Senate Hearing Highlights Senior Scams and New Institutions to Combat Them

The Scams Against Older Adults Advisory Group, under the direction of the Federal Trade Commission, is scheduled to have its first meeting on September 29 at 2:30 p.m., and will be livestreamed on the FTC’s website.

The Stop Senior Scams Act, passed in March, established the group, which includes representatives of various advocacy groups such as AARP and AmeriCorps, and government institutions such as the Departments of Justice and Treasury.

The group is charged with expanding consumer education, improving industry training, identifying new technology to prevent scams and developing research on fraud prevention for financial advisers.

A Senate Aging Committee hearing held Thursday announced the group’s upcoming schedule and also emphasized seniors’ unique vulnerability to financial crime.

Professor Marti DeLiema of the University of Minnesota testified at the hearing that seniors’ heightened vulnerability to fraud is largely because seniors are more socially isolated than younger people and therefore have fewer people who can alert them to a scam, and often have fewer technical skills and suffer from cognitive decline as they age.

The Securities and Exchange Commission recommends that financial firms train their employees on the signs of cognitive decline in older clients.

DeLiema also noted that seniors tend to lose more money when scammed than younger people, and are particularly vulnerable to romance scams, or scams in which someone poses as a romantic partner to build trust and acquire financial information. Gift card and reloadable cards are the most common method to fraudulently acquire money from seniors, accounting for 27% of senior fraud. However, seniors are less likely to report when they are a victim of financial fraud.

DeLiema also testified that the emotional and psychological harm associated with financial fraud from stress, shame and ruined marriages is comparable to the trauma endured by survivors of physical and sexual assault.

Though romance scams lead in losses for seniors, business-related scams grew fastest during the pandemic. A business-related scam usually involves a fraudster impersonating a bank employee to obtain sensitive financial information.

One victim of such a scam, Aurelia Costigan, testified during the hearing. She stated that she was called by a fraudster who told her there were suspicious charges on her account, and that she should make a Zelle account to back up her bank account. The fraudster asked for her Social Security Number as part of the application process, and then proceeded to process fraudulent charges using the number Costigan provided.

The Senate Aging Committee also launched a hotline that can be used to report financial fraud targeted at seniors.