for committing the fraud.
Financially, a scam can come in the form of an investment opportunity that doesn't exist, or may exist but is beyond what the presenter is portraying - for example, promises and does not deliver an above-average return at below-average risk. It can also come in the form of a misleading charitable plea - for example, abusing a charitable status for personal financial gain. Sometimes illegal financial scams do not use systems to get money. Ruthless equally applies to any age, race, religion, gender, or socioeconomic group. The most successful deceptions have a critical characteristic - showing the victim rational evidence that the claims are true.
Scam artists create an emotional state where truth is irrelevant. They excel at influencing the uneducated emotions growing from greed, fear, and trust. Scams work because they circumvent judgment by turning victims' attention to emotions, trusting words, and visible evidence. Nonetheless, almost none of these cues provide any information about the truth of unobservable claims that the scam artist is making. Scams continue because they work. Recognizing those factors that make the elderly prime targets is an important factor in fraud prevention and crucial in understanding the magnitude of financial abuse. There will always be greedy, unethical, opportunistic, amoral, and deceptive people in our world. The ability to detect them is what has to improve in order to significantly diminish the amount of financial scams in which we fall prey, including those targeting the elderly.
4. Impact of Financial Scams on the Elderly
The extent of the impact of individuals who are prey to scams is one that is very hard to fathom or appreciate, particularly given the emotional pain that many victims experience, in addition to the financial loss. Although the financial aspects of what has been described in this paper do have a tangible and quantifiable outcome, the human cost, generated by the emotional side effects, is much more difficult to assess.
The isolation often associated with many elderly people who ultimately fall for scams and become victims of financial predators, and the paucity of financial resources they have at their command, makes the impact of these activities even more alarming. The elderly, upon retirement, typically find they are unable to earn any further income from employment - they are often reliant on pensions or windfalls occurred throughout their lifetime. Being forced to work at regaining financial stability is totally out of reach for most. Financial independence and worth are destroyed, and the repercussions of being a victim of gossip, ridicule, and perhaps the loss of family ties are also rife.
It was argued that financial scams could have an impact on an individual’s independence, dignity, family relationship, trust, and confidence during their retirement years. Therefore, it is important for all parties involved, i.e., the regulators, the state, the elderly, and their families, to be fully aware of the financial scams and the possible impacts that they are capable of, in order to be better prepared and to preempt its evolution to anything more devastating.
5. Preventative Measures and Interventions
Given that research in the area of elder financial abuse is in its nascent stages and longitudinal evidence is limited, the formulation of effective interventions is very challenging. Nonetheless, researchers and advocates point to at least five unique features of elder financial abuse that help shape effective strategies: (1) risk is situational or the result of behavioral dispositions, exposure to potential abusers, and limited cognitive capacity; (2) initial signals can be subtle; (3) victims are often loath to report victimization or participate in prosecution once it occurs; (4) the relationship between perpetrator and victim is often a critical factor; (5) effective intervention often depends on overriding strongly held beliefs.
Existing efforts into preventing financial scams generally focus on educating the elderly. Banking and investment professionals constantly deliver seminars on how to recognize and avoid common investment frauds, protect oneself from identity theft, and other critical investment topics. To be effective, these kinds of preventative endeavors need to take a broad-based approach and employ multiple delivery mechanisms. Such initiatives should clearly and directly target the elderly, acting on their cognitive weaknesses by, for example, targeting the simplistic financial literacy messages that older adults generally adopt. In doing so, the messages should be conveyed in simple and clear terms to those who may suffer from various cognitive impairments such as Alzheimer's disease or less severe age-related memory and cognitive frailties.
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