Elder Fraud: Prevalent & Preventable

The Scale of Financial Crime — Part 3

March 4, 2024 by Verafin

Elder fraud is unquestionably reprehensible, but its prevalence is remarkably high. An estimated 1 in 10 elderly Americans are abused each year, and in Nasdaq’s 2024 Global Financial Crime Report, $77.7 billion of all reported global fraud was linked to elderly victims. With an aging population and sophisticated fraud scams on the rise, financial institutions have a crucial role in defending against these crimes.  

Many Faces & Forms 

Elder fraud is a crime that is vastly underreported. Either out of shame, uncertainty, or an inability or lack of awareness of where to turn, exploited seniors are often left to deal with lost retirement savings, stolen investments, emotional damage, and lasting trauma.  

Elder fraud takes many forms, from government imposter, romance, emergency and lottery scams to tech and customer support scams. While each typology varies in delivery and scope, they have one objective – to prey upon a vulnerable demographic through deceit, misrepresentation, or abuse of confidence. 

Tragically, victims of elder fraud often share a close connection with the perpetrators. Although strangers may be responsible, many cases are committed by family, friends, neighbors or others in positions of trust. 

Behavioral and Financial Indicators 

Understanding the indicators of elder fraud and their implications can help uncover this crime as soon as possible and minimize financial and emotional damage. FinCEN’s Advisory on Elder Financial Exploitation lists numerous behavioral and financial red flags, including: 

  • Sudden changes to account ​contact information​. 
  • Unexplainable account activity​. 
  • Urgent need to send money to ​an account with no history​. 
  • Inability to speak with a customer despite repeated attempts.

How Financial Institutions Can Help 

With many senior victims unable or unwilling to come forward, financial organizations play a crucial role in detecting elder fraud and preventing exploitation. 

  • Practice Customer Awareness 
    Fraud awareness is incumbent both on clients and their financial institutions. By providing educational materials to customers, your institution can warn potential victims of the characteristics of common scams they may encounter — and the more informed a customer is, the better they can protect themselves. From an institution’s perspective, understanding and being aware of your elderly customers’ typical behaviors, engaging with their family and developing a baseline for expected transactions begins at the account opening process, and can help quickly uncover deviations from their normal interactions and spending habits.  
  • Recognize the Signs
    Elderly customers are often targeted for their presumed wealth and reliance on others for care or financial planning. Victims of elder fraud may be reluctant to speak out due to embarrassment, or simply the fact that the person they trust or rely on is the perpetrator. Having an internal education program for front-line staff and fraud investigators is an important step in being an advocate and protector of vulnerable populations. 
  • Timely Reporting
    Timely reporting of suspected elder fraud is critical for prevention and ensuring that the appropriate help and authorities are engaged as quickly as possible. In many states, this is also required by law​.​ There are specific requirements ​for when and how to report, which may includestate health services, telephone hotlines,Adult Protective Services (APS),and/or law enforcement. Establishing contacts​ at local and state agencies and with law enforcement​ can also be beneficial​ to your investigations. ​These requirements should be​ included in training​ and internal procedures.​  
  • Establish a Fraud Monitoring Prevention Program Focused on Elderly Customers
    To better protect elderly customers, financial institutions should establish a fraud monitoring program that is designed with them in mind to help quicky identify red flag transactional activity, out-of-pattern behavior​, suspicious activity​, targeted scam scenarios​, activity across multiple channels, and activity spanning multiple institutions​ using a consortium network. 

Fraud is devastating, and even more so to vulnerable groups, such as seniors. As elderly customers look to enjoy their golden years, financial institutions are key to protecting their wellbeing and hard-earned investments. 

Verafin is the industry leader in enterprise Financial Crime Management solutions, providing a cloud-based, secure software platform for Fraud Detection and Management, BSA/AML Compliance and Management, High-Risk Customer Management and Information Sharing. Over 3800 banks and credit unions use Verafin to effectively fight financial crime and comply with regulations. Leveraging its unique big data intelligence, visual storytelling and collaborative investigation capabilities, Verafin significantly reduces false positive alerts, delivers context-rich insights and streamlines the daunting BSA/AML compliance processes that financial institutions face today.

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