Protecting Seniors from Scams

Last year, over 88,000 seniors reported being victims of elder fraud. Together, these victims lost over $3 billion.

And the number of victims is likely higher. Seniors might not report abuse due to fear of being perceived as incapable of managing their affairs or being uncertain about where to report suspected fraud.

The elderly are disproportionately the most common targets for different forms of abuse and fraud, including financial, cyber, and romantic scams. Seniors are frequent targets for financial fraud because they are more likely to have high credit scores and own multiple assets. These scammers exploit seniors’ inexperience with the internet, loneliness, and physical or cognitive impairments.

Romance scams are all too common as well, with seniors collectively losing over a billion dollars in these scams in 2022. For example, a recently widowed senior repeatedly sent tens of thousands of dollars to someone she had fallen in love with to pay for their nonexistent medical procedure.

State agencies are the primary institutions resolving elder exploitation. In 2010, Congress passed the Elder Justice Act, allocating funds for state Adult Protective Services (APS) agencies to combat elder abuse.

Most APS agencies require individuals working in social services, law enforcement, financial services, and the medical profession to be mandatory reporters of suspected fraudulent activity against seniors. Once a report is filed, case workers counsel the victim and refer criminal cases to state law enforcement.

To help law enforcement officials catch scammers, the Federal Trade Commission (FTC) created the Consumer Sentinel Network. This network provides state enforcement agencies with access to consumer complaints across jurisdictions, enabling them to coordinate efforts to stop common offenders.

Because of the prevalence of scams against the elderly and the difficulty in recuperating lost assets, federal agencies focus on prevention initiatives. The FTC, for example, issues public warnings recommending that victims to end communications with potential scammers, and elders search the internet for others who may have been targeted in the same way.

Advocates for more federal regulations tailored to curtailing elder fraud argue that, given seniors’ vulnerability and wealth, they need legal protection from predators. In particular, these advocates call for greater federal government involvement in investigating reports of elder exploitation and more cooperation across agencies to address all forms of abuse.

In this week’s Saturday Seminar, The Regulatory Review summarizes the work of scholars who offer varying suggestions on protecting elders from abuse.

• In an article for the University of Michigan Journal of Law Reform, David Adam Friedman of Willamette University College of Law examines solutions to mitigate harm posed by “impostor scams.” These scams involve individuals who pretend to be someone else for personal gain and are the most frequently reported category of consumer fraud, explains Friedman. Friedman suggests that policymakers shield victims from these scams by implementing a “least-cost avoider” approach. Friedman explains that such an approach would force intermediaries through which scammers act—for example, social media platforms and telecommunications providers—to absorb the costs. This kind of regulatory framework would protect victims, including the elderly, from financial harm, argues Friedman.
• Policymakers must work to protect elders from power of attorney abuse, argues Genevieve Mann of Gonzaga University School of Law in an article in the Maryland Law Review. The power of attorney—a legal document that allows a person to make decisions on behalf of another—as well as individuals who wield this power, are subject to little oversight, explains Mann. Mann argues that regulatory changes should include stricter supervision of agents through a centralized power of attorney registry, a system for notifying elders of actions that their agents take on their behalf, and a mechanism by which elders receive periodic financial accounting.
• Regulators should include romance scams in the statutory definition of elder financial exploitation to allow financial institutions to distinguish acceptable transactions from scams, urges Milteva Andonellis from Kirkland & Ellis LLP in an article for The Elder Law Journal. Banks can observe financial exploitation but are unlikely to report it because of the ambiguous definition of elder financial exploitation, contends Andonellis. Adonellis explains seniors voluntarily send funds to a romance scammer through wire transfer, usually to an overseas account. The inclusion of romance scams in the definition of elder exploitation should acknowledge that even though banks require the sender to verify the recipient’s name, scammers take advantage of the senior’s romantic feelings to justify any discrepancies, warns Andonellis. Andonellis argues that recognizing romance scams under the statutory definition of elder financial exploitation will allow financial institutions to distinguish acceptable transactions from scams.
• In an article for the Iowa Law Review, Katrice Bridges Copeland of Pennsylvania State Law describes how the more relaxed rules for telemedicine services during the pandemic could make Medicare recipients more vulnerable to fraud. For example, the Centers for Medicare and Medicaid Services eliminated certain restrictions on telehealth, including giving reimbursements for telehealth visits for rural and urban patients and allowing telephone-only visits, explains Copeland. One of the most harmful rule changes, argues Copeland, allows seniors to receive telemedicine services from medical providers with whom they have no prior relationship. These providers can then easily prescribe medical equipment, drugs, and tests without regard to medical necessity and subsequently profit from the Medicare payments for such tests, warns Copeland.
• The FTC’s suggestion for consumers to install spam blocker apps is an insufficient safeguard against harassing calls, argues Nicole Egan from Cohu in an article for the University of Massachusetts Law Review. Consumers, particularly senior citizens and individuals who are cognitively impaired, are often targeted by fraudulent phone calls or texts, resulting in financial and psychological harms, explains Egan. In 2020, the FTC received over three million complaints from people who still received robocalls despite listing their numbers on the National Do Not Call Registry, notes Egan. Stricter identification requirements for phone number user registration and bans on the sale of personal data could provide better protection, suggests Egan.
• In an article for The Elder Law Journal, James S. Spaulding from Koya Law LLC argues that since the elderly are “prime targets” of predatory vacation rental property sales and resale tactics, greater legal protections are needed. Spaulding notes that “high-pressure sales tactics” for vacation rentals are pervasive, and the difficulty purchasers face in recuperating lost assets makes them attractive to scammers. Federal legislation should protect consumers, especially the elderly, against predatory sales and resale practices for vacation rental properties by mandating public reporting of suspected fraud, insists Spaulding.