For senior Americans, experiencing financial fraud can result in significant costs.
According to the FTC’s annual report to Congress published earlier this month, scams reported by individuals aged 60 and above totaled $2.4 billion last year, up 26.3% from $1.9 billion in 2023 and 300% from $600 million in 2020. This surge is primarily attributed to scams with individual losses of $100,000 or more, which accounted for $1.6 billion, or 68%, of the total losses.
Nonetheless, since a large portion of fraud remains unreported, the agency suggests actual losses suffered by senior adults in 2024 could be as high as $81.5 billion. The majority of these losses were attributed to investment-related scams.
Such substantial losses can lead to financial uncertainty, especially as many individuals grapple with escalating expenses and concerns about outliving their retirement funds.
“This crime transcends financial impact,” stated Kathy Stokes, director of fraud prevention programs at the AARP Fraud Watch Network. “Many individuals lose everything, yet they often express that the emotional toll is the most challenging aspect.”
Financial institutions and legislators are targeting fraud
While older adults report larger losses more frequently, financial fraud is on the rise among consumers of all ages. The FTC reported losses of $12.8 billion overall last year, an increase from $3.4 billion in 2020. However, due to underreporting, the actual amount for 2024 could soar to approximately $195.9 billion, based on the FTC’s findings.
Concurrently, financial institutions and lawmakers have been intensifying their scrutiny.
Many banks and financial institutions request that account holders designate a “trusted contact,” an individual who can be reached in specific situations, particularly when financial exploitation is suspected. The Financial Industry Regulatory Authority, or FINRA, mandates that brokerages make a reasonable effort to add a trusted contact to accounts, although investors are not obligated to comply.
Moreover, there is a proposed legislation aimed at combating elder fraud currently in Congress. Known as the Financial Exploitation Prevention Act, this proposed law would empower certain financial institutions to postpone executing transactions they suspect may involve financial exploitation, among other provisions. The House version (H.R. 2478) passed committee in September; the Senate version (S. 2840) awaits deliberation from the Banking Committee.
How scammers access funds
As technological advancements occur, criminals exploit new avenues to target potential victims — such as emails, text messages, social media, and online advertisements.
For instance, an apparently benign text from an unknown sender could foster a trusting interaction, and when the scammer proposes investing in what appears to be a lucrative opportunity, the now-trusting individual may transfer funds to an account they believe will yield substantial returns.
“Recovering funds can prove quite challenging,” noted Kathleen Daffan, an assistant director at the FTC’s Bureau of Consumer Protection. “Scammers act swiftly to obtain the money … and often shift it overseas.”
Older adults are also more inclined than younger individuals to report losses from tech support scams; prize, sweepstakes, and lottery scams; romance scams; and government impersonation scams, according to the FTC’s report.
Nonetheless, there are methods to assist older parents or other loved ones in avoiding victimization.
How to approach victims: Steer clear of assigning blame
To start, engaging in a discussion about the potential for fraud and how scammers aim to ensnare new victims can be beneficial.
For instance, “if [a stranger] reaches out unexpectedly and creates a sense of urgency, that’s a strong indication that someone is attempting to deceive you,” advised Stokes.
You might also enroll for consumer alerts via the FTC’s website to stay informed regarding the latest scams and share this knowledge with others.
In instances where a victim is engaging with a scammer in a trusting manner, it’s unlikely that loved ones will be aware unless they notice changes in the person’s demeanor or behavior.
“If an older adult is involved in a situation that combines trust and monetary transactions, it’s probable that the criminals instruct them to keep it secret,” remarked Stokes.
When victims are pressured to pay via gift card, cryptocurrency, cash, wires, or bank transfers, reversing those transactions can be incredibly challenging, noted Daffan.
“We consistently recommend individuals to promptly contact the entity involved in the money transfer,” Daffan advised.
“For a gift card, reach out to the card issuer. For a bank transaction, contact the bank. Request placing a hold on the transaction and inquire if recovering the funds is feasible,” she added. “However, we often find that this approach doesn’t yield results.”
If fraud has occurred and the money is irretrievably lost, it’s crucial to avoid making the victim feel guilty, Stokes emphasized.
The AARP advocates conversing with victims empathetically instead of with scorn or judgment.
