Prime Targets for Scam Artists

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Here’s a question you’d think would be simple to answer: How many older Americans fall prey to frauds and scams each year?

We’re talking about fake lotteries (“You’ve just won $10,000 in the Spanish lottery! To collect your winnings, send $29.95 to….”) and about phony investment schemes (oil drilling, gold mining, gold coins and other “opportunities” of dubious value). And the latest wrinkle, a heartrending call from someone impersonating a grandchild, claiming to have been robbed in some overseas city and needing several thousand bucks wired right away.

You’d imagine that people conned in this way, losing sometimes staggering sums, would be eager to report the crimes and spread the word. Yet Doug Shadel, a former fraud investigator who probably knows as much as anyone about financial elder abuse, mistrusts approximations of how widespread these crimes are.

Though the Federal Trade Commission estimates that 13.5 percent of the adult population is victimized in a given year, “I don’t believe we’ll ever know definitively,” Dr. Shadel said.

He points to the 2011 National Victim Profiling study underwritten by AARP Foundation, which compared 723 fraud victims with a 1,500-member control group. Those victims, he pointed out, were drawn directly from law enforcement files across the country and were thus known to have been swindled in one way or another.

Yet when the survey asked if they’d ever been scammed, “only 40 percent said they had,” Dr. Shadel said. “A 60 percent error rate! It gives me pause about the accuracy of other studies.”

The respondents, he thinks, were simply embarrassed to acknowledge their exploitation. What we know about the prevalence of fraud, therefore: “It’s a giant number, in terms of threatening people’s retirement,” he said. But just how giant is unclear.

You can hear actual phone scam artists — relentless and abusive — at work in the audio recordings accompanying this post, which were compiled from conversations in which undercover investigators posed as elderly victims. Law enforcement agencies around the country supplied the recordings to AARP.

Fortunately, elder fraud isn’t quite the shadowy phenomenon it used to be, because this and other research projects are unearthing some of its underlying dynamics. Dr. Shadel, now AARP’s director in Washington State, just published a useful paperback, “Outsmarting the Scam Artists,” that describes some of those findings and suggests strategies to help older people resist cons. When we spoke recently, he passed along some key ideas.

  • Different scams attract different victims. Anyone can be defrauded under the right circumstances, Mr. Shadel believes. But, he said, “some people are more likely to fall for some kinds of frauds than others.”

    The people who send off checks to supposed lotteries (always foreign, always fake), for instance, tend to be women over 70, living alone, with less education and lower incomes than the general population. Once they’re on a list of participants, they may receive scores of come-ons in the mail each week. Even if the checks they send are small, these victims can lose tens of thousands of dollars over time.

    Those defrauded by investment opportunities, on the other hand, are more commonly men in their 50s or 60s, college-educated, wealthier and financially literate. “It’s like Willie Sutton said — ‘That’s where the money is,’” said Dr. Shadel.

    Understanding these differences may help in aiming anti-fraud messages at those most susceptible to particular schemes.

  • Age is a risk factor. Victims are disproportionately over age 50; in the AARP study, the average age was 69. It may be that swindlers target older people because they have property and assets.

    But in a small pilot study of lottery victims, also supported by the AARP Foundation, geriatric social workers found that many victims had greater cognitive impairment than most people their age. Since this and a large number of other characteristics are associated with victimization, it’s not clear how potent age itself is.

  • Victims are more engaged in the marketplace. The AARP study found that victims over 50 were more likely than others to accept free meals or trips, during which they’re subjected to high-pressure sales pitches. They’re more apt to open and read junk mail offers, more likely to send away for brochures or allow salespeople into their homes.

    But they were less likely to enter their names on do-not-call and do-not-mail lists. Simply being exposed to persuasive tactics appears related to succumbing to them.

All of this suggests ways that family members and others can help seniors avoid or resist attempts to steal their savings. I’ll pass along some fraud-fighting suggestions on Monday. Meanwhile, there’s reason to think that knowledge can indeed be power, so if your family has had experience with this misery, please tell us about it.