How to Protect Yourself and Elderly Loved Ones from Scams

Scammers target everyone. Young or old, rich or poor, tech-savvy or a fan of flip phones, scammers are happy to take money from anyone. But scammers especially love scamming the elderly. Older adults tend to be more vulnerable to certain types of scams – and not necessarily for the reasons you think.

See Financial Vulnerability and Social Isolation with Marti DeLiema, PhD for a complete transcript of the Easy Prey podcast episode.

Marti DeLiema is an Assistant Professor at the University of Minnesota School of Social Work. She is also a gerontologist, or a person who studies human aging. Her area of focus is on financial scams and fraud among older adults. Fortunately, she didn’t start researching this because someone in her personal life was exploited. Instead, it was because while in graduate school, she sat in on many elder abuse cases discussed by the Los Angeles County Elder Abuse Forensic Center.

Financial exploitation cases required a multidisciplinary team. They needed detectives, prosecutors, cognitive psychologists, gerontologists, and many other disciplines to weigh in on different factors. It wasn’t simple, and it wasn’t something that local Adult Protective Services – or even the police – were trained to do. Marti started by studying financial exploitation and abuse perpetrated by friends and family members. But it was cases where strangers were scamming the elderly that were really interesting to her. So that’s where she focuses her research now.

Scammers Aren’t Just Scamming the Elderly

When she started her research, Marti’s focus was on older adults. But as she gathered more data and got more acquainted with reporting agencies, she saw that fraud impacts people across generations. Scammers aren’t just scamming the elderly, they’re scamming everyone. Adults age sixty-five or older tend to lose more money per incident compared with younger adults, but everyone is vulnerable.

Older adults … tend to lose more money per incident. But in terms of who’s vulnerable, it’s all of us.

Marti DeLiema, Ph.D.

Marti wants everyone to know that if you haven’t succumbed to a scam yet, it’s coming. Scammers are very targeted, tailored, and specific. And there are many different kinds of scams out there. Some of them are very clever and can catch even the most aware person. Marti hasn’t met her scam yet, but she’s sure she’ll get caught by one someday.

Why Scammers Target Older Adults

Most likely, the reason scammers target older adults is a combination of reasons. First, there’s the perception that older people are more likely to fall for a scam. Second, there’s the idea that older people are more likely to have money. If you’re a criminal wanting a good payday, are you going to choose the broke college student or the wealthy retiree with a nest egg? Scamming the elderly makes financial sense to scammers.

It makes good financial sense to target those who are wealthier.

Marti DeLiema, Ph.D.

There is substantial evidence that normal changes in the aging brain affect financial decision-making, and these changes happen before other, more obvious declines start. These aren’t symptoms of Alzheimer’s or dementia. Elderly people can experience these declines in financial decision-making even when disease-free.

Researchers are now exploring why this decline happens. It happens mainly in the frontal lobe, which is responsible for reasoning, planning, and executive function. These functions are all essential to making good decisions in the moment. Executive functioning especially declines earlier than other areas, so a person’s family and friends, and even the person themselves, may have a hard time recognizing it’s happening. This makes them even more vulnerable to criminals who are scamming the elderly.

Financial Decision-Making Decline

For most people, this decline starts in their late sixties or early seventies. Outside of a disease process like Alzheimer’s or dementia, it’s the earliest area of cognitive function affected by the normal aging process. And it’s insidious because people don’t recognize it’s happening. Older adults experiencing these declines are able to drive, grocery shop, cook dinner, and function day to day.

What’s affected are complex decisions that require you to weigh lots of different types of evidence that may be influenced by emotions. Criminals scamming the elderly take advantage of this. They use lots of manipulation tactics to get people in emotional states. No one can make great decisions in an emotional state. For people experiencing this natural decision-making decline, it’s even harder to make the best decisions for themselves.

Social Isolation and Scams

Another factor that makes older adults more vulnerable to criminals scamming the elderly is social isolation. Especially since the coronavirus pandemic started, elderly people have been more isolated than ever. And social isolation has a dual affect on vulnerability.

First, a socially isolated person doesn’t have other people alone. In terms of scams, they don’t have someone else they can ask to get a second opinion on a situation. They don’t have anyone who can confirm they did pay their taxes or suggest they should call their daughter before believing this stranger’s story about their grandson being in jail. Because they don’t have another person to bounce ideas off of, a person scamming the elderly has a great opportunity to manipulate them without interference.

Loneliness tends to correlate with scam victimization.

Marti DeLiema, Ph.D.

Second, being socially isolated increases feelings of loneliness. When people feel alone, they are more susceptible to pitches of friendship, romance, get-rich-quick schemes, or anything else that makes them feel more valued. If the only person someone talks to regularly is the scammer that keeps calling, they’re much more likely to trust that scammer.

Other Risk Factors in Scamming the Elderly

Another risk factor Marti has identified in older adults vulnerable to scams is financial vulnerability. One of the questions she asks in her research is, “If there was an unexpected emergency, would you be able to cover a $1,000 expense without borrowing money or putting it on a credit cared?” People who said “No” were also more likely to say they had been a scam victim. The same was true of people who said they had more debt than they could handle.

A final risk factor in those who are vulnerable to criminals scamming the elderly is recent loss. Humans are loss-averse. If we’ve experienced a recent financial loss, we’re more willing to listen to a scam pitch in the hopes of recouping that loss. An emotional loss, like the death of a loved one, can have a similar effect. Anecdotally, Marti has seen people be more vulnerable to scams following the death of their spouse. However, that correlation is much harder to find in the data.

The Issue of Reporting Scams

A huge problem in research on vulnerability and people scamming the elderly is underreporting. People don’t want to admit they were scammed. Especially among older adults, there are a couple reasons why they don’t report. One is that they know they were a victim, but the consequences of saying so feel too high. They fear it would lead to losing financial autonomy and their kids taking over.

On the opposite end of the spectrum, some older adults don’t believe they were scammed. They still think that sweepstakes win is coming. These people will report they haven’t been victims, which makes it hard to get accurate data about trends and risks in scamming the elderly. It’s hard to look at the links between vulnerability factors and scams when victims claim they aren’t victims.

Research has shown that less than 1 in 40 victims report. Data from the FTC found that for scams that took less than $100, less than 1 in 3,000 victims report. For scams that take more than $1,000, as many as 1 in 10 report. And that’s not just looking at older adults – that’s for everyone. Only a tiny proportion of victims show up in the data.

Reporting takes ten minutes of your time, but it could be absolutely worth it in the end.

Marti DeLiema, Ph.D.

Marti encourages people to report it, no matter the dollar amount, for several reasons. First, it helps federal agencies assign resources to investigate. Second, if there is a big case and money is recovered, that report gets you in line to get some of it back. Most scams and fraud can be reported to the Federal Trade Commission at reportfraud.ftc.gov. Crimes and fraud that involve the internet can also be reported to the FBI’s Internet Crime Complaint Center at ic3.gov.

Protecting Ourselves as We Age

Marti believes in being proactive. She recommends bringing people into our lives and finances prior to any cognitive issues later in life. When many people retire, they get an estate plan done. This is also a great time to think about who in your circle of family and friends you would trust to step in and make financial decisions for you.

When we think about aging, we often think about getting a healthcare power of attorney who can make health decisions for us if we become incapacitated. But to protect yourself from criminals scamming the elderly, it helps to have a financial power of attorney, too. Bring them in, and then use them as backup. Have a question about something? Get a phone call you don’t recognize? An email seems weird? This is the person you call. Have someone you can ask about things, and use this support to combat some of the risk factors.

Pick a buddy. Just send them things that you see and get a second opinion.

Marti DeLiema, Ph.D.

Protecting Your Parents Without Micromanaging

Protecting aging parents can be a challenge. Even when they’re at risk, our parents don’t want to feel like they’ve lost their autonomy. But Marti contends that by designating a financial power of attorney and bringing them into financial decisions, they are actually extending the time where they can be autonomous and make their own decisions.

She recommends laying out the logic to them. The minute you lose half your retirement account to someone scamming the elderly, your family is going to do everything they can to prevent you from accessing your own money and losing more. If you can show that you’re still in the driver’s seat and know to call someone before you send money, you can be more protected and still in control. As a benefit, by showing your financial power of attorney what decisions you make with your money, they’ll have a better idea of what you would want if you ever do become incapacitated.

For adult children approaching their parents about the risks of criminals scamming the elderly, Marti recommends bringing in personal experiences. She suggests starting with something like, “Hey, Mom, you wouldn’t believe the scam I almost fell for the other day!” and explaining a scam you encountered and how convincing it was. You might be surprised how often the parent says something similar happened to them. It opens up a conversation about money and finances that can be beneficial to both of you.

You can also open with an example. Every person older than sixty-five knows a friend or family member who has experienced fraud. Point out what happened to someone they know, and say you want to work together to make sure that doesn’t happen to your parent. It’s important to be collaborative, not take over completely.

Trends to Watch For

There are several trends that will affect rates and risks of criminals scamming the elderly. One is an aging population. The Census Bureau estimates that by 2035, there will be more older adults in the United States than children under eighteen. That’s a huge shift in demographics. We will also see one of the greatest wealth transfers of all time as Baby Boomers pass on and leave their wealth to younger generations, largely Millennials. Criminals will be coming out of the woodwork looking to cash in on that.

I don’t think scams and fraud are anything that we’re getting control over [or] that’s going to go away anytime soon.

Marti DeLiema, Ph.D.

There are a lot of things to be concerned about, and a lot of ways for fraud to happen. We need to be very wary and protect ourselves. We also have to second-guess everything, including new ways to transfer money. A payment app in Germany got a bunch of investors involved, but turned out to be completely fraudulent. Now there are new cryptocurrencies every day that we have to be cautious about. The pandemic shifted scams as well, as scammers realized that everyone had an Amazon account so they could just pretend to be Amazon. Scammers are great at taking advantage of societal shifts. Whether we’re concerned about them scamming the elderly or scamming us, there’s a lot to be cautious about.

Scamming the Elderly with Gift Cards

Gift cards are still a major method of payment in scams, and especially in scamming the elderly. Scammers love gift cards in general – they’re anonymous, accessible, and the scammer doesn’t have to walk an older adult through using Zelle or doing a cryptocurrency transfer. Retailers are starting to wise up, though. Marti was in a chain pharmacy a few weeks ago and listened as a cashier spent fifteen minutes explaining why he wouldn’t sell an older woman any more gift cards. He did a very good job. But even though retailers are doing better, it’s not enough to stop criminals from scamming the elderly. Many times the person will just go to the next store.

Marti interviewed people who said, “The cashier tried to tell me, but I ignored it. I knew those other people were scam victims, but my situation wasn’t a scam.” People scamming the elderly are good at gaining people’s trust, inspiring emotional states, or convincing them that it really is a legitimate purpose. Often, victims aren’t in the mental state required to hear the warnings. Some participants said that what really got to them was when the retailer was sympathetic. When it felt like routine questions, it wasn’t enough, but human empathy was enough to make them think.

Marti also thinks criminals warn victims about what kind of questions they’ll get and what to say. This coaching inoculates the victim from hearing the warning. Criminals scamming the elderly through gift cards is such an issue that Marti thinks there should be limits on how many gift cards people can buy and how much can be on them, and the limits should be fairly low. We should also consider how to protect people purchasing gift cards online, because they won’t get any warning from a cashier.

Advice to Protect Yourself from Any Scam

Whether the scammer is scamming the elderly or anyone else, Marti’s biggest tip is to pause. If it sounds at all like a sales pitch or you feel pressured, stop and think. Most legitimate marketing has moved away from high-pressure sales. If someone comes to your door, take their brochures and tell them you’ll call them. Never make a decision in the moment.

If anything sounds like a sales pitch or there are any high pressure sales tactics, that is such a red flag.

Marti DeLiema, Ph.D.

Criminals are also great at making financial transactions not seem like financial transactions. In Social Security scams, for example, you’re not buying gift cards to pay for anything – you’re buying gift cards to protect your money. It doesn’t feel like paying, it feels like moving money. Any time someone asks you to do a transaction of any amount, be concerned. Be even more concerned if it doesn’t feel like money is even involved.

Learn more about Marti DeLiema on her faculty profile page or on her website, marti-deliema.com. There you can also see her work on fraud, scams, and aging.