June is Elder Abuse Awareness Month, and June 15 is Elder Abuse Awareness Day, a designation meant to highlight the criminal tactics targeting one of the most vulnerable populations, and better sensitize financial crime professionals and caregivers about an issue growing in scope.

The issue of how to protect the elderly and spot fraudsters attempting to take advantage of the elderly is also very important to the Association of Certified Financial Crime Specialists (ACFCS). We have extensively covered the dynamics at play in detailed stories, webinars and during live events.

To help compliance teams and investigators better spot transactions tied to crimes against the elderly, ACFCS has culled some guidance and tips from our archives below.

While usually available only to members, we’ve unlocked this content for public access to help spread awareness of this critical topic, and the role all financial crime professionals can play in combating elder financial exploitation.

ACFCS is also holding a special webinar focusing on these topics later this month. To find out more and register, click here.

DOJ, Finra, FTC target fraudsters, scammers

In this Elder Abuse Spotlight, ACFCS is highlighting some key recent actions to counter the rising financial exploitation of the country’s most vulnerable population.

This includes a historic, coordinated sweep by federal authorities arresting hundreds of individuals who allegedly defrauded victims of an estimated half a billion dollars, new securities rules to protect seniors from predatory scammers, and a government watchdog noting a rise in phishing attempts targeting elders. To read the full “Elder Abuse Spotlight,” click here.

DOJ sweep brings charges against hundreds accused of defrauding elderly victims

In the global sweep involving nearly a dozen countries, the U.S. Department of Justice (DOJ) and other authorities levied charges against more than 250 defendants alleged to have victimized more than a million Americans, mostly elderly, to the tune of more than $500 million.

The actions charged a variety of fraud schemes, including mass mailing, telemarketing and investment frauds to individual incidences of identity theft and theft by guardians. To read the full release, click here.

As the elderly population of the country grows, countering financial abuse has become a growing focal point of federal and state investigators and bank anti-money laundering (AML) compliance departments. In some cases, banks have created specialized training for alert analysts and frontline staff to better recognize the red flags of elder abuse.

In the sweep, one critical area was tracing the financial trails to the larger, often foreign, criminal networks victimizing hundreds at a time. As one example, a single criminal enterprise identified in the sweep garnered tens of millions of dollars in illicit funds.

“A number of cases involved transnational criminal organizations that defrauded hundreds of thousands of elderly victims,” according to authorities, while others involved smaller scale cases of abuse involving those in a position of authority or trust, such as a single relative or fiduciary who took advantage of an individual victim.

For example, federal investigators stated that just one of the schemes prosecuted criminally by the operated from 14 foreign countries to cost American victims more than $30 million.

Some examples of the elder financial exploitation prosecuted by the Department include:

  • “Lottery phone scams,” in which callers convince seniors that a large fee or taxes must be paid before one can receive lottery winnings;
  • “Grandparent scams,” which convince seniors that their grandchildren have been arrested and need bail money;
  • “Romance scams,” which lull victims to believe that their online paramour needs funds for a U.S. visit or some other purpose;
  • “IRS imposter schemes,” which defraud victims by posing as IRS agents and claiming that victims owe back taxes;
  • “Guardianship schemes,” which siphon seniors’ financial resources into the bank accounts of deceitful relatives or guardians.

Perfect storm leads to more crimes targeting elderly

An aging population, desperate relatives still downtrodden by the economic downturn and fraudsters more readily realizing the vulnerability of older folks is leading to a surge in financial crimes against the elderly.

According to the Census Bureau’s “middle series” projections, the elderly population will more than double between now and the year 2050, to 80 million. By that year, as many as 1 in 5 Americans could be elderly.

This puts more pressure on bank compliance teams to look for the signs of elder abuse, including:

  • Has an elder customer with a stable account balance suddenly started incurring non-sufficient funds (NSF) charges or low account balance?
  • Has an elder customer account shown a large increase in withdrawals or checks to unfamiliar recipients?
  • Do accounts of an elder customer show large transfers into the account from investment accounts, only to be quickly withdrawn?
  • Is an elder customer with no or infrequent ATM withdrawals now showing an increased pattern of ATM withdrawals?
  • Is an elder customer with consistent spending patterns now showing a sharp increase in spending?

To read the full ACFCS story and for more red flags, please click here.

In industry first, new Finra rules come online to better protect seniors from fraudsters, scammers

The Financial Industry Regulatory Authority (Finra), the nation’s chief self-regulatory body overseeing the securities sector, has warned companies and criminals alike that as of February, there are two new rules to better protect seniors.

The new rules, approved a year ago prior, put in place the first uniform, national standards to protect senior investors, according to Finra.

Firms since that time have been required to make reasonable efforts to obtain the name of and contact information for a trusted contact person for a customer’s account when there is a reasonable belief of financial exploitation.

The rule also permits Finra member firms to place a temporary hold on a disbursement of funds or securities when there is a reasonable belief of financial exploitation, and to notify the trusted contact of the temporary hold.

Firms can also reach out to law enforcement and adult protect services.

It is a critical measure because of the difficulty investors face in trying to recover funds that they have inadvertently sent to fraudsters and scam artists. To read more, click here.

As well, last year the Securities Exchange Commission (SEC), the country’s chief trading regulator, worked with Finra to tackle the issue head on, creating a new rule aimed at protecting elder investors.

The commission approved the rule in March 2017, with an effective date of February 5, 2018.

The new rule involves “two key steps to protect investors. First, firms will be required to make reasonable efforts to obtain the name and contact information for a trusted contact person for a customer’s account.

Second, firms will be permitted to place a temporary hold on a disbursement of funds or securities when there is reasonable belief of financial exploitation.”

For more information on the SEC and Finra rules, please click here.

FTC notes rise in phishing schemes targeting seniors

The U.S. Federal Trade Commission (FTC), which offers a bevy of resources to help seniors better protect themselves, issued a new alert recently related to scammers attempting to gain access to victims’ computers by sending a fake invoice and diseased link that could install ransomware if someone clicks on it.

The FTC offers these tips to prevent from being victimized:

  • Be suspicious if a business, government agency, or organization asks you to click on a link that then asks for your username or password or other personal data. Instead, type in the web address for the organization or call them. The link in the email may look right, but if you click it you may go to a copycat website run by a scammer.
  • Be cautious about opening attachments. A scammer could even pretend to be a friend or family member, sending messages with malware from a spoofed account.
  • Set your security software to update automatically, and back up your files to an external hard drive or cloud storage. Back up your files regularly and use security software you trust to protect your data.

To read the full ACFCS story, click here.

 United Nations Snapshot: Key facts related to elder financial abuse

  • Around one in six older people experienced some form of abuse in the past year.
  • Rates of abuse may be higher for older people living in institutions than in the community.
  • Elder abuse can lead to physical injuries and long-term psychological consequences.
  • Elder abuse is predicted to increase as countries experience rapidly ageing populations.
  • The global population of people aged 60 years and older will more than double, from 900 million in 2015 to about 2 billion in 2050.

Source: The United Nations. To read more, click here.

DOJ sees growing risks of elder fraud

The issue of how best to protect the elderly is a challenging one for federal, state and local investigators, and an emotional one for families who have seen their parents, grandparents and relatives get victimized by fraudsters, unscrupulous caregivers and opportunists.

What’s more, the problem is only expected to get worse.

On World Elder Abuse Awareness Day last year, DOJ noted the rising scourge of crimes targeting older Americans. Some studies suggest that 10 percent of seniors may suffer some form abuse, financial exploitation or neglect, according to DOJ.

Likewise, other studies suggest that older adults “may suffer billions in losses as a result of financial fraud, and that being victimized by financial fraud could lead to higher rates of hospitalization and mortality.”

[Did You Know] ACFCS offers training on financial abuse of older adults? 

We have teamed up with TAMLO to offer you an award-winning 35-minute course Financial Abuse of Older Adults: Recognize, Review and Respond. The course is built around 3 short videos that illustrate how older adults are vulnerable to those they rely on the most – and what financial institutions can do about it.

This course awards 0.5 CFCS Credits and the content can be modified to form a customized version of the course for your financial institution. If you are interested in customization, please contact us.

Learn more and start your training: https://www.acfcs.org/tamlelderabuse

Expert insights and warning signs from the ACFCS Annual Conference

ACFCS also analyzed how and why criminals are targeting seniors and offered solutions from renowned experts at the association’s annual conference last year.

In a June 2nd, 2016 presentation, Jilenne Gunther, a senior strategic policy advisor for the American Association of Retired Persons (AARP), shed light on the increasing prevalence of fraud and financial abuse targeting elderly individuals.

“Older Americans lose about $3 billion, but we know it’s just the tip of the iceberg,” said Gunther, who also leads the AARP’s BankSafe initiative. She added that banks as a result of scams against seniors, lose $1 billion annually.

Moreover, compounding the problem is that the people older folks should be able to trust the most are the ones most at risk to steal, and steal even more than strangers or non-related caregivers, she said, citing a study. And with the elderly population set to double in coming years, the “problem is only going to get worse.”

Thousands of older Americans are victims of financial exploitation every day.

Older Americans are targeted not only because they have accumulated $18 trillion in assets, but also because they are more likely to suffer from cognitive decline making them vulnerable to exploitation.

Customers are asking their banks to help. Four of every five older Americans want their financial institutions to fight exploitation, according to the AARP’s own research.

Theft tied to older people averages $120,000, a figure roughly equal to their life savings. Studies also reveal that the closer a person is to the victim, the more they steal, with a child stealing an average of nearly $160,000, down to a non-related caregiver stealing an average of nearly $20,000.

In tandem with the elderly population expanding comes a greater awareness by fraudsters and hacking groups that they can potentially get more money from older people and do so with less stolen information, in some cases only needing a phone number, address and a bank account statement.

Investigators have noted that in some data breaches, the hackers parsed out the information by age to better manipulate older victims, through such means as penny stock pump-and-dump scams.

The session highlighted several overarching scam areas fraudsters attempt to employ against the elderly, including

  • Telemarketing
  • Construction/Home Repair
  • Sweetheart Grandparent
  • Lottery
  • Investment Fraud
  • Reverse Mortgages
  • Phishing and Internet Fraud
  • Cold calls from a boiler room
  • ID Theft

The panel also detailed key red flags that would be of value to compliance analysts and fraud investigators:

Changes in Financial Activity:

  • Unusual and/or inconsistent transactions
  • New debit card, credit card &/or increased activity
  • Withdrawals over daily maximum limit
  • Bounced checks and/or nonpayment for services
  • Unusual credit or debit transactions
  • New wired funds without a previous history of the customer doing so
  • New access to internet banking without a previous history of the customer doing so
  • Closed CDs, without regard to penalties
  • New power of attorney (POA), account holder, or change of address

Red flags focusing on seniors, companions and caregivers:

  • Senior makes complaints about missing assets
  • Inability to contact/speak with senior, despite repeated attempts
  • Changes in the older victim; clothing, demeanor, conversation
  • Senor unable to recall or discuss transactions
  • New caregiver or ‘family member’
  • Senior appears to be frightened, fearful or submissive w/companion
  • Companion – excessive interest
  • Companion won’t permit senior to speak for himself/herself

To read the full story about last year’s ACFCS conference, please click here.

 Further resources

Here are some additional resources from the U.S. government and private sector groups to more efficiently and effectively spot elder financial abuse: