Elder abuse is a problem in western cultures world-wide. There are
many forms of abuse ranging from neglect to physical abuse, and within
that range is financial fraud. Elder fraud can take many forms and we’ll
focus on the type of fraud that primarily uses the internet in this
article.
Seniors are disproportionately targeted as victims for
fraud. The AARP (formerly the American Association of Retired People)
found that while only
35 percent of the American population is over 50 years old, fraud victims over 50 accounted for 57 percent of all fraud.
It’s
difficult to obtain numbers on how large a problem elder fraud is
world-wide. Different organizations calculate numbers in different ways
and also define fraud differently. All we can be sure of is that
billions of dollars are lost each year to criminals preying on elder citizens.
Fraud and the internet: a backgrounder
Fraudsters
play a numbers game. They know that most of their attempts to con
people won’t work, but they also know that some will. To succeed, the
con-man has to make as many tries as possible. Going door-to-door
attempting to scam people has low odds because it takes a long time and
it’s only possible to hit so many doors in a day. Also, once a scam
succeeds, the con-man has to high-tail it out of town before getting
caught. Then, find another town and start all over.
The internet
removed all those problems for fraudsters. They can now sit in the
comfort of their own home, possibly countries away, and through the use
of spam email attempt to con thousands of people per day, every day.
Elder
fraud is a specific type of fraud aimed at seniors. The most common way
that seniors are targeted over the internet is through email.
General phishing techniques
are used against a large number of email addresses with content aimed
at seniors. Content aimed at seniors usually falls into these
categories:
- Medication
- Financial support with regards to home equity or retirement savings
- Friendship or camaraderie
From
responses to that general attack, more targeted spear phishing can take
place in an attempt to defraud specific individuals.
Why are elders targeted?
The
problems that plague humanity are fairly steady throughout life. We all
want to be safe, warm, fed, loved, and financially secure. Very few
people have all of those things all the time, and in our elder years the
absence of some of those things can converge into a pattern.
It’s
easier to phish people if you know what their problems are. A general
phishing attack may use low mortgage rates, as an example. At any given
time there are millions of people looking for mortgages but there are
billions who are not and don’t care about the mortgage email. Seniors,
on the other hand, tend to have a smaller pool of things that are of
greater concern. As a population, things like medication costs, proper
health care coverage, financial security as retirement funds run out,
and providing for loved ones left behind tend to get more attention.
It’s therefore easier to craft phishing emails about a small number of
subjects that a large percentage of a population is likely to be
interested in.
Other reasons may include the fact that many
seniors are isolated and therefore have nobody they can trust to run
ideas by. Email did not become widely affordable to households until the
1990s in Canada and wasn’t a daily communications mechanism until after
that. Anyone over about 30 today has memories of a world without
internet and our seniors would have spent most of their lives without
it. That can lead to confusion over how reliable email is, and how much
trust to assign it.
It’s also not uncommon to experience some
level of diminished mental capacity as we age. That can tax our
decision-making abilities to the limit and lead to bad decisions.
Common types of elder fraud
A
surprisingly sad statistic is that a good chunk of elder fraud is
committed by family members or caregivers. The North American Securities
Administrators Association reports that
23% of elder fraud causes in 2015 were committed by family members,
trustees, or people with powers of attorney.
Generally, those types of
fraud are not committed over the internet since the parties are already
known to each other. However, that doesn’t mean other types of fraud
don’t exist – this
body shop owner has been charged with defrauding elderly clients for car restoration jobs. Some of the more common internet scams take the following forms:
Monetary scams
Monetary
scams aimed at elders are attractive to criminals for two diametrically
opposed reasons. On one hand, many seniors are living on fixed and
inadequate incomes and could use more money to live on. On the other
hand, many seniors have sizable nest eggs and large amounts of equity in
their houses so they can get their hands on a lot of money. The most
insidious scams play both angles.
Fraudulent investment or insurance schemes
seek to bilk money out of people with the promise of some greater
reward down the road. While it can be grisly to consider at the time, it
is always important to think of how much time is left for an investment
to mature. By and large, elder people would be looking at short-term
investments and there are very few legitimate lucrative short-term
investments. The insurance scam plays the other angle – there is no
concept of pulling any money out of the insurance policy. Rather, heart
strings are played upon to invest money for those left behind.
In
some cases, the insurance agent actually is a legitimately licensed
insurance agent, but is still trying to commit fraud against the
elderly. David Pickett, as
US-based insurance agent, has been arrested 3 times for fraud.
A
sub-class of this type of fraud involves offers to lend money that seem
too good to be true. These types of scams are usually complicated to
figure out because it’s hard to believe someone can fraudulently
give someone else money. A complex example of this is the
reverse mortgage
system that exists in some countries. In a reverse mortgage situation,
elder homeowners with significant equity in their property can opt to
take a chunk of money for the estimated value of their house at the time
they pass on or willingly move. At that time, the lender takes
possession of the house and the debt is paid. The danger lies in that
the principal plus the interest over time can end up being more than the
house is worth.
In some countries, such as Canada, only 55
percent of the value of the property can be reversed mortgaged. That is
to hedge against the possibility of the loan exceeding the value of the
property when the debt is repaid. Some mortgage bloggers state that the
value of the loan is not allowed to exceed the value of the property,
but neither the
government of Canada site, nor the single authorized reverse mortgage lender in the country (
HomEquity Bank) confirm that. It’s harder to find concrete information on reverse mortgages in other countries. In the U.S., for example,
the borrower’s estate generally does not have to pay any excess of the balance over the property value,
but legislation enforcing that isn’t readily available. Reverse
mortgages are not inherently fraudulent, but if the industry is not
tightly controlled in your country, be sure to obtain sound third-party
financial and legal advice beforehand.
Lottery scams
are targeted at people of all ages and elder people are no exception.
The basic framework of a lottery or sweepstakes scam is to tell the
victim they’ve won a large prize of some kind, but some smaller amount
of money has to be paid in order to claim the prize. The money to be
paid is usually attributed to non-existent things like “international
transfer fees” or something equally silly. It is safe to say that if
you’ve never entered a lottery, you can’t win it, so claims like this
out of the blue are a red flag. Legitimate lotteries are tightly
regulated to ensure there is no fraud. It is extremely unlikely that a
real lottery organization would contact the winner by email to begin
with. (
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Full Article & Source:
How to avoid and detect Elder Fraud: A guide for older people, carers and relatives
