Use Anti-Fraud Measures to Stop Elder Abuse Scams

Deb Geister, Fraud Subject Matter Expert, NICE Actimize

Elder abuse, according to the Department of Justice (DOJ), conservatively costs our senior population more than $3 billion dollars annually. The DOJ, with support from the U.S. Postal Inspector and the Secret Service, have been focused on targeting those transnational criminal organizations that target elders with their varied schemes. As part of this effort, the DOJ alone has handled cases for frauds involving more than 2 million U.S. victims with losses totaling more than $750 million. Altogether, more than 260 criminal and civil defendants have been caught in the enforcement effort designed to protect our senior citizens.

As you can well imagine, these efforts strongly focused on perpetrators of those infamous “tech-support” schemes that targeted seniors, but there are dozens of fraud types specially created to ensnare seniors. A few of the more common fraud cons include romance scams, fake lottery scams, tax refund offers, as well as government grant and property schemes. Even though the themes are different, the actual frauds are similar in that they either promise something that sounds too good to be true or they threaten the elder with loss if they don’t comply with the fraudster’s demands. Regardless of the flavor of the day, the result is always a financial loss to an unsuspecting elder.

The fraud schemes that are typically perpetrated on elders take a couple of distinct forms. Typically, stranger scams or caregiver fraud are the two types of prevalent schemes. Stranger scams usually involve some type of coercion. The common denominator in this type of fraud is the use of fear to manipulate an elder in to taking some type of action. This can range from fear of missing out on big winnings to loss of their home by the IRS to fear of harm to a loved one. In nearly all cases, the fraudsters invest time in hooking their victims by making some type of emotional connection. In these cases, the emotional connection creates reluctance on the part of the senior to report the activity to the authorities. Once they discover the fraud, seniors are sometimes too intimidated to act.

Caregiver schemes can involve family members or others entrusted with care of the senior. These cases are always emotionally charged with the elder’s reluctance to speak out for fear of causing trouble for their family member or caregiver on whom they may rely. This creates a situation which is extremely hard to address, even once the activity is identified. In both scenarios, the emotional toll is high for the elder who is targeted.

Being the victim of a fraud scheme can be devastating to not just the financial health of the victim, but also to the physical health of a senior. It can cause the loss of independence, loss of their home and even limit their ability to take care of themselves due to the often substantial financial losses that can occur.

According to the Consumer Financial Protection Bureau’s report on Elder Abuse, the average loss per senior is five figures. When strangers are involved in these schemes, elders lose an average of approximately $17,000. That number more than doubles when a family member is involved in the scheme with losses averaging $50,000. Once the information of victimization does come to light, for some seniors it can cause embarrassment and shame at the minimum. Unfortunately, by the time the schemes are exposed, the damage to a senior and their independence and quality of life can be devastating. As anti-fraud practitioners, we play an important role in the detection of elder abuse fraud.

Understanding the mechanisms and typologies of these types of frauds, and recognizing these quickly in the alert review process, can make a huge difference to an elder and their families. Unfortunately, I have seen some organizations ignore these warning signs and mark the reviews as a non-escalation. Sometimes it may seem easy to give in to the temptation that if the customer is authorizing a transaction, then it should not be of any concern.

What is missing in these scenarios is that we are often not looking closely at the other side of the transaction. The counterparty to the transaction provides just as much, and in most cases more, risk to the customer and the financial institution in elder abuse schemes. Even though the counterparty may not be our customer, they still warrant review in the overall assessment of the transaction.

We would do well to remember when working through transactions, that not only are we protecting the bank’s assets, but also protecting the reputation of the organization and its customers.

Remember that when our senior, and most vulnerable, populations are targeted by fraudsters, the devastating effects ripple through to their whole family, their friends, and even the larger community. It is easy to look at work cues as just another transaction here and there. But remember that the actions we take, or which we fail to take, can have a lifelong impact on both the customer and our culture.

With this in mind, encourage your teams to pay special attention to the types of fraud that often prey on our elderly citizens. You will feel better for the effort. 

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