Elder financial exploitation is unfortunately an ongoing and common issue in the financial industry today [1]. Elder financial exploitation is the act of an individual, or group of individuals, taking advantage of an elderly person and defrauding them of their assets. This is done by utilizing various known fraud schemes including, but not limited to, family scams, technology scams, grandparent scams, and romance scams. It is not always scammers or unknown strangers that take advantage of the elderly. A study done by the Keck School of Medicine of The University of Southern California [2] showed that elder financial exploitation is more often perpetrated by a trusted family member or close friend of the victim, as opposed to a stranger.

When elder financial exploitation takes place, generally the elderly person is coaxed into giving away their assets in the form of monetary instruments due to a fabricated story made up by a fraudster or a family member with malicious intent. Family members that conduct elder financial exploitation are usually successful because of their close relationship with the victim and the dependence of the victim on the family member. The victim trusts this person to take care of them, and this trust is exploited to financially benefit the perpetrator.

Strangers that attempt to take advantage of elderly victims use various scams that prey upon an elderly person’s general lack of knowledge of these scams. One common scam, known as a technology scam, occurs where the elderly person is contacted via phone or email and they are told that their personal electronic device (usually a personal computer or laptop) has a virus or some other problem. The elderly person is convinced to allow the scammer to access their device via free screen sharing software; the perpetrator then pretends to remedy the “problem” or locks the device immediately for the benefit of fake billing the victim. The scammer then forces the victim to send them money for either a false service or to simply unlock their device. This benefits the fraudster as they acquire financial gain from the victim without performing a real service.

Another common scam, the grandparent scam, consists of a stranger contacting an elderly person, telling them that a family member, usually a grandson or granddaughter, had something happen to them, such as they are in jail or in financial trouble, and needs money sent quickly to aid them. The scammers are generally able to find victims via social media, purchasing lists containing information on individuals who have been scammed before, or it can just be random.  The narrative will include seemingly specific details of what has happened to make the story appear more legitimate, and may also include references to a professional, e.g. a doctor, or police officer, will be able to give them more details on the situation. This scam is centered on alarming the elderly person and making the situation seem urgent, pushing for immediate action.

The final scam is a romance scam. Here a fraudster creates a fake online dating profile and attempts to lure unknowing victims and build an artificial relationship with them to get them to send them money or surrender other assets. The fraudster will either create a story to convince the victim they need financial support and prey upon the victim’s giving nature or exploit their need for companionship [3].

The Consumer Financial Protection Bureau provides information about the obligation that banks and other financial institutions have in preventing this activity [4]. It is up to banks, Fintech companies, money-service-businesses, and anyone else dealing with the potential victims to be vigilant and make sure the transactions they see make sense and do not raise any red flags. They offer a line of defense that is important to catching and stopping this activity before it becomes a significant issue in a victim’s life. Additionally, many states require banks to report suspected elder financial abuse.

Common red flags are:

  • Large transactions that do not match prior account activity
  • Withdrawing the maximum daily amount of funds from an ATM
  • Money transfers (ACH, e-commerce, or wire transfers) being sent to individuals with no apparent relationship to the victim, especially if they are located internationally
  • Sudden changes to any relevant financial documents.

It is very important for these industries to have the correct controls in place to prevent and detect this activity. This can be done with quality know your customer (KYC) procedures, efficient and accurate transaction monitoring software and alert rules, and training so that BSA/AML employees can recognize the red flags efficiently and effectively. It is important that the individuals looking at this activity know what to expect when this type of activity crosses their desk and how to prevent it, as well as making sure that it is reported accurately and presented to the proper authorities.


1. - https://www.napsa-now.org/get-informed/exploitation-resources/

2. - https://keck.usc.edu/study-financial-abuse-of-older-adults-by-family-members-more-common-than-scams-by-strangers/

3. -https://www.consumer.ftc.gov/articles/what-you-need-know-about-romance-scams

4. -https://www.consumerfinance.gov/data-research/research-reports/reporting-suspected-elder-financial-exploitation-financial-institutions-update-2016-advisory-and-recommendations/)

 

AML RightSource, LLC is an Equal Opportunity Employer and does not discriminate against applicants due race, color, religion, national origin, sex, age, disability, veteran status, sexual orientation, gender identity, or other legally protected status.