Sophisticated scams targeting older Americans: How technology and awareness can protect their retirement savings

Wily scam­mers, equipped with advanced tools and elab­o­rate schemes, are increas­ing­ly tar­get­ing old­er Amer­i­cans through var­i­ous types of scams. As seen in cas­es like Bar­ry Heit­in’s — where a 76-year-old retired lawyer lost $740,000 — the sever­i­ty of this issue accen­tu­ates the advanced tac­tics used in mod­ern scams.

Often, scam­mers imper­son­ate as offi­cials from banks or gov­ern­ment bod­ies, exploit­ing psy­cho­log­i­cal manip­u­la­tion and tech­no­log­i­cal means to defraud people. 

For near­ly three months, Heitin believed he was assist­ing in a gov­ern­ment inves­ti­ga­tion into finan­cial crimes. Scam­mers, imper­son­at­ing as offi­cials from var­i­ous agen­cies, guid­ed him through fraud­u­lent trans­ac­tions, ulti­mate­ly deplet­ing his retire­ment savings. 

“They kept telling me, ‘This is a big case and we are going to stop a whole ring of peo­ple,’” the NY Times report­ed Heitin saying.

Heit­in’s heart-ren­der­ing sto­ry has not only revealed the extent to which scam­mers will go but also the emo­tion­al and finan­cial toll on their victims.

Prevalent Types and Tactics of Scams

Elder fraud, with loss­es exceed­ing $3.4 bil­lion in 2023 — an increase of approx­i­mate­ly 11% from the year pri­or — is on the rise. The sit­u­a­tion that old­er Amer­i­cans and their fam­i­lies are grap­pling with demands urgency to strength­en defens­es against these threats.

Rec­og­niz­ing the spe­cif­ic tac­tics used by scam­mers is cru­cial for pre­ven­tion. Many schemes involve imper­son­ation, where crim­i­nals pose as trust­ed fig­ures such as IRS agents, tech sup­port per­son­nel, or finan­cial advisors. 

They use per­sua­sive tac­tics to cre­ate a sense of urgency or lever­age the victim’s trust.

Heitin, for exam­ple, was instruct­ed to make with­drawals and trans­fers under the pre­tense of pro­tect­ing his assets. Such manip­u­la­tions can make it extreme­ly chal­leng­ing for vic­tims to detect the fraud until it’s too late.

Tech sup­port fraud is a major concern. 

Scam­mers often imper­son­ate tech com­pa­nies, claim­ing urgent issues with a com­put­er or account that require imme­di­ate action. They seem as if they are legit­i­mate rep­re­sen­ta­tives, using offi­cial-look­ing emails, phone calls, or web­sites to con­vince vic­tims to grant remote access or pro­vide sen­si­tive information.

In addi­tion, seniors must be cau­tious of iden­ti­ty theft and phish­ing attempts.

Fraud­sters may steal per­son­al infor­ma­tion through fake emails or mali­cious web­sites — sites designed to deceive users into pro­vid­ing per­son­al infor­ma­tion or down­load­ing harm­ful soft­ware, which can then be installed on com­put­ers or mobile devices.

Heitin, for instance, was tricked into believ­ing his accounts were com­pro­mised, lead­ing to dras­tic finan­cial decisions.

Anoth­er burn­ing prob­lem is tax fraud.

Scam­mers often steal Social Secu­ri­ty num­bers to file fraud­u­lent tax returns and claim refunds. They nor­mal­ly do that by gain­ing unau­tho­rized access to per­son­al infor­ma­tion through phish­ing emails, data breach­es, or by inter­cept­ing sen­si­tive documents.

Among the elder­ly, health­care fraud is preva­lent, par­tic­u­lar­ly due to their fre­quent inter­ac­tions with health­care providers and insur­ance companies. 

Scam­mers may exploit this vul­ner­a­bil­i­ty by send­ing fake med­ical bills or insur­ance claims. What they assume is that old­er indi­vid­u­als may be less like­ly to ques­tion or ver­i­fy such doc­u­ments and fall into the trap of finan­cial exploitation.

Reverse mort­gage scams, such as those involv­ing fake lenders or fraud­u­lent loan offers, are also a grow­ing concern.

Scam­mers tar­get elder­ly indi­vid­u­als because they often hold sub­stan­tial home equi­ty and may not ful­ly under­stand the com­plex­i­ties of finan­cial prod­ucts, which makes them more vul­ner­a­ble to decep­tive schemes.

Even in the name of char­i­ta­ble caus­es or invest­ment oppor­tu­ni­ties, scam­mers often deceive indi­vid­u­als, involv­ing fake char­i­ties or fraud­u­lent deals that can be par­tic­u­lar­ly damaging.

Scam­mers may exploit emo­tion­al appeals or present offers that seem too good to be true. And old­er peo­ple, hav­ing less famil­iar­i­ty with dig­i­tal plat­forms or finan­cial schemes, may be more vul­ner­a­ble to such tactics.

Practical Tips for Scam Prevention

Giv­en the com­plex­i­ty of these scams, here are some prac­ti­cal tech tips to help pro­tect old­er Americans:

Edu­cate on Rec­og­niz­ing Phish­ing Attempts: Scam­mers often use emails, calls, or texts to imper­son­ate rep­utable orga­ni­za­tions. Old­er adults should scru­ti­nize unso­licit­ed com­mu­ni­ca­tions care­ful­ly and ver­i­fy the sender’s iden­ti­ty through offi­cial chan­nels before shar­ing per­son­al infor­ma­tion. No legit­i­mate orga­ni­za­tion, includ­ing the IRS, will request sen­si­tive details via phone or email.

Imple­ment Two-Fac­tor Authen­ti­ca­tion: Encour­age the use of two-fac­tor authen­ti­ca­tion (2FA) for online accounts. 

This added lay­er of secu­ri­ty requires not only a pass­word but also a sec­ond form of ver­i­fi­ca­tion, such as a code sent to a mobile device. This can sig­nif­i­cant­ly reduce the risk of unau­tho­rized access, even if pass­words are compromised.

Reg­u­lar­ly Update Soft­ware and Secu­ri­ty Tools: Ensure that devices used by old­er adults have the lat­est secu­ri­ty updates and antivirus soft­ware installed. 

Reg­u­lar updates patch vul­ner­a­bil­i­ties that scam­mers exploit to install mal­ware or gain unau­tho­rized access. Keep­ing oper­at­ing sys­tems and apps updat­ed helps pro­tect against known secu­ri­ty threats.

Set Up Account Alerts: Many finan­cial insti­tu­tions offer alerts for unusu­al account activ­i­ty. As sug­gest­ed by the STATE DEPARTMENT FEDERAL CREDIT UNION, below are a few of the most com­mon­ly used account alerts:

Set­ting up these alerts can help detect unau­tho­rized trans­ac­tions ear­ly. Old­er Amer­i­cans should be encour­aged to acti­vate these alerts to receive noti­fi­ca­tions of sus­pi­cious activ­i­ties or transactions.

Be Wary of Unso­licit­ed Offers and Requests: Scam­mers often use high-pres­sure tac­tics to con­vince vic­tims to act quick­ly. Advise old­er adults to avoid engag­ing with unso­licit­ed offers or requests for per­son­al or finan­cial infor­ma­tion. Instead, they should inde­pen­dent­ly ver­i­fy the legit­i­ma­cy of such offers by con­tact­ing the orga­ni­za­tion direct­ly through offi­cial con­tact information.

Use Secure Pay­ment Meth­ods: When mak­ing online pur­chas­es or finan­cial trans­ac­tions, rec­om­mend using secure pay­ment meth­ods such as cred­it cards or trust­ed pay­ment services.

Here is Bankrate’s list of secured pay­ment methods:

• Secure online pay­ment methods
• Cred­it cards
• ACH pay­ments
• Stored pay­ment credentials
• Cred­it cards with EMV chip technology
• Cred­it cards with con­tact­less payment
• Pay­ment apps

These meth­ods often offer bet­ter fraud pro­tec­tion com­pared to direct bank trans­fers or wire transfers.

Pro­mote Aware­ness of Com­mon Scams: Famil­iar­ize old­er adults with com­mon scams tar­get­ing their demo­graph­ic. For exam­ple, tech sup­port fraud, where scam­mers claim there’s a prob­lem with their device and request pay­ment for a fix, is preva­lent. Under­stand­ing the tac­tics used can help them rec­og­nize and avoid these scams.

Encour­age Dig­i­tal Lit­er­a­cy Train­ing: Pro­vid­ing old­er adults with basic dig­i­tal lit­er­a­cy train­ing can empow­er them to nav­i­gate online envi­ron­ments more safely. 

This includes under­stand­ing how to use pri­va­cy set­tings, rec­og­niz­ing secure web­sites (look for “https” in the URL), and iden­ti­fy­ing phish­ing attempts.

Financial Impact on Older Americans

The finan­cial impact of scams on old­er Amer­i­cans is staggering. 

In 2023, indi­vid­u­als over 60 expe­ri­enced the high­est loss­es among all age groups due to cyber­crime, with fig­ures exceed­ing $3.4 bil­lion. This empha­sizes the need for ongo­ing edu­ca­tion and robust pre­ven­tive mea­sures. Heitin’s case was not iso­lat­ed but part of a broad­er trend where old­er indi­vid­u­als are dis­pro­por­tion­ate­ly affect­ed by fraud.

More­over, scams often lead to addi­tion­al finan­cial burdens. 

Vic­tims, as seen in Heit­in’s sit­u­a­tion, not only lose their sav­ings but may also face sig­nif­i­cant tax impli­ca­tions due to ear­ly with­drawals from retire­ment accounts; in Heit­in’s sit­u­a­tion, this result­ed in a $285,000 tax bill, adding insult to injury.

It is ‘like a rab­bit hole,’ as described by Heitin: “I was going down the hole with them.”

This twofold impact neces­si­tates both pre­vent­ing fraud and address­ing its con­se­quences; a sin­gle approach alone is insuf­fi­cient to com­bat scams, par­tic­u­lar­ly those tar­get­ing old­er Amer­i­cans and dri­ven by advanced tech­nol­o­gy; a mul­ti-faceted strat­e­gy that com­bines edu­ca­tion, tech­nol­o­gy, and vig­i­lance is essential. 

On the gov­ern­men­tal front, enforc­ing effec­tive reg­u­la­tions and pro­mot­ing pub­lic edu­ca­tion are key, where­as com­mu­ni­ty orga­ni­za­tions should pro­vide coun­sel­ing and finan­cial assis­tance to sup­port victims.