The FBI recently released the 2021 IC3 Elder Fraud Annual Report. Along with the Department of Justice Elder Fraud Initiative and the Internet Crime Complaint Center (IC3), the FBI is committed to identifying, investigating and prosecuting criminals who target seniors. I commend this effort having an elderly grandmother who was a victim of a fraud scam many years ago.
The report has some frankly terrifying statistics regarding the alarming rate at which seniors are being taken advantage of financially. Per the report, in 2021 over 92,000 victims over the age of 60 reported losses of a staggering $1.7 billion. Yes, billion, with a B. The 2021 loss amount was a 74% increase over 2020.
The State of Arizona ranked #10 on the number of victims over 60 years old with 3,175. The state ranked #8 in dollar amount loss for victims over 60 years old with losses of $54.4 million. That’s an average of over $17,000 per victim. Can your parent or grandparent afford to lose $17,000?
Some of the most common frauds directed at those over 60 years of age include Tech Support Fraud, Confidence Fraud/Romance Scams, Lottery/Sweepstakes/Inheritance, Government Impersonation and Investment.
Tech Support accounted for almost 14,000 victims and over $230 million in losses across the U.S. Tech support scams include impersonation of well-known tech companies, renewing/selling fraudulent software or security subscriptions and offers to fix non-existent technology issues. Victims reported being directed to purchase large amounts of prepaid/gift cards, making direct wire transfers and mailing large amounts of cash via express services.
Confidence Fraud/Romance Scams not only empties the bank account but also tugs at the heart. Nationwide during 2021, 7,658 victims over the age of 60 experienced over $430 million of losses from these horrible scams. Most romance scams involve a fake online identity who uses the illusion of a romantic relationship to scam the victim out of their cash. Grandparent Scams also are included in this category – criminals impersonate a loved one in trouble who needs money fast.
Lottery/Sweepstakes/Inheritance scams often involve a phone call or email indicating the victim has won a substantial amount of money. The only thing they have to do to claim the prize is pay the taxes up front. The victim will then send the fraudster the “tax” money never to see their prize. This is the exact type of fraud my grandmother was a victim of. She sent $5,000 to pay for her large winnings which never came. Her criminals were caught and convicted but all the money was gone. The IC3 report indicates 2,600 victims during 2021 lost over $53 million.
Government Impersonation involves criminals impersonating government officials to extort victims often with threats of financial or physical harm. They are trying to obtain personal information to further scam the victims. In 2021, 3,300 victims lost over $69 million mostly through demand for gift cards, wire transfers and overnighting of cash.
Investment Fraud involves the illegal sale or purported sale of financial instruments. Typical schemes include guaranteed returns, complex strategies, overly consistent returns or unregistered securities. Ponzi and pyramid schemes would be included in Investment Fraud. Over 2,100 victims reported over $239 million in losses from these types of frauds in 2021, a huge jump from $98 million of losses in 2020.
Keep in mind, all of these numbers are based on “reported” frauds. The numbers may actually be much higher as victims, especially seniors, are sometimes reluctant to report fraud due to feeling ashamed, embarrassed or humiliated. The only reason I found out about my grandmother was because she had to go to Chicago to testify in court about her scam and she wanted me to go with her. If the criminals had not been caught, I doubt my grandmother would have ever admitted to being duped.
Not mentioned directly in the report are those who are scammed by family members, close friends or trusted caretakers. This also happens far too often and is not reported as much as it should be.
We must educate our seniors and keep lines of communication open. Check in on your loved ones and keep an open dialogue. If you suspect something isn’t right, contact Adult Protective Services or an Elder Law attorney.
If you have any questions on this subject, please contact your Henry+Horne advisor.
Melissa E. Loughlin-Sines, CPA, CFE, CVA, CFF, ABV