Financial losses from frauds on seniors last year soared 84%, boosted by cryptocurrency, the FBI says.
Criminals stole $35,101 on average from victims age 60 and older who reported cases to the FBI in 2022, according to its annual Elder Fraud Report.
While the crooks who devised the schemes picked pockets in most age groups in similar numbers, they stole three times more — $3.1 billion — from seniors, who tend to have available retirement assets to tap.
Consumer advocates want the public to flip the script and stop blaming Grandma for getting duped.
Fraud schemes are crimes, just like an intruder in Grandma’s home, says Erin Witte, director of Consumer Protection for the Consumer Federation of America.
“When people are defrauded into making a $50,000 wire transfer thinking it’s their grandson on the [phone] line, a criminal stole that money from them,” Witte says. “A criminal targeted them to get that money. We tend to see these frauds and scams as, ‘Mom should have known better.’”
An AARP survey found that although 85% believe fraud can happen to anyone, 53% say the victims are culpable and blameworthy.
As a result, AARP says, most confidence-scheme frauds aren’t reported to any of the cornucopia of law enforcement agencies, because many victims are too ashamed to come forward.
The FBI says that older victims also often don’t know who to contact when local police reject their complaints, are unable to supply identifying information to investigators and fear their relatives will lose confidence in their abilities to manage their own financial affairs.
“Criminals aren’t stupid. They know the demographics,” Witte says of communities in which society’s narrative “shifts blame to the victim, and the approach is on fixing them [the victim].”
“We need to involve law enforcement and give them the tools to enable them to pursue these as crimes,” Witte says.
No 911 for fraud
As banks get bigger and fewer, they rely on gaps in law to avoid accountability for financial fraud they enable, says Witte, a consumer protection attorney who leads CFA’s advocacy efforts in Congress and at regulatory agencies.
She urges the public to press their legislators to close those gaps.
“Banks have the ability to report fraudulent conduct,” Witte says, including channels not publicly known.
The FBI found 5,456 seniors were robbed last year of more than $100,000 each — almost 100 of them taken for more than $1 million each — among 88,000-plus cases reported to its Internet Crime Complaint Center.
Investment frauds tend to be complex and mischaracterized as low-risk investments with guaranteed returns. The FBI says in 2022, they used advanced-fee frauds, Ponzi and pyramid schemes, market manipulation, real estate investing and trust-based investing, such as pig butchering, that commonly involved cryptocurrency.
Scams involving cryptocurrency, including Bitcoin, Ethereum, Litecoin and Ripple, stole $1 billion from about 10,000 seniors, a 350% increase from 2021, according to the FBI report.
But many of the scams that the FBI recorded were age-old confidence schemes that baited victims with promises of romance and lottery winnings. Once successful, the crooks keep a ploy going for repeat windfalls.
The FBI says almost half of the senior frauds were made by phone and internet in technical- and customer-support schemes — up more than 300% in 2022 and 69% of all fraud financial losses.
This includes tricking victims into giving remote access to their computers under the guise of urgent need to remove malware they claim to have detected. These and government-impersonation scams often originate from call centers in India, the FBI says.
In some cases, the crook robbed entire retirement accounts and caused victims to remortgage property, causing them to lose their homes to foreclosure, the FBI says.
The long-given advice to verify unsolicited phone numbers or email independently is no longer reliable enough, because scammers now create mock websites and use Search Engine Optimization (SEO) to make sure their scam is at or near the top of a Google search of keywords that their victims would deploy, Witte and the Federal Trade Commission (FTC) say.
Scammers exploit seniors’ unfamiliarity with technology, online banking and cryptocurrency, the FBI says.
Banks, on the other hand, understand how the criminals master these scams, Witte says.
“I sincerely doubt that, unless there’s a law that says a bank is on the hook for a transfer of, say, $80,000, that they’re going to fix it out of the goodness of their heart. They may work with authorities to report it, but banks are also tremendously larger than they were 10, 20, 30 years ago.”
“If there’s no accountability, it’s just going to enable these fraudulent transfers,” Witte says.
Gaps that betray consumers
The Fair Credit Billing Act, which protects credit-card customers, requires the lending bank to address fraud complaints, Witte says.
Still, some lending banks deny accountability, including in illegal “dark pattern” deceptions, which include subscriptions and autorenewals that trick consumers into appearing to have agreed to unwanted charges. The FTC has sued and issued guidance over these deceptive practices.
Deceptive conduct is “fraud by design,” Witte says.
Debit cards, ATM transactions and other bank transfers are covered by the Electronic Funds Transfer Act (EFTA), not the Fair Credit Billing Act (FCBA).
“One of the really big gaps in the law has to do with the EFTA … and is consistent with research showing older Americans lose more money in scams,” Witte says of how digital evolution is leaving the law behind in the dust.
“Where the EFTA applies, it allows consumers to seek recourse from their banks,” she says, but “wire transfers historically never have been covered. That’s why so many consumers have trouble getting their money back.
“If they had protections under the EFTA, (fraud) would be a lot less likely, because they’d have recourse against their bank,” Witte says.
Federal regulation under the Consumer Financial Protection Bureau (CFPB), Title 12 CFR 1005.6, says consumer liability in unauthorized transfers is limited to $50 if notifying a bank “within two business days after learning of the loss or theft of the access device,” or no more than $500 under other circumstances.
But while an unauthorized transfer is protected, most criminal schemes rely on “fraudulent inducements” that deceive the victim into participating in the transaction, Witte says. Banks take the position they don’t have liability because the consumer authorized the transfer, she says.
“If a person was convinced to send $50,000 to get their grandson out of jail (in a fake scheme), that transfer of funds has no recourse,” she says.
Venmo, PayPal, Zelle and other relatively new peer-to-peer transactions have even fewer consumer protections, she says. Gift cards and Western Union cash transfers that scammers often demand have no protection at all.
“Amending the EFTA to cover wire and fraudulently induced transfers would go a long way to cover these problems that still persist,” Witte says. “As far as what it takes to get it passed: Communicate with legislators to help influence them to make those changes.”
“If no one is on the hook for it, it’s going to continue to proliferate,” Witte says.
Eyes on criminals
Consumer agencies including the FTC and the CFPB constantly sue bad actors in an effort to keep up with the new methods of deceptions that scammers devise.
“The CFPB is doing historic work,” Witte says. “Without them, I think we’d be in a real pickle. They’re doing a great job” gathering evidence and holding financial institutions’ feet to the fire.
They sometimes win restitution for consumers, but as a class, Witte says.
None of the oversight agencies resolves individual cases to win back money that’s stolen by fraud. That’s left to lawyers and the civil court system, she says.
For details on the many ways consumers can report different types of financial fraud crimes, read this Rethinking65 piece.
Evidence and testimony from the victims of financial fraud and abuse helps agencies address pattern problems within their missions and to provide data for Congress to consider in amending essential laws.
“Fraud and scams need to be treated as the crimes that they are,” Witte says.
Linda Hildebrand is a longtime newspaper editor and consumer reporter.