The COVID-19 pandemic created a shift in the financial industry that made older adults increasingly vulnerable to financial exploitation, according to a new report from AARP.
Loneliness, social distancing, dependence on others and the quick adoption of online banking technologies all contributed to the rapid growth of elder financial fraud, according to the report, developed by AARP and NORC at the University of Chicago.
With many of those changes in the financial industry here to stay, the authors pointed to several existing tools to better identify and prevent scams against older adults, including analytics, education and trusted contacts.
Elder fraud doubled during pandemic
According to the study, elder financial fraud by “trusted others”’ — family members, caregivers and friends — increased by more than twofold, from 3.5% pre-pandemic years to 7.5% during the pandemic. Fraud initiated by strangers also doubled to 57% during the early months of the pandemic compared with prior years.
“The pandemic brought financial strain and uncertainty for many people because of layoffs and furloughs, which may have compelled relatives to exploit their older family members’ regular income or government payments,” the study read.
Many elder fraud cases go unreported, a trend exacerbated by pandemic shelter-in-place requirements, the authors said. According to the National Elder Mistreatment Study, 87.5% of older adults victimized by trusted others did not report abuse, compared with 33% of those victimized by a stranger.
An increased use of virtual transactions through peer-to-peer payments and in-app payments during the pandemic led to increases in fraud related to identity theft, and mobile or digital wallet scams, according to the report. And some of those fraud approaches “are here to stay.”
“The pandemic necessitated and accelerated older adults’ engagement with online financial transactions,” the authors wrote. “Older adults’ communication and financial transactions will likely continue increasing in online, mobile and even metaverse formats.”
Role of the financial industry
To help reduce financial exploitation, many financial institutions have educated consumers and their employees on identifying warning signs of elder financial fraud, as well as providing tools to stop exploitation.
Among the action steps identified as having stopped suspected exploitation were refusing transactions, delaying transactions, placing accounts on hold, adding notes to an account, placing withdrawal limits on accounts and establishing trusted contacts.
Many financial organizations also use fraud detection software and leverage artificial intelligence and machine learning to monitor fraud schemes. Monitoring analytics and predictive analytics were suggested as helpful tools for financial institutions to detect out-of-pattern transactions
DOJ expands elder fraud strike team
Meanwhile, in response to increasing fraud against older adults, the Justice Department announced Tuesday that it is expanding its Transnational Elder Fraud Strike Force, adding 14 additional U.S. attorneys’ offices, including to all offices in California, Arizona, Texas, Florida, Georgia, Maryland and New York.
“We are intensifying our efforts nationwide to protect older adults, including by more than tripling the number of U.S. attorneys’ offices participating in our Transnational Elder Fraud Strike Force, dedicated to disrupting, dismantling and prosecuting foreign-based fraud schemes that target American seniors,” Attorney General Merrick B. Garland said in a statement.
From September 2021 to September 2022, the Strike Force pursued 260 cases involving more than 600 defendants, the department said. Targeted schemes included grandparent scams, romance scams and investment scams.
The DOJ said that “substantial” efforts also were made over the past year to return money to fraud victims; $52 million was returned to more than 150,000 victims. In addition, the FBI’s Internet Crimes Complaint Center’s Recovery Asset Team recovered more $21 million, which was returned to older-adult victims.