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Elder Financial Exploitation

Prominent Scam Typologies Identified in New Analysis

June 4, 2024 by Verafin

In a recent FinCEN analysis, Elder Financial Exploitation: Threat Pattern and Trend Information, June 2022 to June 2023, two predominant categories of victimization were identified across Elder Financial Exploitation (EFE)-related BSA filings. Elder scams, where the victim does not know the perpetrator, and elder theft, where the victim knows the perpetrator — approximately 80% of the BSA reports filed were related to elder scams. 

The report reveals $27 Billion in suspicious activity filed between June, 2022, and June, 2023 was linked to EFE-related fraud in the U.S. These findings are a follow-up to a FinCEN advisory from 2022 alerting financial institutions to the rising trend of EFE targeting older adults at that time. 

 The Anatomy of Prominent EFE Scams 

Elder abuse is predicted to increase as many countries are experiencing rapidly ageing populations.  

~ United Nations, World Elder Abuse Awareness Day, 15 June 

EFE is the illegal or improper use of an older adult’s funds, property, or assets. Losses may affect their personal savings, checking accounts, retirement savings and investments, and can severely impact a victim’s well-being and financial security.  

The average SAR value related to elder scams from June 2022 to June 2023 was $129,483. The most frequent scam typologies identified in SAR filings during this timeframe were account takeover, tech support and romance scams. 

Account Takeover

The majority of elder scam-related filings referenced account takeover activity, where an account was taken over by a perpetrator unknown to the victim. Once an account is under criminal control, unauthorized outgoing transactions would take place, typically in the form of peer-to-peer transfers, bank transfers, or fraudulent checks.  

Tech Support Scams 

The 2023 FBI Elder Fraud Report found illegal call centers overwhelmingly target older adults, with almost half the complainants reported to be people over 60 years of age and losing more to these scams than all other age groups combined. Fraudsters will notify victims, posing as technical experts, feigning a fabricated computer virus or informing them that someone has gained illegal access to their device. The elder either pays for fake repairs, grants the scammer remote access leading to compromised personal identifiable information, or is asked to pay for software they didn’t purchase. 

Phantom Hacker scams were identified by the Internet Crime Complaint Center (IC3) as an emerging and sophisticated scam in 2023, combining elements of tech support scams with other typologies. 

Romance Scams  

Romance scams are often conducted via online dating platforms where fraudsters create false relationships based on deceit. These scams are highly lucrative for fraudsters – in 2023, romance scams accounted for $3.8 billion in estimated global losses along with other confidence schemes. Romance scams can follow several different patterns evolving into additional scams such as investment scams, retail scams, government impersonation scams, lottery scams, real estate scams, and family-in-need scams.  

Transmitting Funds: Checks and Wires Most Frequent Channels 

The report identified the most targeted payment channels used in EFE scams were check and wire transfers. The finding noted that fraudulent or counterfeit checks were used frequently as a result of compromised accounts, where scammers altered intercepted checks using stolen information.  

Based on review of BSA filings, fraudulent checks were typically the result of compromised accounts, as scammers either altered an intercepted check or created new checks using stolen information. 

~ FinCEN, Financial Trend Analysis 

While criminals typically rely on less sophisticated scam typologies that minimize direct contact with financial institutions, recent scams have become more elaborate. In these instances, criminals manipulate their victims into becoming both the source of funds and acting as witting or unwitting money mules to assist them in laundering illicit gains. Scams frequently used to recruit money mules involve employment scams, romance scams, lottery scams, and grant scams. 

Preventing EFE 

Financial institutions can play a pivotal role in detecting and preventing EFE by: 

  • Understanding the typical behaviors of elderly customers. 
  • Training employees to recognize the signs of EFE and to report any suspicious activity to the appropriate authorities.  
  • Implementing stronger security measures to prevent account takeover activity including multi-factor authentication, monitoring for unusual account activity, and educating customers.  
  • Liaising with law enforcement and other organizations to raise awareness around the issue of EFE.   

Many victims of EFE are unable or unwilling to come forward due to fear, embarrassment, or lack of resources, resulting in the majority of EFE incidents not being reported. Financial institutions can help protect elderly customers by detecting pervasive scams such as tech and romance scams and account takeover to prevent EFE from growing.

 

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.