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Are seniors more vulnerable to fraud?

By Neil Charness, Ph.D.
Director, Institute for Successful Longevity

Given the number of scams that seem to target seniors specifically, a very reasonable scientific question is whether seniors are more at risk for fraud susceptibility than their younger counterparts (middle-aged, young adults). This has proven difficult to research for a number of reasons. My interest in this question was piqued by a series of fraud attempts that hit me within months of turning 65 years old.

Apparently I was on mailing lists not only for Medicare advantage plan providers, burial services, and hearing aid purveyors, but also for fraudsters.

In full disclosure, for my research projects I have made use of mailing list companies to get lists of potential research participants with the peculiar requirements that I needed (e.g., over 65, living alone, not computer users; or in another case nurses living in Tallahassee without telehealth knowledge). So I know that there are many folks earning a living by slicing and dicing our population and selling contact information to others who put it to good, or not so good, use.

The first fraud attempt involved a real-looking check sent to me that I could cash and then send back a portion to the company for having won a lottery in the United Kingdom. The check was, of course, fraudulent, and it would have bounced after a week or so. Had I sent out the “tax portion” with my own real funds, I would have been stuck with both a penalty fee from my bank for depositing a bounced check and with the loss of whatever real funds I had sent to the company.

The second attempt was a phone call from “Microsoft” about a problem on my computer that they wanted to help me fix. Being fairly knowledgeable about computer technology and because they caught me at work on my computer on a Sunday, I played them along for a while to keep them away from people less wary than myself. It didn’t do much good because about a month later I got another call from “Microsoft” to fix the same problem. If only the real Microsoft had been so eager to help when I actually contacted them with a Windows problem many years back.

I have yet to get the “IRS call” — a common fraud attempt — probably because the mailing lists that fraudsters purchase screen out seniors who have accountants preparing their tax forms. So it was easy for me to tell the fraudulent from the real situations. But, I’m probably not the average senior.

The problem with gauging the level of fraud is that victims are often embarrassed to come forward, particularly seniors who are concerned about how they will be seen by family members in terms of their competence and ability to remain independent in the community. Thus, many researchers have argued that fraud is severely under-reported, perhaps by a factor of 10 to 1, meaning that for every reported fraud there might be as many as 10 unreported cases.

If you look at formal complaints registered by those age 60 and above, such as at the FBI’s Internet Fraud Complaint Center, the top cases in 2014 were confidence/romance scams netting over $26 million, automobile fraud for $11 million, intimidation/extortion scams netting over $5 million, real-estate fraud netting over $5 million, and government impersonation email scams netting over $2 million.

For those over age 70, top complaint numbers in the Consumer Sentinel data from 2014 were imposter/government (16,386), telemarketing practices (14,262), imposter/business (10,666), prizes/sweepstakes/gifts (5,373) and imposter/family & friend (3,495).

It stands to reason that seniors might be more susceptible. Researchers on memory long ago warned that seniors might be easier victims. Aging adults tend to have poorer recollective ability but relatively intact familiarity memory. That is,they might not remember specific details for a referenced event (“remember that I said the repair would cost $3,000” when the figure discussed was actually $300) but might get a feeling of familiarity for the earlier discussion, remembering that they discussed repair costs and be swayed to pay because the perpetrator seems sure of the amount they discussed and they can’t recollect a specific amount.

Another version of the scam relying on false memory for an earlier event was a con artist first calling to get general information and then checking in with a second call asking about details of the first call and if finding a weakness, making a false claim, such as, “We received your check for $1,200, but it should only have been for $950. Send us another check for $950 and we’ll simply return the first check to you.”

On the other hand, one feature that improves with aging is general knowledge, and seniors may have learned a lot about fraud over their lifetimes, have shared recent attempts made on them with friends, and have learned to be skeptical of fraud perpetrators. I remember my father, then in his late 80s, mentioning a “grandchild in trouble” phone call he had received and easily rejecting it, thanks to having heard about a similar attempt on one of his friends. (He asked, “Is it my grandson Fred?” and when getting assent hung up on them, saying he didn’t have a grandson named Fred.)

There are a few national surveys that have tried to assess financial exploitation of seniors, though financial exploitation need not involve fraud and seems to be due most often to family members misappropriating money. Figures range from 4 to 8 percent of seniors reporting being exploited in the past five years, with psychological vulnerability (higher depression, low social-needs fulfillment, low financial satisfaction) being important risk factors. Perhaps surprisingly, in one study (Lichtenberg, Stickney & Paulson, 2013) being younger (middle-aged versus older) was a risk factor, as was higher education. Cognitive ability was not a predictor, though in another study, having dementia put seniors at greater risk.

However, when it comes to national surveys by the Federal Trade Commission comparing seniors with younger groups, seniors were less likely to report being defrauded than younger adults. Those age 54 and younger were most at risk. The most recent Consumer Sentinel report (2018) shows younger people reporting losing money more often to fraud than older people (40 percent of cases versus 18 percent of cases), though the average loss was much higher for a fraud attempt in older adults ($400 at ages 20-29 versus $621 at ages 70-79 and $1,092 for age 80 and above). The top three categories in 2017 were debt-collection fraud, identity theft, and imposter scams.

Researchers at Florida State University are looking at ways to reduce the likelihood of seniors falling victim to fraud as one outcome in a clinical trial looking at cognitive interventions. This includes trying to improve cognitive ability as well as providing direct instruction about finances and fraud. Results should be available within the year.

So, to get back to the initial question, are seniors more likely to fall victim to fraud, the evidence drawn from self-report surveys suggests no. However, we don’t know if seniors are less likely than younger adults to report fraud or even recognize or remember that they have been defrauded. And the evidence is that for those seniors who report to the Federal Trade Commission, they are more likely to be defrauded for larger amounts of money than their younger counterparts. There is even some evidence of a greater risk of death after being defrauded.

So, yes, fraud is a serious problem for seniors. How best to mitigate that risk is an important societal question.