Scams targeting the elderly have proliferated during the pandemic, with losses from three popular types of frauds seeing triple-digit percentage spikes over the past two years, according to a new report from the Federal Trade Commission.
Some of those scams are directly related to the pandemic—shady businesses promoting bogus Covid treatments, for instance—while others found fertile ground in the general confusion and economic dislocation of the past two years.
“Covid-19 has had, and continues to have, a particularly devastating impact on the health and finances of older Americans,” the FTC says in its report.
Investment-related scams that don’t necessarily have a direct connection to the pandemic have especially flourished since 2020. In that time, reported losses from those types of schemes have ballooned 213% to $147 million, according to the FTC.
The commission has taken a number of enforcement actions on that front, such as the March order for an online investment site to pay $2.4 million related to a trading scheme that the commission said made bogus earnings claims and locked investors in hard-to-cancel subscription services. Many of the victims were retirees and older Americans.
The FTC’s report acknowledges the challenges of quantifying the extent of any type of fraud, which relies on the victim being aware of the scam and reporting it. The report found that older Americans—defined as 60 or older—were “substantially less likely” to report losing money to a scam than younger Americans. But in the instances that were reported, the oldest Americans lost the most money. Victims in their 80s reported a median loss of $1,500 to fraud, while victims in their 70s had a median loss of $800.
The report is yet another indicator for advisors that scams are on the rise, and that it can be helpful to talk over some of the common frauds with clients—especially older ones.
Demographic data indicate that the challenge of safeguarding older Americans’ nest eggs is likely to get worse amid an aging population. Drawing on census data, the Department of Health and Human Services has projected that by 2040, Americans ages 65 and older will account for 21.6% of the country’s population, up from 16% in 2019.
Impersonation scams have become another favored line of attack for fraudsters. Since 2020, reported losses from business-impersonation scams spiked 134% to reach $151 million. Government-impersonation scams saw nearly as dramatic an increase, with reported losses jumping 109% to $122 million.
“The Covid-19 pandemic has spurred a sharp spike in impersonation fraud, as scammers capitalize on confusion and concerns around shifts in the economy stemming from the pandemic,” the FTC said in December 2021, when it proposed a rule aimed at cracking down on those kinds of scams.
Protecting seniors from financial exploitation is one of the rare issues these days that doesn’t stoke partisan ire. Congress earlier this year passed legislation that called for an advisory group led by the FTC and comprised of government agencies, consumer advocates, and business representatives to develop education materials industries like financial services could use to combat fraud targeting seniors. The FTC convened the first meeting of the advisory committee last month.
“Protecting older consumers from predatory practices is a top priority,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement. “We’ll continue to bring aggressive cases, engage in proactive outreach and research, and work closely with others, including in our new advisory group formed under the Stop Senior Scams Act.”
This article was originally published in Barron’s on October 21, 2022, and written by Kenneth Corbin.
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