Criminals are increasingly targeting older adults for fraud using a variety of financial products and services such as gift cards, electronic payments, wire transfers, and cryptocurrencies. The Federal Bureau of Investigation found that in 2021, nearly 168,000 people age 50 and older reported being victims of fraud, losing a total of nearly $3 billion. The average amount lost by a person age 50 and older was over $17,500.
Common frauds targeting older adults include fake check scams, romance scams, government or business impostor scams, family emergency impostor scams, and investment scams. Payments often change hands quickly. Once the money is transferred, it is usually not traceable or reversible, making it difficult for law enforcement to prosecute and for victims to get their money returned.
Criminals often demand payment from their victims using anonymous forms of payment, including gift cards and cryptocurrency. Older adults may be directed to send money urgently to strangers through these anonymous payment mechanisms as a form of ransom or extortion.
Gift card sales have rapidly increased over the past few years, with market projections estimating that sales will reach $221 billion by 2024. With this rapid growth, the Federal Trade Commission has seen the number of reported gift card scams increase every year since 2018. In 2021 alone, consumers reported losing $233 million to scams using gift cards. The average loss has also increased from $700 per victim in 2018 to $1,000 in 2021.
According to a 2022 Federal Trade Commission (FTC) report, consumers lost more money in scams through cryptocurrency than any other payment method in recent years. The report found that consumers lost over $1 billion in crypto to scams since 2021 alone, with a median reported individual loss of $2,600.
Increasingly, criminals are seeking payments in cryptocurrency. The reason is that cryptocurrency transactions do not pass through a bank or other institution, which otherwise might flag and stop suspicious activity before the transfer happens. Like wire transfers, cryptocurrency transfers cannot be reversed once the money is transferred.
SCAMS AND FRAUD: Policy
SCAMS AND FRAUD: Policy
Policymakers should conduct robust oversight and enforcement related to scams and fraud. They should also consider new protections on gift cards, cryptocurrencies, and electronic payments to prevent fraud. This includes refund or clawback provisions. Likewise, the private sector should establish policies and procedures to prevent scams and fraud, particularly against older adults (see also Elder Abuse).
Policymakers and the private sector should put in place:
- limits on the amount placed on a single gift card,
- limits on how many gift cards may be purchased in a given period of time,
- waiting or cancellation periods, and
- requirements that gift cards be stored securely and separate from other merchandise to minimize the chance of account compromise.