Scam artists committing elder fraud against older couple - ahead of Grandparent's Day

Grandparent’s Day is almost here! For banks it's a perfect time to think carefully about how to protect older customers from elder fraud.

Unfortunately, elder fraud (or senior fraud or senior citizen fraud) remains one of the most popular tactics in fraudsters’ toolkits. Fraudsters target older adults because they tend to be more trusting, especially of law enforcement or bank officials. They also are more likely to have easy access to income from pensions or retirement funds. Finally, the pandemic brought many older customers into the digital banking fold. This means there are more older customers banking online to target than ever before.

Our grandparents and parents have lived full lives and deserve to live in peace without fear of being scammed. Here’s what banks can do to keep our loved ones safe and prevent elder fraud.

The Financial, Emotional, And Physical Toll Of Elder Fraud

Fraudsters worldwide have seen massive profits by targeting older adults. The latest figures from the FBI’s Internet Crime Complaint Center (IC3) found US consumers alone lost $1.7 billion to fraud last year,  a 74% increase from the previous year. In the UK, older consumers lost roughly £977 million between 2019 and 2022. In Australia, older customers have lost more than $51 million to scams so far this year.

These are staggering sums. But as we all know, the impact of fraud goes far beyond the financial loss. Fraud and scams take a heavy emotional toll on victims. Elderly customers feel ashamed about falling for a scam and humiliated in front of their family. They’re likely to distrust others and worry if more fraudsters are targeting them. Some may not report the scams at all, enabling a “silent epidemic” of fraud to take root.

These emotional anxieties may cause older victims to withdraw, contributing to older adults’ physical and mental health. Some may drink too much or over-medicate, resulting in higher blood pressure and other health problems. Imagine how you would feel if it was your own grandfather or grandmother – or maybe your own parents – who were defrauded? Who can bear to see a loved one suffer because of a fraudster’s vile actions?

5 Common Types of Elder Fraud Scams

Fraudsters and scam artists have far too many tactics available to them to commit senior fraud. Here are some of the dirtiest tricks bad actors use to defraud some of society’s most vulnerable citizens.

1. Family/caretaker fraud

Arguably the most devastating fraud tactic occurs when a relative or loved one commits elder financial abuse. For example, a “loved” one enrolls their older relative in a digital banking app and transfers money to their own account. The older relative doesn’t learn about the financial fraud until they log in themselves or visit a bank branch. But relatives aren’t the only ones who may exploit an elderly loved one. A caretaker may take advantage of the older adult’s trust and mental decline and coerce them into giving them power of attorney over their assets.

2. Social engineering scams

Older adults are often more trusting of authority figures. Fraudsters exploit this trust to commit social engineering scams in which they impersonate law enforcement or bank staff. Once they gain the victim’s trust, they convince them they have an outstanding tax bill that must be paid immediately. In other cases, scam artists direct victims to transfer money into a different bank account.

3. Tech support scams

Besides trust, older bank customers are motivated by fear. This fear combined with a lack of familiarity over digital banking technology makes them highly vulnerable to tech support scams. Victims get a phone call from a scam artist pretending to offer tech support services and warning them that they’ve detected a virus on their computer. The fraudster then guides them on how to give them remote access to their devices. From there, fraudsters have access to the users’ personal information like bank account details and social security number.

4. Investment scams

Another fear elderly customers have is how to stretch their retirements. Many older consumers worry they do not have enough money in their savings or pensions to live on. Others worry about how much they are able to bequeath to their loved ones. These fears make older customers vulnerable to investment scams, including supposedly lucrative payouts from cryptocurrency investments.

5. Romance scams

Many elderly people look for companionship when their spouse passes or they divorce. Fraudsters use this loneliness to lure older people into romance scams. Once they win their trust, scam artists convince victims to send money or gift cards to them for a plane ticket or to cover a medical expense.

4 Steps Banks Can Take to Protect Senior Citizens

Banks must do everything they can to keep our family members safe from fraudsters. Here are a few steps banks can take to prevent elder fraud. 

1. Hold special education events for elderly bank customers

Elderly bank customers need help learning digital banking technology. But learning new technologies and skills can be frustrating and intimidating for many older users. Plus, focusing too much on the fraud threat could scare off some customers from digital banking entirely. Instead, banks should try teaching their older customers on their own terms. Consider holding pop-up education classes specifically for older adults and their loved ones to learn how to use a laptop or access online banking. These sessions can teach older customers about the benefits of online banking — not just the threats.

2. Have the right transaction monitoring tools in place

Elderly bank customers have different lifestyles than the average bank customer. As such, banks can’t afford to compare their transactions to those in the general population. Look closely at the customer and their patterns. Consider if a large transaction is trustworthy or if they’re at risk of an investment scam.

3. Have a script specifically for older customers

Banks should also have a script ready that is tailored to senior citizens. If a transaction is flagged or blocked, be specific when communicating with older users about why the bank believed it was fraudulent. If a transaction is blocked, the customer will likely call in to straighten it out. Explain to them why the transaction was flagged and if they would still like to proceed.

4. Invest in strong authentication tools 

When transactions are above a certain value, banks need to be absolutely certain the customer is the one approving it. Consider adjusting your thresholds for older customers and reaching out to them directly to confirm they know about the transaction, understand its risks, and whether they are certain they want to authorize it.

It falls to us as a society to help keep our grandparents and parents safe from myriad fraud attacks. Banks and financial institutions have an especially important role to play in preventing elder fraud. This Grandparent’s Day — and every day after that — let’s all commit to keeping our elderly loved ones safe.

Want to learn how you can keep elderly customers safe from fraud and scams? Schedule a demo with our team today to learn how to keep customers safe from new fraud threats.