Strangers, family defrauding seniors at an alarming rate: Fincen

A bureau of the Department of the Treasury has released an analysis calling attention to a scourge of financial exploitation against elderly people after it received more than 155,000 suspicious activity reports on the matter over a one-year period.

The analysis from the Financial Crimes Enforcement Network, or Fincen, follows up on a June 2022 advisory on what it calls elder financial exploitation, which is the illegal or improper use of the funds, property or assets of someone 60 years of age or older. In the year following that advisory, financial services companies (mainly banks, according to Fincen) reported $27 billion had been tied up in actual or attempted transfers relating to elder financial exploitation.

Elder financial exploitation encompasses both elder scams, which is the transfer of money to a stranger or imposter for a promised, undelivered benefit; and elder theft, which is theft by an otherwise trusted person. According to Fincen's analysis, roughly 80% of exploitation reports involved scams, and the remaining 20% were theft cases.

Andrea Gacki, the director of Fincen, thanked financial institutions for their help documenting the crimes as part of their compliance with the Bank Secrecy Act, and said that the institutions play a "critical role" in helping to identify and prevent suspected elder financial exploitation.

"We are grateful for their vigilance and for the BSA information they have filed — and continue to file — in response to Fincen's 2022 advisory," Gacki said.

Each year, 10% of people aged 65 or older experience some form of elder abuse — physical, psychological, financial, sexual or neglect and abandonment — according to the U.S. Department of Justice. Pertaining specifically to finances, elderly people can suffer exploitation by family, close friends, neighbors, trusted professionals or strangers.

The Department of Justice provides a list of warning signs that indicate an elder may be suffering financial exploitation. Leading this list are sudden changes in bank accounts or banking practices, including an unexplained withdrawal of large sums of money by a person accompanying the elder.

Other warning signs include abrupt changes in a will or other financial documents, unexplained sudden transfer of assets to a family member or someone outside the family and, critically, reports by elders of financial exploitation.

According to Fincen's Friday report, the most frequent type of elder financial exploitation was account takeover, which as the name suggests refers to an unauthorized party gaining control over someone's account.

Often perpetrators rely on unsophisticated means to steal funds, minimizing direct contact with financial institution employees. These methods include using previously compromised identity information (including passwords), guessing passwords or mass spam emails that elicit replies containing sensitive information.

Artificial intelligence

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Some research has found that age indeed correlates with susceptibility to scams, even in the absence of dementia. In a paper published in 2015 by the Department of Health and Human Services, researchers provided decision-making assessments to 639 adults without dementia who lived in retirement and subsidized housing around Chicago. The researchers found strong evidence of increased susceptibility to scams with age.

In the study, susceptibility to scams also correlated closely with lower income, lower cognition, less psychological well-being, less social support and less financial literacy. Other studies have reached similar conclusions.

Polling last year by the University of Michigan also suggests that elders with less than $60,000 in annual income said they were more likely to suffer from scams than people with higher incomes. Likewise, older adults who said their mental health was fair or poor were also more likely to report being the victim of a scam.

The American Bankers Association provides advice that banks and credit unions can give to their elderly customers and members and to friends and family members of older people. Among the large variety of red flags to watch for and steps that elderly people and those around them can take, one of the most practical bits of advice for consumers is this: Never share your Social Security number, account numbers or other personal financial information over the phone unless you initiate the call.