资源环境科技发展态势分析平台

We've all had the experience: you get a phone call, email, or text message from someone pretending to be your bank, the Social Security Administration, or someone who is trying to get you to send them money or personal information. We all hope we will manage to avoid falling prey to such schemes. But some groups, like older adults, are more vulnerable to these scams than others and there are no good ways of protecting them.

Why are older adults more vulnerable to financial exploitation? A couple reasons: They may be lonelier (PDF), more trusting, less aware of the kinds of fraud that can take place, or suffering from cognitive impairment. Older adults are also more likely to have money and assets than their younger counterparts of the same race/ethnicity—making them more valuable targets for scam artists. All of these factors can come into play regardless of age, but older people are more likely to experience these risks.

Exploitation can take several forms and the strategies to limit it depends on who is doing the exploiting—strangers or people who are known. Avoiding fraudsters who are strangers requires knowledge of how scammers operate using cell phones, social media, and email, which can challenge older adults' sometimes limited digital literacy. Predators know that older adults often lack knowledge of technology-driven scams and seek to exploit this common vulnerability.

There are programs in place to help prevent fraud, security at banks and the like, but these technological solutions can actually make things harder for older adults and require them to rely more on people to help them. This potentially exposes these adults to exploitation by people they know.

Many older adults—either due to physical or cognitive impairment—need to rely on others to help them with activities of daily living. And when you let someone into your home, your life, even your bank account, you become vulnerable to exploitation. This kind of exploitation is typically committed by family members and represents over half of financial exploitation of elders.

What Might Be Done? Here Are a Few Possible Ideas

For Families and Loved Ones Caring for Those in Decline

Ideally, everyone would plan in advance for the worst case scenario. In practice, most people don't want to have those conversations. The fact is that more than one-in-ten adults will face cognitive impairment. These people are at risk of exploitation, and they need trustworthy oversight. While guardianship is traditionally how society supports adults who can't make decisions for themselves, recent media coverage of this approach has highlighted the dangers that come with it. Finding a trustworthy person to assume all responsibilities for another adult can be difficult. In such cases, families and advocates could consider oversight involving multiple family members to spread out the responsibility and provide checks and balances. Shared responsibility could mean that one child helps with the day-to-day tasks, but another manages the money. The availability of online banking now allows for financial oversight to be shared with siblings who may be far away. Abuse and fraud are less likely to take place when there is strong oversight in place.

For People Without Cognitive Impairment

For people without cognitive impairment, researchers could seek to develop and rigorously test programs to train older adults to spot fraud and help them identify fraud before it happens. These new programs could help by encouraging planning for the possibility that fraud may occur. Scammers are always coming up with new tricks and so this training could be ongoing to keep pace with the development of new and ever-more-sophisticated scams. As an example, while many younger people never answer their phone, this goes against the norms that many people learned in the past; older adults may need to learn that they have to directly dial their bank if they receive a message about fraud, because even the email or text alerting them to fraud may be fraudulent. Advanced security technology, like bank account and credit score alerts (PDF), also could help identify risks.

Financial Institutions Who Serve Older Adults

Financial institution like banks, credit reporting agencies, and investment firms could consider designing products with older users in mind. This may align with institutions' commitment to limit customer fraud, while at the same time being a good business practice. Older people hold the majority of the wealth in the United States and very few, if any, major companies provide critically needed services tailored to the needs of aging adults. Few banks provide offerings tailored to elder protection from fraud such as enhanced monitoring for suspicious account activity or reserved phone lines for elderly people who suspect abuse. Investment firms' fraud prevention service is to add a trusted contact in case of suspected financial exploitation. This solution is similar to firms that monitor the finances of older people and report any suspicious activity to a trusted person. However, this practice runs counter to findings that older adults often trust the person who eventually financial exploits them.

The limited services from banks and investment firms for increased elder protection remains an opportunity for financial institutions. One regional bank offers a private trust solution for the bank to monitor and manage finances (PDF) for their clients. The private trust is a potential bank-based solution but is currently extremely rare.

Policy solutions that provide protection against financial fraud, either by known or unknown individuals, could help older adults to live more financially stable lives.

Katherine Carman is a senior economist at the nonprofit, nonpartisan RAND Corporation, director of RAND's Center for Financial and Economic Decision Making, and a professor at the Pardee RAND Graduate School. Sierra Smucker is an associate policy researcher at RAND and a professor at the Pardee RAND Graduate School.

Commentary gives RAND researchers a platform to convey insights based on their professional expertise and often on their peer-reviewed research and analysis.