Sophisticated scams and scams on the Internet are growing alarmingly in our country, so much so New York Times there is a whole series, Fraudulent savingsdedicated to her. We're also in the midst of giving season and International Fraud Awareness Week, so sharing some of these stories and tips to protect yourself and your customers is only fitting.
The elderly are a particularly targeted group because they are more likely to fall prey to these tricks. Older demographics are more prone to cognitive decline, less tech-savvy, and are widely perceived to have more savings, making them the perfect target. or Elder Fraud Report 2023 released by the FBI revealed that the Internet Crime Complaint Center received over 880,000 complaints, with potential losses exceeding $12.5 billion. Losses reported by those over 60 reached $3.4 billion, an 11% increase in reported losses from 2022. There was also a 14% increase in complaints filed by elderly victims. The technical support scam generated more complaints; romance, cryptocurrencies and investment scams were also among the most reported.
However, do not underestimate these criminals. Even the smartest individuals have fallen victim to fraud, and fraud is on the rise.
Losing it all
Case in point: the last one New York Times story about Barry Heit, a 76-year-old retired lawyer who for months believed he was part of a government investigation reminiscent of a scene straight out of a James Bond movie. Of course, the “investigation” turned out to be a load of fiction, a bogus case fabricated by criminals who used Barry as a hostage to help them steal hundreds of dollars of his money. To make a long story short, Barry kept making withdrawals from his accounts in what he thought was helping the feds protect his money and catch a ring of thieves. Instead, he lost almost all of his savings, roughly $740,000.
Another article in New York Times The scam series details how a 79-year-old man, Alfred Mancinelli, lost nearly $1 million in savings after falling victim to a romance scam with a criminal pretending to be WWE wrestler Alexa Bliss. The scam also cost him his relationship with his son, who ended up embroiled in a lawsuit with Alfred as he tried to stop him from being cheated out of the last of his money.
Cheats using Bliss's personality are as prolific as they get had to issue statements on her social media accounts warning fans not to fall for scammers.
Gone for good?
Creating an emergency and isolating victims from loved ones are trademark tactics used by these types of criminals. Barry's adviser became suspicious when he tried to withdraw more than $830,000 from his individual retirement and brokerage accounts. The scammers coached Barry into telling his adviser that he was using the money to buy his children a windfall in Canada, but his adviser refused. Unfortunately, the fraudsters came up with a better plan – to transfer the IRA to another institution. The tactic worked. Barry was able to empty the new account in less than two weeks with no questions asked.
Methods such as bank transfers to foreign accounts and laundering through cryptocurrencies make it almost impossible to recover the money. To make matters worse, victims often end up being taxed under a Trump-era tax law that requires fraud victims to pay federal taxes on the money lost. A bill that would restore a tax deduction for personal casualty losses has been introduced, but with Trump back in office in January, the bill's fate remains unclear.
Consumers often bear the brunt of losses due to scams or fraud, as they typically authorize transactions. Barry's attorney, Robert Rabinowitz, told him New York Times that investment firms are required to “make a reasonable effort” to obtain a reliable contact when accounts are opened or updated so they can alert someone if they have reason to believe a client is being taken advantage of. They may also temporarily freeze transactions or disbursements. Proving liability on the part of the institution is likely to be an uphill battle.
Customer protection
“We've witnessed a variety of scams, from criminals impersonating government officials or local authorities to fraudulent Bitcoin investment managers, some with heartbreaking results. It is imperative to be proactive about these discussions before it is too late to take appropriate action,” said Elias Crist, CFP, associate wealth advisor at Regent Peak Wealth Advisors.
Some of the measures Crist suggests clients take include:
- Activate a trusted contact person on the accounts – or better yet, a financial power of attorney – who can empower children to monitor account activity and put the necessary safeguards in place.
- Set guidelines for account activity “thresholds” and when to intervene.
- Keep external checking accounts to a minimum balance, so in the event of fraud, the loss is minimal.
“Discussing these topics may be uncomfortable for some, but the potential consequences of inaction are much more painful,” he adds.