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 two 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 victims by building an emotional connection so the victim trusts them, or by using pressure tactics and threatening consequences.”
Anyone at any age can fall victim to a scam, but there are several factors that put older women at higher risk, including the fact that women typically outlive men, are likely to live alone in older age, and are more likely than men to serve as a caregiver. Perhaps reflecting these risk factors, among the cases of scams targeting seniors tracked by RBC Wealth Management's Client Risk Prevention group, 68 percent of the victims were female.
As fraudsters become increasingly persistent, wealth managers, bankers and families can work together to help protect any older adults from further losses and future scams.
Why women can be affected most by financial fraud
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, explains Angie O'Leary, head of wealth planning at RBC Wealth Management–U.S.
As women outlive men, they often live alone and have no companion with whom to discuss a fraudster's request for money. For older heterosexual couples, O'Leary says, it's not uncommon for men to handle most of the family finances. So in some cases, when the husband dies, “women who are widowed might be taking over that responsibility for the first time, and they may be insecure about the finances,” she adds, which could put them at risk of being tricked by a scammer.
Living alone can also lead to loneliness, and fraudsters prey on that isolation and emotion. Ambrose describes how one client fell victim to an IRS scam. Every morning for months, the victim 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 fall victim to 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.
Five common scams
Some of the most common scams that successfully target older adults include:
1. Romance scams
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 victim, exploiting religious beliefs, grief and past trauma to manipulate them.
2. Sweepstakes scams
These scammers claim the victim won a lottery or sweepstakes, but must pay taxes or fees to claim the prize.
3. Grandma scams
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 victim 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.”
4. Computer software or virus scams
A pop-up ad or email says the person's computer has been hacked and demands payment. Once the victim engages, they use extreme pressure tactics for more and more funds or gift cards.
5. Government agency scams
The scammer impersonates someone from the IRS or another agency, demanding payment or a transfer of funds to avoid further penalty or jail.
New scam developments
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 victims 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 the victim is 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 victims figure out the scam and confront the caller, telling them to stop calling, the scam is not necessarily over, Ambrose says. Recently, perpetrators have begun contacting their victims 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.
How older adults can protect their finances
Though women may be more at risk, it's important for any older adult and their families to be vigilant about protecting their finances as fraudsters become increasingly sophisticated. Because scams are only successful when the victim 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.”
Steps to help protect your loved ones from financial fraud
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 the victim 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.”
O'Leary recommends the older adult 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,” she 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.”
How to respond to a victim
In working with fraud victims, whether male or female, Ambrose has learned most are afraid and embarrassed to tell their friends and families. If someone you love falls victim to financial fraud, your response can have a lasting impact on their mental health and well-being. Rather than shaming or blaming the victim, or sharing the details of the fraud with others without their permission, Ambrose recommends responding with:
Empathy. Focus your concern on the victim's well-being, not the money. Scams can leave a victim feeling powerless, hopeless and ashamed; it can be emotionally devastating.
Curiosity. Ask how the fraud started and about any early warning signs the victim may have seen or ignored. Helping the victim 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 the victim's 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.