The growth in the older population is being accompanied by an increase in financial fraud targeted at older people, according to a report by the Center for Retirement Research at Boston College.
"As baby boomers age, the problem is expected to grow in the future. This generation is potentially a lucrative target due to three characteristics: it is enormous, with some 75 million people; increasingly well off; and facing cognitive decline," it said.
Americans in 2011 submitted more than 1.5 million complaints about financial and other fraud to the Federal Trade Commission– up 62 percent in just three years and up from about 300,000 a decade before — but probably there is significantly more because much fraud never is reported. The FTC estimates that 30 percent of adults have been victims of fraud. The financial cost of each instance also is up, with the median loss per victim rising from $218 in 2002 to $537 in 2011.
While there has been much emphasis on a few large fraud schemes that have been exposed, far more common are instances of theft of personal information through schemes such as Internet "phishing," the report said. Investment fraud also is common on the Internet, which provides a potentially large payoff for the perpetrators if even only a tiny percentage of the persons targeted respond.
"Baby boomers are accumulating inheritances from their parents, adding to substantial home equity and a lifetime of saving for retirement as the first genera¬tion to experience the transition from traditional pensions to 401(k) accounts. When money is combined with cognitive decline among aging baby boomers, it can be a recipe for fraud," it said, noting that between ages 71 and 79, one-fifth of individuals are considered to be cognitively impaired but that rises to half of those between ages 80 and 89.
"Failed memory is another problem. Older people often do not remember that information they have previously received was negative. Seniors can more easily be charmed by a charlatan, because they tend to process the positive information about him, such as how nice, warm or attractive he is – that’s what they remember. Young adults are more likely to be suspicious and to look for and remember inconsistencies in someone’s story," it said.
It added: "Knowing that seniors are more risk-averse, con men often ease seniors’ fears by peddling financial products they say are ‘low-risk’ or ‘no-risk.’ Whether they are selling stocks, bonds, debt, or high-yield investments, the schemers tap into a senior’s source of anxiety: earning enough money on their investments to support themselves comfortably in retirement while keeping their money safe."
Other common forms of fraud especially targeting older persons include offers to help people having difficulty paying credit cards, mortgages, or loans.