Fraud Victimization is a Chronic, Escalating Problem for Seniors

Published in the Pawtucket Times on March 8, 2021

Everyone has heard of the ago old proverb, “Fool me once, shame on you, fool me twice, shame on me.”  After being tricked once, hopefully a person learns from one’s mistakes and avoids being tricked in the same way again.   But for many victims of financial fraud, this is not the case.

Last week, AARP, the FINRA Investor Education Foundation (FINRA Foundation) and Heart+Mind Strategies released a four-phase study that identifies evidence-based ways to help repeat victims of financial fraud and their families to avoid being tricked again.

The study’s researchers note that over the years intervention strategies have generally remained the same, while the sophistication of the scammers continues to evolve.  This new study, “Addressing the Challenge of Chronic Fraud Victimization,” released on March 4, provides “new thinking” as to how to support victims of financial fraud and scams who are repeated targeted and fall victim to sophisticated scammers.

According to the study, some of the common tactics used savvy scammers include: playing upon fear, need, excitement, and urgency; making threats; creating a belief of scarcity; using the victim’s personal life and history to create trust; and using emotional stimuli, like hope of winning a prize or finding love, to lure in the victim. 

 The Chronic Fraud Victimization study, published during National Consumer Protection Week (NCPW), scheduled from February 28 to March 6, uses a behavior model to help illuminate factors that may contribute to repeat or chronic victimization by financial fraud schemes.

Looking at Chronic Fraud Victimization

According to AARP, “about one-in-ten U.S. adults are victims of fraud each year, losing billions of dollars annually to criminals through a variety of scams, including natural disaster scams, fake charities, fake prize promotions, and government imposter scams, such as Social Security and Medicare scams.”

“The drivers behind chronic fraud victimization have remained a mystery, so this study is an important step to being able to stop the cycle,” said Kathy Stokes, director of fraud prevention programs and leader of the AARP Fraud Watch Network in a statement announcing the release of the study findings on March 4. “Chronic fraud can give targets and their families a sense of helplessness. By gaining a better understanding of the target’s drivers, we are hopeful there can be more meaningful interventions to disrupt and end the cycle,” notes Stokes.

Last year, the FINRA Foundation and the AARP Fraud Watch Network engaged Heart+Mind Strategies to deploy a four-phased study of chronic fraud victimization to uncover evidence-based concepts for effective interventions. The study’s goal was to generate new ways of thinking as to how to best support the individuals and families repeatedly targeted and victimized by financial scams and fraud. The study’s researchers accomplished this goal by reviewing existing literature, interviewing subject matter experts, chronic victims of financial fraud, and family members of victims, and finally, hosting two expert roundtables as a part of the study.

“This research provides a new lens through which to identify key intervention strategies that could disrupt the cycle of chronic fraud victimization at one or more points along the path to victimization,” adds Gerri Walsh, President of the FINRA Foundation. “We hope it stimulates additional attention to the need for effective interventions that may reduce chronic fraud victimization,” she says.

The 13-page study found that chronic fraud victimization may be a consequence of chronic susceptibility due to certain situational factors that disrupt judgement and derail good intentions. The researchers say that one of the most effective ways to reduce chronic fraud victimization may be to reduce chronic susceptibility. However, they note that chronic susceptibility can be challenging to identify and address. The study offers ideas for managing other factors, such as triggers that elicit an emotional response and the ability to access funds, which may be more scalable ways to reduce fraud victimization rates or counteract the negative consequences associated with being a victim.

The study identified the importance of fraud education but acknowledged that victims or would-be victims do not consider themselves as such, and consequently may not seek out help or absorb anti-fraud messaging. So, creating more in-the-moment education and intervention opportunities could be more effective approach, say the researchers. Partnering with clergy and counselors, or locations such as hair salons and churches, could provide more powerful messages and tools for potential or repeat victims, they note.

The researchers concluded that preventing chronic fraud victimization is a challenging task in the absence of interventions and individualized support.  However, even after a person has been scammed,  intervention is possible to lessen chronic fraud victimization and its impact.

Tapping into Free Resources

Anyone who suspects a fraud or has a family member experiencing chronic fraud can call the free AARP Fraud Watch Network Helpline at 877-908-3360 or visit aarp.org/fraudwatchnetwork for more information. The AARP Fraud Watch Network is a free resource that equips consumers with up-to-date knowledge to spot and avoid scams, and connects those targeted by scams with fraud helpline specialists, who provide support and guidance on what to do next. The Fraud Watch Network also advocates at the federal, state and local levels to enact policy changes that protect consumers and enforce laws.

Investors with questions or concerns surrounding their brokerage accounts and investments can also contact the FINRA Securities Helpline for Seniors toll free at 844-57-HELPS (844-574-3577) Monday through Friday from 9 a.m. – 5 p.m. ET. FINRA staff can help investors with concerns about potential fraud or unsuitable or excessive trading; answer questions about account statements or basic investment concepts, and assist beneficiaries who are having trouble locating or transferring their deceased parents’ assets.

According to AARP, the Washington, DC-based aging group and FINRA Foundation have a long history of collaboration on research and programs that explore and combat financial fraud. Working together, the Foundation and AARP Fraud Watch Network’s fraud fighter call centers, have conducted outreach to more than 1.7 million consumers, enabling them to identify, avoid and report financial fraud.

National Consumer Protection Week is a time to help people understand their consumer rights and make well-informed financial decisions about money.

AARP Fights Consumer Fraud – by Herb Weiss

Published in Pawtucket Times on November 30, 2020

Every year, fraudsters continue to operate government imposter scams falsely claim to be from federal agencies, including the Internal Revenue Service, Social Security Administration, to get people to turn over money or personal information. Every year, hundreds of thousands of Americans continue to fall victim to these scams.

FTC Compiles Fraud Complaints

Last January, the U.S. Federal Trade Commission (FTC) released its annual report detailing data from the Consumer Sentinel Network Data Book 2019, continuing to put a spotlight on the impact of imposter scams and identify fraud on consumers across the nation. Expect the FTC to release its 2020 data book early next year.

The data book, initially released in 2008, includes national statistics, as well as a state-by-state listing of top report categories in each states, and a listing of metropolitan areas that generated the most complaints per 100,000 population.

According to the FTC, its 2019 database network receives reports directly from consumers, as well as from federal, state, and local law enforcement agencies and a number of private partners. Last year, the network received 3.2 million reports, including nearly 1.7 million fraud reports as well as identity theft and other reports.

The researchers found that younger people reported losing money to fraud more often than older people. But, when people age 70 and over had losses, the median loss was much higher, they say.  

Imposter scams, a subset of Fraud reports, followed closely behind with 657,472 reports from consumers of 2019. The most common type of fraud reported to the FTC last year was identified theft scams, with imposter scams following closely behind.    

Specifically, last year there were over 647,000 imposter scams reported to FTC’s database. Thirteen percent of those calling reported a dollar loss, totaling nearly $667 million lost to imposter scammers. These scams include, for example, romance scams, people falsely claiming to be the government, a relative in distress, a well-known business, or a technical support expert, to get a consumer’s money.

Of the 1.7 million fraud reports, 23 percent indicated money was lost. In 2019, people reported losing more than $1.9 billion to fraud – an increase of $293 million over what was reported in 2018.

Protecting Yourself Against Scammers

With the release of a new report, AARP continues its efforts to combat identify theft and imposter scams. The Washington, DC-based nonprofits continues to report on the latest scams, exploring its impact on U.S. adults age 55 and over and how technology may play a role in their ability to protect themselves from financial harm. The 16-page report, “Identity Fraud in Three Acts,” developed by Javelin Strategy & Research and sponsored by AARP, reveals that 26 percent of seniors have been victims of identity fraud. But researchers say that more are taking additional safeguards to prevent losses of personal information. Following an identity theft incident, 29 percent have placed credit freezes on their credit bureau information, and more than half have enrolled in identity protection or credit monitoring services.

“Older Americans are leading more digitally infused lives, with two-thirds using online banking weekly, so it’s encouraging to see that many are taking proactive steps to protect their identity following a data breach,” said Kathy Stokes, Director of AARP Fraud Prevention Programs in a statement announcing the release of the report. “Passwords still represent a security threat, however; using repeated passwords across multiple online accounts makes it easy for criminals to crack one of them so that all of your accounts – including financial accounts – become accessible,” says Stokes.

According to the AARP report, age 55 and over consumers call for banks to use stronger security authentication. About 90 percent support the use of more fingerprint scanning, and 80 percent view facial recognition capabilities as a reliable form of technology for financial transactions and private business matters. The report’s findings indicate that identity fraud victims age 65 and over do not necessarily change how they shop, bank or pay following a fraudulent event, with 70 percent exhibiting reluctance to change familiar habits.

“Criminals are regularly targeting age 55 and over Americans through a combination of sophisticated scams via computer malware and also through more traditional low-tech channels via telephone and U.S. mail,” says the AARP report’s author, John Buzzard, Lead Analyst, Fraud and Security at Javelin. “The combination of high-tech and low-tech strategies unfortunately gives the upper hand to the criminal — not the consumer,” he adds.

The AARP report provides these tips to older consumers to protect their pocketbooks. Just hang up on strangers. Independently verify everything.  Always adopt security practices that go beyond a single password.  Consider using a password manager tool or app to create and safely store complex passwords.  Always write down important numbers of companies you do business with rather than rely on a web search for a customer service number, as criminals post fake numbers online.  

The report also recommends securing your devices – mobile phones, laptops and tablets- with a complex password, preferably with screen locks that use a fingerprint or facial recognition and secure personal payments with digital wallets.

Be vigilant.  Don’t become a sucker for scams.  

To report a compliant, call the Consumer Sentinel HelpLine at 1.877.701.9595.

For a copy of Consumer Sentinel Network Data Book 2019, go to:  https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-2019/consumer_sentinel_network_data_book_2019.pdf

For a copy of “Identity Fraud in Three Acts,” go to:  https://www.aarp.org/content/dam/aarp/home-and-family/family-and-friends/2020/10/aarp-Identity-fraud-report.pdf.

To learn more about AARP’s fraud prevention programs, visit aarp.org/fraudwatchnetwork.