Aging and Exploitation: How Should the Financial Service Industry Respond?

Elder financial victimization is a growing problem facing older Americans. As the conduits of financial transactions, financial firms are positioned to stop losses at their source. Representatives at small and large firms were interviewed to describe their financial exploitation training and prevention programs, their detection and response protocols, and how they balance the goals of client protection with the client’s right to autonomy and privacy in financial decision-making. Representatives from regulatory agencies were interviewed to describe the interventions firms are authorized to engage in, the legal barriers they face, and recent rule change proposals that may overcome some of these barriers

Financial Fraud among Older Americans: Evidence and Implications

The consequences of poor financial capability at older ages are serious and include making mistakes with credit, spending retirement assets too quickly, and being defrauded by financial predators. Because older persons are at or past the peak of their wealth accumulation, they are often the targets of fraud. Our project analyzes a module we developed and fielded in the 2016 Health and Retirement Study (HRS). Using this dataset, we evaluate the incidence and risk factors for investment fraud, prize/lottery scams, and account misuse, using regression analysis. Relatively few HRS respondents mentioned any single form of fraud over the prior five years, but nearly 5% reported at least one form of investment fraud, 4% recounted prize/lottery fraud, and 30% indicated that others had used/attempted to use their accounts without permission. There were few risk factors consistently associated with such victimization in the older population. Fraud is a complex phenomenon and no single factor uniquely predicts victimization. The incidence of fraud could be reduced by educating consumers about various types of fraud and by increasing awareness among financial service professionals

Exploring the Risks and Consequences of Elder Fraud Victimization: Evidence from the Health and Retirement Study

This is the first study to use longitudinal data to explore both the antecedents and consequences of fraud victimization in the older population. Because older persons are close to or past the peak of their wealth accumulation, they are often the targets of fraud. This paper reports on analysis of the Leave Behind Questionnaires (LBQs) fielded on Health and Retirement Study (HRS) respondents over three survey waves in 2008, 2010, and 2012. We evaluate the demographic determinants and risk factors of reporting financial fraud victimization in the survey, and explore whether there are demographic subgroups of older victims. In addition, we examine the financial, physical and psychological consequences of fraud. Overall results suggest that there is no single reliable predictor of fraud victimization across all three LBQ samples. When LBQ responses were pooled across survey years, we found that younger, male, better-educated, and depressed persons reported being defrauded significantly more often. Victimization was associated with lower non-housing wealth in the combined sample controlling for other factors, but had no measurable impact on cognitive, psychological, or physical health outcomes. Future research should examine predictors and outcomes based on the type of financial fraud experienced and the amount of money lost

Mixed Methods Analysis of Consumer Fraud Reports of the Social Security Administration Impostor Scam

Most Americans have received fraudulent calls from impostors claiming to be officials from the Social Security Administration (SSA). Callers threaten those who respond with arrest and suspension of their bank accounts and Social Security numbers, but charges can be removed if the target agrees to buy retail gift cards, wire money, or deposit cash in cryptocurrency ATMs. This paper uses mixed methods to analyze SSA imposter scam consumer reports from victims and attempted victims filed in the Consumer Sentinel. Qualitative analysis of 600 case narratives reveals that SSA impostors use the persuasion principals of authority, reciprocity, liking, and scarcity to put pressure on consumers to comply with their requests. Expressions of fear, anger, anticipation, and trust in the imposter were present in the victim case narratives. Qualitative findings were supported using a quantitative sentiment analysis of more than 200,000 consumer reports to count the frequency of emotion words in case narratives. Emotional expressions were significantly associated with reported victimization versus attempted victimization. Quantitative models show that older adult consumers are significantly less likely to report victimization relative to those 30 and younger, but older victims lose significantly more money per incident on average. Results also indicate that consumers from majority Black, Asian, and Hispanic communities are more likely report victimization, although victims from non-Hispanic White communities report higher average loses. Consumer education on government imposter scams, specifically targeting young people and minorities, as well as greater controls on retail gift card sales, might help limit consumer losses.U.S. Social Security Administration, RDR18000002-03, UM21-Q1http://deepblue.lib.umich.edu/bitstream/2027.42/171805/1/wp434.pdfDescription of wp434.pdf : working paperSEL

Contextual and Social Predictors of Scam Susceptibility and Fraud Victimization

Financial fraud targeting older adults is on the rise, with annual losses totaling in the billions of dollars. Prior cross-sectional and qualitative studies have reported that negative life events and social factors, such as poor psychological well-being and loneliness, are significant correlates of fraud, yet there is little research using longitudinal data to show that these social factors and life events precede (versus follow) victimization experiences, and no studies that examine the impact of modifying social variables on the risk of fraud and reducing scam susceptibility. In this study, we use repeated measures from the Rush Memory and Aging Project (MAP) decision making substudy to assess how negative life events and trajectories in social support, well-being, and loneliness affect susceptibility to scams and fraud victimization over the course of the study. Experiencing negative life events was not associated with the risk of self-reported fraud victimization, although negative life events were statistically significantly associated with greater scam susceptibility in unadjusted models. Using a causal inference analysis that simulates the impact of a social support intervention on the risk of fraud over time revealed that higher consistent social support increases the average probability of reporting fraud victimization over the study, contrary to study hypotheses. Although the magnitude of effects are small, consistent interventions that maximize psychological well-being and minimize loneliness significantly reduce average scam susceptibility. Effects are stronger for older adults who are divorced, widowed, or never married relative to those who are married or partnered.U.S. Social Security Administration, RDR18000002-03, UM21-15http://deepblue.lib.umich.edu/bitstream/2027.42/171798/1/wp429.pdfDescription of wp429.pdf : working paperSEL

Identity Theft Among Older Adults: Risk and Protective Factors

Although financial exploitation and fraud targeting older adults have been the focus of increasing academic attention, research on identity theft among older adults is virtually nonexistent. Identity theft refers to an intentional, unauthorized transfer or use of a person’s identifying information for unlawful purposes (Federal Trade Commission 1998). Society’s growing reliance on technology to transfer and store private information has created increased opportunities for financial predators to access and misuse personal data. Results from the most recent Bureau of Justice Statistics’ Identity Theft Supplement show that nearly 1 in 10 adults aged 65 or older experienced identity theft in the past year, with financial losses totaling $2.5 billion. Given the high frequency and cost of identity theft among older Americans, more research is needed to guide prevention efforts and interventions that support recovery. This paper examines the risk factors, protective factors, costs, and consequences of identity theft victimization among older adults, focusing on differences between those aged 65-74 and those 75 or older. Findings suggest that the prevalence of identity theft is lower among those 75 or older (6.6$155 vs $96). Compared to those aged 65-74, a lower percentage of adults aged 75 or older engaged in online shopping, thereby reducing their risk of identity exposure (48% versus 24%). However, they were also less likely to engage in protective behaviors such as checking credit reports, changing passwords, checking account statements, and using security software

Risk and protective factors of identity theft victimization in the United States

Identity theft victimization is associated with serious physical and mental health morbidities. The problem is expanding as society becomes increasingly reliant on technology to store and transfer personally identifying information. Guided by lifestyle-routine activity theory, this study sought to identify risk and protective factors associated with identity theft victimization and determine whether individual-level behaviors, including frequency of online purchasing and data protection practices, are determinative of victimization. Data from sequential administrations of the U.S. National Crime Victimization Survey-Identity Theft Supplement (ITS) in 2012 and 2014 were combined (N = 128,419). Using multivariable logistic regression, risk and protective factors were examined for three subtypes: 1) unauthorized use of existing credit card/bank accounts, and unauthorized use of personal information to 2) open new accounts, or 3) engage in instrumental activities (e.g., applying for government benefits, receiving medical care, filing false tax returns). Existing credit card/bank accounts and new accounts identity theft victimization were associated with higher levels of online purchasing activity and prior identity theft victimization. All identity theft subtypes were associated with government/corporate data breaches and other crime victimization experiences. Routine individual-level preventive behaviors such as changing online passwords and shredding/destroying documents were protective. Identity theft subtypes showed divergent socio-demographic risk/protective profiles, with those of higher socioeconomic status more likely to be victims of existing credit card/bank account identity theft. Identity theft is a pervasive, growing problem with serious health and psychosocial consequences, yet individuals can engage in specific protective behaviors to mitigate victimization risk

WP 2017-374

This is the first study to use longitudinal data to explore both the antecedents and consequences of fraud victimization in the older population. Because older persons are close to or past the peak of their wealth accumulation, they are often the targets of fraud. This paper reports on analysis of the Leave Behind Questionnaires (LBQs) fielded on Health and Retirement Study (HRS) respondents over three survey waves in 2008, 2010, and 2012. We evaluate the demographic determinants and risk factors of reporting financial fraud victimization in the survey, and explore whether there are demographic subgroups of older victims. In addition, we examine the financial, physical and psychological consequences of fraud. Overall results suggest that there is no single reliable predictor of fraud victimization across all three LBQ samples. When LBQ responses were pooled across survey years, we found that younger, male, better-educated, and depressed persons reported being defrauded significantly more often. Victimization was associated with lower nonhousing wealth in the combined sample controlling for other factors, but had no measurable impact on cognitive, psychological, or physical health outcomes. Future research should examine predictors and outcomes based on the type of financial fraud experienced and the amount of money lost.Social Security Administration, RRC08098401-09, R-UM17-16https://deepblue.lib.umich.edu/bitstream/2027.42/142373/1/wp374.pdfhttps://deepblue.lib.umich.edu/bitstream/2027.42/142373/4/wp374.pdfDescription of wp374.pdf : Working pape