As a response to the increasing prevalence of fraud against the elderly, the Department of Justice and the FBI partnered in 2017 to create the Elder Justice Initiative. Elder Fraud is defined as a financial fraud scheme which targets or disproportionately affects people over the age of 60. The FBI, including IC3, has worked tirelessly to educate this population on how to take steps to protect themselves from being victimized.
Most of the elder fraud schemes are financially driven, targeting those who most likely have a secure and readily available source of income such as retirement accounts, pensions, and other forms of assets. While the seniors of today are much more computer savvy than those of yesteryear, that does not mean they are immune to fraud. One reason for this is that the scammers are becoming better versed in social engineering techniques, taking advantage of people by offering false goods or services.
While anyone—young or old—can fall victim to these scams, seniors with cognitive impairment, health issues, or other concerns are at higher risk. Add that to the fact that many seniors have a set amount of money in retirement—with little ability to recover financially should fraud occur—and the results can be devastating. Sometimes, the fraud is perpetrated through one of the strongest motivators—emotions, particularly, fear. This is the mode used in a very popular scam known as “The Grandparent Scam.” Is there a way to combat this? Yes, there is. But first, in case you are unfamiliar with this particular fraud, let’s review how it works.
Romance scam: Fraudsters present themselves as potential romantic partners online to exploit their targets’ desire for companionship — a desire that has grown for many who have felt isolated through the coronavirus pandemic — and eventually get access to their money. Person in need scam: Criminals pretend to be a loved one (e.g., a grandchild) in immediate trouble and need of money right away. Fraud investigation scam: Criminals pose as law enforcement officials, asking for personal information or even money to help with their investigation. echnology scam: Fraudsters appear to be a technology support team member or someone from a trusted financial institution asking for remote access to fix a fabricated technical or account issue.
The grandparent scam begins when a parent or grandparent is contacted by someone impersonating the child, or grandchild, stating there is an emergency that requires money to fix. The fraudsters use convincing techniques such as a noisy phone line to obfuscate voice recognition by the victim as well as common social engineering techniques such as urgency or false premises like, “my parents will be so mad if they knew I was asking you for money.”
For caregivers, if you’re worried about your loved ones, start with this checklist to protect them: Talk about it. Have a conversation about common scams. Discuss your loved ones’ investment goals and attitudes toward money so that you can recognize irregular behavior. Designate trusted contacts. Make sure financial institution reps know who to contact on your loved one’s behalf in the event of suspected exploitation, fraud or health issues. Get organized. Locate and safely store important financial documents, such as wills, trusts, powers of attorney, account statements, insurance policies and beneficiary designations.
The Federal Trade Commission (FTC) offers some good advice about ways to prevent this scam including resisting the urge to act immediately, sending gift card codes, or using obscure questions to verify that the caller is who they purport to be. These are good tips, but there may actually be an easier way to protect against this scam. One of the tips offered by the FTC is to ask questions that a scammer would not be able to answer. However, in the heat of the moment, with a panicked “relative” in trouble, these types of questions would probably not come easily. That is the “engineering” part of social engineering at work, motivating the target to behave in a way that is not in their best interest.