FTC warns of alarming surge in scams that target seniors

The Federal Trade Commission recently highlighted the dramatic surge in scams targeting older adults that has increased pressure on U.S. banks and credit unions to enhance their fraud prevention measures.

The FTC said a growing wave of scams has taken aim at retirees' life savings, with fraudsters often impersonating trusted government agencies and businesses to exploit their victims.

Older adults consistently report significantly higher losses from these imposter scams compared to younger individuals, according to FTC data. From 2020 to 2024, the number of reports from adults 60 and older who lost $10,000 or more to these schemes increased more than fourfold.

Alarmingly, the number of reports about victims losing over $100,000 at once increased nearly sevenfold, and combined reported losses rose eightfold during the same period.

In 2024 alone, older Americans reported losing $445 million in scams over $100,000, $214 million in scams between $10,000 and $100,000, and $41 million in scams under $10,000.

However, reported losses tell an incomplete story because many losses go unreported. As such, while older Americans reported $700 million in total losses in 2023, the FTC estimates total real losses were between $7.1 billion and $61.5 billion.

Sophisticated tactics and high stakes

Scammers initiate these high-loss schemes with deceptive narratives. Common lies include claims that:

• Someone is using your accounts: This often involves the scammer impersonating a bank to flag supposedly suspicious activity, or Amazon regarding a supposedly unauthorized purchase.
• Your information is being used to commit crimes: Fraudsters may pose as government officers, warning victims their Social Security number links to crimes like drug smuggling or money laundering.
• There's a security problem with your computer: This often starts with fake on-screen alerts appearing to be from Microsoft or Apple, prompting victims to call a number where they are told their online accounts are hacked.

The scammers then instruct victims to send money to keep it safe, secure their identity, or clear their name, convincing them they are solving a problem rather than sending money to a stranger.

These schemes heavily rely on phone calls, even if they don't start that way. This helps scammers instill fear and urgency, to make it harder for the victim to think clearly and check things out.

Scammers often impersonate the FTC, banks, Microsoft and the Social Security Administration. For high-loss cases in 2024, victims frequently used cryptocurrency (33% of the time), bank transfers (20%) and cash (16%) as payment methods.

For losses over $100,000, bank transfers were the most common method at 32%.

Banks grapple with intervention and accountability

Banks and brokerage firms hold a fiduciary responsibility to protect their customers, including from scams. However, intervening in suspected cases can be challenging.

A survey earlier this year by the American Bankers Association revealed that while 94% of banks report suspected elder financial exploitation to Adult Protective Services and 92% report to law enforcement, only half of banks operating in states with hold laws actually use them.

These laws allow banks to delay or hold transactions when they suspect exploitation. In states without such laws, including California, banks run the risk of liability for wrongful dishonoring of checks written on the account if they freeze funds.

Customer reactions to holds are often negative, with 45% of banks reporting negative reactions compared to just 17% reporting positive ones, leading some bank employees to feel they are in a bad position regardless of what they do.

Despite the challenges, banks that operate in states without hold laws overwhelmingly (86%) report that their customers would be better off if the state adopted such a law, according to the ABA survey.

Technology serves as part of the solution

Regulators are actively encouraging financial institutions to adopt innovative approaches.

In December 2024, six federal agencies issued guidance outlining strategies for banks and credit unions to identify, prevent and respond to elder financial exploitation. These strategies include enhancing governance and oversight, conducting employee training, utilizing transaction holds, implementing trusted contacts and leveraging data analytics.

Fintech companies including EverSafe and Carefull offer software to monitor customer activity and flag unusual behavior. Banks including Synovus and Charlie Financial have announced partnerships with these companies.

On Monday, Maryland State Employees Credit Union announced a partnership with Carefull. The credit union's president and CEO, David Sweiderk, said the partnership "allows us to protect our members in a more holistic, family-centered way while strengthening the trusted relationships we build across generations."

Carefull's platform uses AI to monitor linked accounts for suspicious activity and sends alerts with step-by-step guidance on next steps when the platform detects suspicious activity.

Carefull also enables members to designate trusted contacts, such as adult children or caregivers, who also receive real-time alerts without having direct access to funds.