Scammers are becoming increasingly persistent and sophisticated. Here are some of the most common types of scams to watch out for.
Financial fraud targeting older adults has long been a problem, leading to billions of dollars of losses each year. Increased isolation, loneliness, and the uncertainty of the last few years has further aggravated the issue.
In 2021, the Client Risk Prevention team at RBC Wealth Management–U.S. saw a 40 percent increase in reports of scams targeting older clients year over year. In 2020, such scams were up 54 percent over 2019 incidents.
“Fraudsters are taking advantage of people’s isolation and anxiety, and they’re getting more sophisticated,” says Tara Ambrose, senior manager of client risk prevention at RBC Wealth Management–U.S. “We categorize a scam as an incident where a client has been duped or coerced by a fraudster to participate in a scheme. Scammers usually trick people by building an emotional connection they can exploit, or by using pressure tactics and threatening consequences.”
As fraudsters become increasingly persistent, wealth managers, bankers and families can work together to recognize risk factors and red flags, and help protect older adults from further losses and future scams.
Although anyone can be targeted by scammers, there are several factors that put older women at high risk. In general, women live six to eight years longer than men, according to the World Health Organization. That means as more women live to old age, more women than men are in the target demographic for elder fraud.
As women outlive men, they often live alone and have no companion with whom to discuss a fraudster’s request for money.
Living alone can also lead to loneliness, and fraudsters prey on that isolation and emotion. Ambrose describes how one client was targeted by an IRS scam: Every morning for months, she got a phone call from the scammer, checking on her and making sure she took her pills, Ambrose says. When the scam came to light, the client said she considered the caller to be like a son to her.
Additionally, women are more likely to serve as caregivers, a role that can often be impacted by scams. “Sometimes the stress and isolation of caregiving can make them more susceptible,” Ambrose says. Around two-thirds of dementia caregivers are women, according to the Alzheimer’s Association.
Some of the most common scams that successfully target older adults include:
Initiated on dating or social media sites, scammers build a relationship for weeks or months before asking for a large sum of money. “They often have a fantastic story; one of the most common storylines involves working on an oil rig overseas,” Ambrose says. The scammer will use the emotional and personal information they’ve gained against the target, exploiting religious beliefs, grief and past trauma to manipulate them.
These scammers claim someone won a lottery or sweepstakes, but must pay taxes or fees to claim the prize.
A caller impersonates a relative, such as a grandchild. Calling in a panic, they say they’re in trouble and need help, and hand the phone to their “attorney” or “representative” before the target can clearly recognize the voice. These callers insist on confidentiality, saying things like, “Don’t tell my parents,” and “You’re the only one who can help.”
A pop-up ad or email says the person’s computer has been hacked and demands payment. Once someone engages, the scammers use extreme pressure tactics for more and more funds or gift cards.
The scammer impersonates someone from the IRS or another agency, demanding payment or a transfer of funds to avoid further penalty or jail.
Scammers have gotten bolder in their attempts to target seniors.
“When clients withdraw funds for the scammer, they’ll lie to their loved ones and their financial advisor about what they’re using the money for, because the scammers are now coaching them to lie,” Ambrose says.
Additionally, scammers are now encouraging older adults to move money out of investment firms to a new or local bank to avoid scrutiny, Ambrose says. “They’re coached to provide a rationale for moving the money that sounds legitimate, but they almost always come back for more. So large, unplanned withdrawals that are close together are a common indicator that something isn’t right,” she explains.
Recently, Ambrose has seen an increase in scams where seniors are coached to withdraw and deposit cash into a cryptocurrency ATM using a QR code. This type of fraud is hard to detect for financial institutions and virtually untraceable for law enforcement.
Also, when someone being scammed figures out what’s happening and confronts the caller, telling them to stop calling, the scam is not necessarily over, Ambrose says. Recently, perpetrators have begun contacting their targets a few days after the confrontation, impersonating a government agency or a lawyer, offering to help them get their money back for a fee or help them secure the rest of their assets at a price. It might be a different person, Ambrose says, but they are likely working with the original scammer.
It’s important for older adults and their families to be vigilant about protecting their finances as fraudsters become increasingly sophisticated. Because scams are only successful when someone actually participates and hands over money, there’s usually no way to recover any of the funds.
For that reason, awareness is the first step. “Be aware that there are people who impersonate government agencies, grandchildren and other people you trust,” Ambrose says. “Never give out money or personal information over the phone. If you’re not sure about something, call a family member or your financial advisor.”
If your loved one is active on social media or a dating site, advise them to video chat early in a new relationship. “In romance scams, the perpetrator will often say they can’t video chat for some technical reason,” Ambrose says, adding that it’s actually because they can’t show who they really are.
Older adults and their trusted family members should work out a plan for helping each other with finances. “Even with healthy brain aging, we’re less likely to perceive that someone is tricking us as we age,” Ambrose says. “Also, it seems that our ability to say no under pressure can deteriorate.”
Older adults can also ask their financial institution to provide duplicate statements, one for the account holder and one for a loved one or trusted contact, someone their financial institution can follow up with if they have a concern about cognitive decline or suspect financial abuse.
“If you’re named on the account, you can keep your eye on it,” Ambrose says. “If you have older loved ones, make sure you’re checking on them, open the mail with them, have some rules about writing checks. Remind them that the bank will never call and ask you for information and will never ask you to put sensitive information in an email.”
Consider asking your loved one’s phone provider to implement protections, such as spam blocking, that may help protect against scams, Ambrose says. And partner with your financial institution to alert you of activity that could be fraudulent.
At RBC Wealth Management, the Client Risk Prevention team provides extensive training and support to the firm’s financial advisors to help protect clients from scammers.
“We surveil for large transactions and atypical patterns, and our financial advisors will usually notice if a client is taking out large sums or wiring money to third parties. We can then call the client and talk to them about it,” Ambrose says. “We make every effort to help our client realize when they are being scammed, and encourage them to take steps to report it and further protect themselves.”
In working with people who have been impacted by financial fraud, Ambrose has learned most are afraid and embarrassed to tell their friends and families. If someone you love has been financially exploited, your response can have a lasting impact on their mental health and well-being. Rather than shaming or blaming them, or sharing the details of the fraud with others without their permission, Ambrose recommends responding with:
Empathy. Focus your concern on their well-being and not on the money involved in the fraud. Scams can leave someone feeling powerless, hopeless and ashamed; it can be emotionally devastating.
Curiosity. Ask how the fraud started and about any early warning signs your loved one may have seen or ignored. Helping identify those signs can help stop them from talking to the scammer and avoid future scams.
Support. Keep trying if your loved one doesn’t confide in you initially. Try again another day, in another setting or with a different person. Rather than threatening to take away their independence, offer partnership and oversight.
Encourage your loved one to report the scam to the proper authorities. This can offer closure and help them move on with their lives.
RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC.
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