In the late 1800s, con artist George C. Parker made a name for himself by "selling" famous New York landmarks — including the Brooklyn Bridge — to unsuspecting victims. He was so persuasive that some buyers even tried to set up toll booths on their newly “purchased” bridge before police intervened. His scams were audacious, but they thrived on the same principles that drive financial fraud today: deception, trust, and a target willing to believe the unbelievable.While few people today would fall for a scam involving the sale of a public landmark, financial fraud has only grown more sophisticated — particularly when it comes to targeting the elderly. Fraudsters no longer rely on fast-talking sales pitches; instead, they employ cutting-edge technology, social engineering, and even artificial intelligence to manipulate victims into willingly handing over their money.With the reliance on technology, fraud targeting seniors is soaring. From widespread beliefs that many older adults have significant savings in their bank accounts to cognitive issues and a higher likelihood of unfamiliarity with common financial scams, the elderly have become an attractive target group for fraud. In 2023 alone, more than 101K seniors were the victims of financial scams, with losses totaling $3.4B, according to the Internet Crime Complaint Center. Of that amount, impersonation scams accounted for more than $1.3B in losses, with people 60 and older representing roughly half of the victims. Gender is a factor as well, with elderly women twice as likely to be victims of financial fraud than their male counterparts, according to a MetLife study on elder abuse. Unfortunately, it is believed that the real numbers are actually higher, as the embarrassment of being scammed keeps many victims from reporting such crimes. Common Tactics for Fraud Against the ElderlyWhile the types of financial fraud targeted at the elderly range from caregivers taking advantage of access to financial records and accounts to fraudsters taking advantage of loneliness in individuals living alone by fostering trust, in a growing number of instances people are tricked into willingly transferring funds from their accounts — making it harder than ever for financial institutions to detect fraud. Given this reality, it is important for financial institutions to educate employees about the most common types of financial fraud against the elderly. The following are just a few of the most common scams targeting the elderly:
- Tech Support Scams. Fraudsters pose as representatives from well-known tech companies, claiming to fix nonexistent computer or software issues. Victims are often pressured into granting remote access or making unnecessary payments.
- Refund Scams. Scammers claim that the victim was overpaid for a service or product and must return the excess funds — often before realizing the original payment was fraudulent.
- Threat-Based Scams. Criminals impersonate government agencies (such as the IRS) or utility companies, threatening arrest, fines, or service shutoffs if immediate payment isn’t made.
- Emergency Scams. Fraudsters impersonate a distressed friend or relative — often claiming to be in jail, hospitalized, or stranded — urgently requesting money or personal financial details.
Fraudsters don’t just target the elderly — they study their victims and continuously refine their tactics to mimic the communication styles of legitimate organizations, including banks. This makes it even harder to distinguish scams from genuine interactions.Pending Legislation to Protect Elders from Financial FraudThe rise in elder fraud has not been lost on financial institutions and regulators, particularly since many victims will blame banks for overlooking the signs of fraud and allowing transactions to go through. Yet, in most cases of elder fraud, transfers and payments are initiated by the victims themselves. With no clear federal guidance on reimbursement for elderly fraud victims, individual states have begun taking matters into their own hands. So far, a handful of states have introduced bills or begun working on laws to protect the elderly from financial scams:
- Pennsylvania. House Bill 2064 is a proposed amendment to a 1987 bill called the Older Adults Protective Services Act. This amendment would require financial institutions to report any potential elder financial fraud identified and would give them tools and the power to halt any such transactions until their legitimacy can be confirmed. Failure to halt such transactions could open banks to liability and the need to reimburse victims. Maine has taken a similar approach.
- Connecticut. State legislation authorizes financial institutions to halt suspicious transactions initiated by customers aged 60 and up.
- California. Financial institutions must set up a monitoring program to help employees spot fraudulent transactions when assisting older customers by 2026. The state has put in place a safe harbor provision for financial institutions to protect them against civil liability when delayed transactions turn out to be legitimate.
- Florida. Multiple bills have been put in place that give financial institutions the authority to halt suspicious transactions that involve the accounts of seniors.
What CFIs Can DoThough it is still unclear what the financial obligations of financial institutions that fail to identify and prevent elder financial fraud will be, there is no doubt that diligence should be prioritized. In addition to stepping up IT efforts and algorithms to identify potential fraud, community financial institutions should focus on educating both employees and customers about tactics that fraudsters use to target the elderly. Front-line workers, from tellers to financial advisors, should be trained regarding the red flags to look for, particularly transactions that seem out of the norm for older clients. Customers should also be reminded about the risks of sharing sensitive personal information and the extensive steps that criminals will take to mask their identities or imitate legitimate organizations. Your institution may want to consider holding demonstrations showing how criminals can use tools like artificial intelligence to replicate someone’s voice or likeness. As new regulations and laws are put in place to protect the elderly from financial fraud, failing to spot and react to potential fraud could prove costly for financial institutions.
