Editor's note: Three audio files of actual scams are included at the end of this story.
SALT LAKE CITY — Retired educator Nancy McCormick has told the story often at senior centers across Utah, but she never gets used to the "particular evil" that underpins this bit of family history.
A much-loved elderly relative was bilked repeatedly by telephone out of an astounding amount of money, a few thousand dollars at a time. First the caller said the relative had won a lottery and had to pay fees to collect. The money was sent. There were more costs, over and over. The family found out and the relative promised not to send any more. Then a caller claimed to be an FBI agent and the relative turned over receipts for the money that had been previously sent, effectively destroying evidence fraud had occurred.
McCormick, who tells the story as part of AARP's efforts to prevent fraud and help senior citizens build a strong financial foundation, refers to the relative as "Pat" to protect the individual from embarrassment and further abuse by scammers.
Pat was like a toy for tormentors, the phone ringing in Pat's room at the residential center from 7:30 a.m. to nightfall. The family watched from afar in shock as Pat was fleeced, repeatedly, despite their efforts. One caller claimed to be from the IRS, willing to help Pat get the previously promised winnings, but there would be a tracking fee. Another threatened to arrest Pat. As family tried to extricate Pat from the phantom callers, someone posed as Pat's then-dead spouse to have the phone company change Pat's number. Only scammers, temporarily, could call.
Eventually, the court appointed a guardian. A bank now monitors Pat's account, limiting spending money while paying fixed expenses. Pat's personal relationships with family have suffered. The law enforcement officials who first found the problem while tracking criminal activity said Pat's money was funneled to illegal sex and drug trades.
Elder financial abuse was called the "crime of the 21st century" in a recent joint study by the MetLife Mature Market Institute, the Center for Gerontology at Virginia Tech and the National Committee for the Prevention of Elder Abuse. They said America's senior citizens lost at least $2.9 billion in 2010, a 12 percent jump from 2008's estimates.
Experts say a victim's embarrassment or confusion, or the fact that the perpetrator is sometimes a close relative or friend, means many cases never get reported. Still, a recent Utah study said as much as $1 million a day is stolen from the state's seniors, most taken by relatives. Other experts say strangers take just over half.
Passage in 2010 of the federal Elder Justice Act should focus more effort on education, prevention and better understanding of financial exploitation. In June, Health and Human Services Secretary Kathleen Sebelius announced a new federal elder justice coordination team to improve how financial abuse is battled. It will also study the most effective state adult protective service programs.
Up close and very personal
Friends and kin are most likely to exploit seniors by getting the house deed signed over, by tapping into a joint bank account or through a general financial power of attorney, says Jilenne Gunther, legal services developer in the Utah Division of Aging and Adult Services, who wrote "The 2010 Utah Cost of Financial Exploitation."
Prescott Cole, senior staff attorney at San Francisco-based California Advocates for Nursing Home Reform, which tackles elderly abuse, says some family members and caregivers are just venal, but sometimes it's more complicated.
He says research shows caregivers start to identify with the property of the person they're tending to; as a daughter cares for her mom, she starts to feel her mom's things are hers. When a friend's elderly parents died, the friend asked the paid caregiver if she'd like a memento. She wanted the car. "(The family was) thinking of something like a salt shaker." The caregiver had driven her charge to appointments in it. She felt like the car was hers.
Or consider, he says, four hypothetical siblings. One, Michael, lives at home and cares for his dad, who is old and frail. Soon, the siblings are calling each other: "Michael has put his name on the account and wants the house. He acts like he owns everything."
Michael's thought may be very simple, Cole says: "Where's everyone else? I'm changing Dad's Depends."
When a stranger calls
Stranger fraud is most often based on emotion, says Doug Shadel, who leads AARP Washington and wrote the AARP book "Outsmarting the Scam Artists." When researchers interviewed con men, they learned the goal is to get a "mark" excited, negatively or positively, then make the mark mad.
The scams of diverse con men shared points, including what Shadel calls "phantom riches" that promised to make a lot of money, sources that harped on their own trustworthiness, an "everyone is doing it" theme, warnings that "time is running out," assurance it's a great deal and references to a make-believe kinship with the con: "Do this for me, your friend."
Recent studies that looked at those persuasion statements found those who were victimized were more responsive to them than the general public was — even if they'd been defrauded before, Shadel says.
The who: victims and perps
While financial fraud can hit nearly anyone, no matter how limited their assets, the elderly seem more vulnerable. AARP Foundation researchers studied scam victims of all ages, hoping to note traits those victims shared. Those victimized averaged 69 years old, Shadel says, and most were "more open to sales presentations in general and more engaged in the marketplace than non-victims."
They were not naive or unintelligent. "The people we interviewed are doctors, lawyers, college professors." One of the latter fell for a fake movie deal, spurred by boredom and hoping to meet movie stars.
Senior citizens may be slightly easier to target because they listen politely and don't interrupt. Shadel advocates a refusal script and tells seniors to practice it and keep it where they can refer to it. "I'm sorry. This is not a good time. Thank you for calling." Click.
Women were almost twice as likely as men to be defrauded, and most victims were in their 80s, lived alone and needed some help as they hung onto vestiges of independence. Most of the perpetrators were males. Those who targeted strangers, the MetLife study says, often looked for vulnerabilities like limited mobility, living alone or apparent confusion.
Pick an approach
Experts shared a sampling of methods used to cheat the elderly:
In one rental scam, a too-large check is sent to cover the deposit, month's rent, etc., then the renter "discovers" the error and begs the landlord to wire the money back. The check is bogus, so it sparks fees, besides loss of the money that was returned.
A scammer buys an item on eBay or Craigslist, says Andrew Schrage of Money Crashers (www.moneycrashers.com), then pays with a fake check or cancels the check and the seller is out both money and item.
Friends or relatives may forge documents or steal checks. They get signing rights on a bank account and withdraw funds. A son persuades his mom to take out a home equity loan and uses the money.
The senior is told she won a prize but must pay something first to collect.
Seniors are sold deferred annuities or reverse mortgages that hurt them financially. Cole says 80-year-olds have been persuaded to tie up their money for 20 years to "protect" it. One man invested in an annuity that matures in 2063. To access it sooner, there's a big surrender penalty. The salesman pocketed a hefty commission. It is also legal.
Successful scammers flip a victim's emotional switches and overpower logical impulses. One study likens the process to decision-making by a person with a traumatic brain injury, Cole says. Great sorrow is built on targeting twin dreads: fear of nursing homes and fear of poverty.
Scammers know many seniors control a lot of money, but will not want to spend their last years fighting over it. "They want to go out in peace and that opens up a huge opportunity for predators," Cole says.
Most financial abuse happens across the kitchen table, up close and personal, built upon fear, anger and grief. Sometimes, victims are targeted with "educational" lunches.
Fighting back or heading it off
There are solutions and protections, including a new one. Utah officials worked with the Bank of American Fork to create the ability for someone to monitor an account with view-only access.
"We found in Adult Protective Services that most of the exploitation occurs through withdrawals from the bank account," says Gunther. View-only access provides a protective pair of eyes that may spot exploitation.
Both parent and child are protected, she says, if the child is not made a co-signer on a parent's account. She recommends a limited power of attorney with access only to a small account with funds to cover a month's expenses, not the bulk of an individual's wealth.
Gunther tells people not to deed their home. Half of the overall costs of financial exploitation in Utah comes from houses deeded to or somehow stolen by an adult child. A joint checking account is smart "only with a loving spouse." An individual can fill out a payable-upon-death account form at the bank to make money available easily.
A broad power of attorney gives "a lot of power to one person. It's not just unlimited power to everything in a wallet, but to sell the house, the car, the silverware. That's a lot of temptation even for people who are trustworthy," Gunther says.
AARP Washington notes signs someone may be a victim: Constant phone calls from "charities," might mean one has made a "sucker list" scammers sell each other.
Having lots of cheap new stuff could be a hint. Watches, pens and small appliances are common with "order to win" scams.
Payments to unfamiliar companies or frequent bank withdrawals can mean trouble, as can secretive behavior regarding mail and phone calls or not being able to pay bills.
Shadel provided the Deseret News with undercover recordings of actual calls with con artists, accessible through this story online. The approaches range from sympathetic to nasty. In one, a woman tells her mark that it's illegal to hang up during something she calls a "validation process." In another, a woman says an unspecified law was created "by President Bush himself" and the victim must do what she's told. One man calls his mark stupid and says he wants to slap her.
One woman says she has sent a very valuable coin that her target says she doesn't remember ordering. "Well, you ordered it five weeks ago," she says blithely. "And I feel bad that it's taken us so long to get it to you." Still, she says, she needs the credit card information. Or a bank routing number. Or something to complete the fleecing.
Lottery fraud scam
Gold coin scam