Compliance Blog

 Written by Shari R. Pogach, NAFCU Regulatory Paralegal

Last week the U.S. Department of Justice (DOJ) announced the largest coordinated sweep of elder fraud cases in history.  More than two million Americans, largely seniors, were victimized by more than 260 defendants from around the globe in these cases.  Total alleged losses from the elder fraud financial schemes were over three fourths of one billion dollars.  This DOJ interactive map provides details on its cases.

An increasingly more common form of elder fraud is the technical-support (tech-support) scam.  This is where criminals trick victims into giving remote access to their computers while pretending to give technical support.  According to the Federal Trade Commission (FTC), older adults are the hardest hit by such scams.  The FTC’s Consumer Sentinel Network received nearly 143,000 reports with a loss of $55 million on tech support scams in 2018.  Consumers 60 and over filed more loss reports on tech-support scams from 2015 to 2018 than on any other type of fraud reported to the Consumer Sentinel Network. The median individual reported loss to tech-support scams was $400, however, people 60 and over reported a 25 percent higher median loss of $500. 

Tech-scam frauds are done in several ways:  the criminals make telephone calls and claim to be computer technicians associated with a well-known company or may use internet pop-up messages to warn about non-existent computer problems.  They might claim they have detected viruses or other malware on a victim’s computer.  They then pretend to be “tech support” and ask the victim to allow remote access to his or her computer.  Eventually, they diagnose a non-existent problem and ask for payment for unnecessary services.

The problem is that money isn’t the only thing people can lose with tech-support scams.  People hand over control when they give the scammers remote access to their computer.  Scammers can then steal sensitive information or install spyware to gather information.  People have even been persuaded to log into their bank accounts whereby the scammer can then move funds remotely.  The FTC has developed a resource webpage and infographic for consumers that explain how to spot, avoid, report and recover from such scams.

Although tech-support scams appear to be the au courant scam in defrauding older adults, other schemes to defraud the elderly are still very much in use.  Some examples include:

•  Sending supposedly personalized direct mass mailings on official-looking letterhead promising cash, valuable prizes or good fortune if the recipients sent back a payment for processing fees or taxes;
• Operating a “Grandparent scam” or “relative in distress scam,” convincing seniors that their grandchildren or relatives were in trouble in a foreign country and money was needed to resolve the problem;
• Setting up websites for fictitious financial services companies offering to arrange loans to individuals with credit problems while them to provide bank information and pay an “insurance deposit”;
• Posing as agents of a U.S. government department or agency and telling victims they had won large monetary prizes in sweepstakes contests that required a sum of money in order to receive the prize; and,
• Acting as a third party attorney, contacting businesses and elderly individuals in an attempt to collect a so-called outstanding debt by sending a counterfeit check to the victim for deposit and requesting the victim then wire funds to an account overseas in Asia.

The coordinated sweep also took action against the money mule network that facilitates foreign-based elder fraud.  According to the DOJ, the FBI and Postal Inspection Service took action against over 600 alleged money mules nationwide by conducting interviews, issuing warning letters and bringing civil and criminal cases. Secret Service agents assisted by seizing and forfeiting proceeds in transit from victims to the elder fraud perpetrators.

Reducing elder financial abuse has become a priority for federal agencies. Elder fraud complaints may be filed with the FTC at www.ftccomplaintassistant.gov  or at 877-FTC-HELP. The DOJ provides a variety of resources relating to elder fraud victimization through its Office of Victims of Crime.  And, here are some additional helpful resources on combatting elder financial exploitation:

• NAFCU On-Demand Webinar - Elder Financial Exploitation: Information and Resources from the CFPB.
• NAFCU Compliance Blog - Going Fishing for Easy Money; Elder Abuse Resources and Because We Will All Age...... A Primer on the Prevention of Elder Financial Exploitation and Abuse.
• Financial Crimes Enforcement Network (FinCEN) Advisory FIN-2011-A003 - Advisory to Financial Institutions on Filing Suspicious Activity Reports Regarding Elder Financial Exploitation.