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Elder Fraud and Cyber Security - Protect Your Loved Ones Against Elder Fraud

Elder fraud is on the rise. According to the Consumer Financial Protection Bureau (CFBP) 63,500 elderly financial abuses were reported in 2017 by financial institutions out of an estimated 3.5 million incidents. Let’s explore this topic in further detail.

What is Elder Fraud?

Elder fraud is a type of financial abuse that occurs within the elderly community. It comprises of different abuses including scams, fraud, identity theft, theft from family members or appointed managers, and cyber security threats. Elder fraud has become a prevalent concern in the financial sector as well as elderly care for several reasons. These reasons include:

elderly man and son grimly reviewing paperwork
  • The elderly are substantially vulnerable to financial exploitation.
  • Many elders have amassed a significant amount of retirement savings.
  • The elderly are in many cases less informed with regard to cyber security and online safety protocols.
  • The elderly population faces diminishing health and mental faculties making them favorable criminal targets.

With elder fraud on the rise,  caregivers and family members should be aware of the types of abuses that are taking place in order to protect loved ones against this form of financial corruption.

4 Types of Elder Fraud Abuses Caregivers Should Be Aware of

Financial Abuse by Friends or Family Members

According to the CFBP elder fraud perpetrated by familiars often amount to much larger sums of financial exploitation. It goes without saying that finances are always a touchy subject amongst family, especially as a parent or loved one is aging. To avoid this type of abuse friends and family members should insist that a will and/or trust be created to ensure assets are legally allocated beforehand. This should take place before the elder in question suffers from any form of diminished mental health.

To ensure that your loved one’s wishes are carried out it’s advantageous to assign a third party entity to oversee his or her assets. Understandably, a senior already experiencing diminished capacity may not have created a living will or trust. In which case, caretakers or friends can also report suspicious activity to adult care protection services.  For example organizations like National Adult Protective Services Association (NAPSA) provide a directory for nationwide services including Florida, wherein you can report suspected financial abuses. 

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Financial Scams

There are many different types of financial scams targeted specifically towards the elderly community. Some of these include:

  • Lottery Scams
  • Investment Scams
  • Official Agency Imposter Scams
  • Grandparent Scams

Let’s explore each type of these in further detail below so that you can become a bit more familiar with these potential threats.

Lottery Scams

A lottery scam, otherwise known as a sweepstakes scam, provides the target a prize or award check with instructions to pay a fee before the award can be issued. Most people make payments because the award checks appear official. However, after deposit they learn that the checks are fraudulent.

Official Agency Imposter Scams

An official agency imposter scam may begin with a phone call appearing from an official agency like the Internal Revenue Service (IRS) or Social Security Administration. These scams implement high-tech methods like call spoofing or robocalls to make it appear like the agent is calling from an official government agency. They will then pose a realistic and time sensitive threat if a fee is not paid. Some examples of threats include:

  • Owing taxes, a threat of deportation or arrest
  • Compromised social security number followed by a prompt to wire funds to a temporary account else a threat of account seizure

Keep in mind if you or an elder in your care receives such a call that imposes pressure to act quickly (e.g. before the termination of the call) this should immediately raise a red flag. The safest thing to do is call or visit the agency itself.

Grandparent Scams

Grandparent scams are scams often conducted by fraudsters who pose as a relative needing urgent assistance. Oftentimes these scammers will call in the middle of the night or target elders who are suffering from diminished mental capacity (e.g. declining memory). Fraudsters will tell the elder they need funds for an emergency. In many cases, elders wire funds before realizing that the perpetrator was not the actual relative.

4 Simple Ways to Avoid Elder Fraud Scams

Falling victim to the above mentioned scams can be avoided by simply doing your due diligence.  Some examples of due diligence include:

  • Do the follow up legwork (e.g. verify the entity or agencies in question)
  • If you are sending emergency funds to relative call their number before wiring funds to verify your relative made the request
  • Never wire money in exchange for free money or quick cash. There is no legitimate reason to do so.
  • Never feel pressured to send money or act quickly. You should always have time to make significant financial decisions.

Reverse Mortgage Fraud

Reverse mortgage fraud is a scheme organized by deceitful individuals across multiple sectors include real estate, finance, and related services. These schemes are devised to target and steal equity from unsuspecting seniors. Benefits that lure seniors to such offers typically include free homes, investment opportunities, or refinancing assistance. Keep in mind that according to the FBI legitimate reverse mortgages of HECM loan products are insured by the Federal Housing Authority (FHA). If you intend to make home improvements but do not have the finances on-hand a line of credit like a HELOC is a much better option.

Identity Theft

With the advent of online shopping and information accessibility identity theft has become more and more prevalent. Identify theft begins with access to an elder’s personally identifiable data. Criminals then use this data to commit identity theft fraud. Some examples of identity theft fraud include:

  • Credit card fraud
  • Debit card fraud
  • Account takeovers
  • Online shopping fraud
  • Loan stacking fraud
  • Internet of Things (IoT) fraud

The elderly are easy targets for these types of frauds primarily because of their lack of knowledge on identity theft prevention as well as cyber security measures. Even still, an informed elder remains at risk. Risks extending outside a seniors personal control include 3rd party variables like the way an entity stores your personally identifiable data or who they share your data with. A primary example of variable risks is the Veteran’s Affairs data theft incidents. These incidents exposed personally identifiable data to unscrupulous cyber hacks. Eventually, some of these breaches resulted in class action lawsuits and awards of up to $20 million for emotional distress and identity theft monitoring.

3 Tips for Elderly Fraud Prevention

elderly woman grimly reviewing paperworkNow that you know the different types of elder fraud taking place today it’s also important to identify measures that will help you protect your loved one’s against these types of abuses. Below are 6 tips to help you prevent elderly fraud.

Setup Bank Safeguards

Many banks have safeguards and features in place to help protect their account holders from fraud and identity theft. For example, many banks with online access and/or mobile banking apps provide two-factor authentication. Enabling two-factor authentication for all online access will ensure an added step is in place to help protect your accounts against cyber attacks. Other safeguards include:

  • The ability to disable international or out of state transactions
  • Account monitoring features
  • Controlled spending features

These features help prevent fraud and abuse while also promoting control. 

Investigate Unusual Financial Patterns

Our beloved elders usually have established financial patterns. Consequently, monitoring their accounts and setting red flags for outlier expenditures or transfers is certainly a form of prudent elderly fraud prevention. Some examples of unusual financial patterns include:

  • Purchases or transfers to unknown accounts or vendors
  • Out of state transactions
  • Online transactions when the elder is not a frequent internet user
  • Unpaid fixed expenses or NFC charges
  • Checks with suspicious signatures
  • Sudden closure of CD’s or long term investments before they’ve reached their maturity date

Once these unusual activities are identified take action to verify whether there is a further cause for concern. Then take the necessary measures to eliminate any risks.

Educate Elders on How to Prevent Cyber Security Attacks

Cyber security is an important measure that many stray away from addressing particularly because of the technical nature of cyber security. This is understandable, as even many professional entities remain perplexed by Cybersec and Fintech in general. However, when it comes to the financial security of our loved ones, it’s important to educate them on how to use the be safe when using the internet.

Some simple protections you can put in place include:

  • Ensure home Wifi connection requires secure or password access
  • Install up to date security and identity protection software and ensure it’s maintained overtime.
  • Educate loved ones on how secure shopping works. Explain what secure payment gateways and secure protocol requirements are including active examples of what to look for when shopping online.

Taking these simple steps towards online security is certainly not the end all be all solution. However, it’s a step in the right direction for elderly fraud prevention.

Resources Promoting Financial Security for the Elderly

As our current population continues to age and live longer the topics of elder fraud and fraud prevention support for caregivers will become increasingly important. Below we’ve included a few important resources to keep you informed of elder fraud regulatory updates, scam alerts, and additional resources. 

If you believe you or a loved one is a victim of elder fraud take a look at

Seacoast Bank’s Security and Consumer Protection Information for more insight on how to move forward. 


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