Investment scams targeting the elderly surge, government agency reports

Investment scams targeting the elderly surge, government agency reports
The Federal Trade Commission says older Americans lost $147 million in 2021, up 213% from 2020, with crypto rip-offs being a leading culprit.
OCT 20, 2022

False promises of romance and bogus cryptocurrency investments were the two rip-offs that extracted the most money from elderly Americans last year, a federal agency said this week. State securities regulators are seeing similar trends, and the tactics are sometimes combined.

The Federal Trade Commission announced that older adults lost $147 million to investment scams in 2021, up 213% from 2020. The schemes included investment seminars and advice, stocks and commodity futures trading, art, gems and rare-coin investments. Crypto was also a major culprit.

“This increase was driven in large part by a surge in reports of losses to cryptocurrency investment scams,” the FTC report to Congress states.

The median individual loss for people age 60 and older was $6,800 per incident of investment-related fraud, according to the FTC. The next highest was $5,100 per individual for romance scams. The median loss for all fraud reports for the age group was $685.

The elderly were vulnerable online, where they lost a total of $341 million. Of that amount, $72 million was attributed to investment fraud, while romance rip-offs accounted for $137 million.

State securities regulators reported a 70% jump in fraud related to digital assets in 2021, according to an enforcement report released in September by the North American Securities Administrators Association.

“We’re seeing the same increase in [crypto rip-offs] and the need to investigate and take action,” said Andrew Hartnett, deputy commissioner of the Iowa Insurance Division and president of NASAA.

The bear market is aiding crypto fraudsters, said Amanda Senn, deputy director of the Alabama Securities Commissions. They convince elderly targets who are worried about running out of money in retirement that crypto could give them a better future.

“They’re describing crypto as the thing to invest in because people are getting rich,” Senn said.

Sometimes romance is tied to crypto in scams. In what is called pig butchering, a crypto scammer lures an elderly victim by sending messages through social media platforms. The perpetrator uses an attractive photo for his profile.

Once a relationship is established, the scammer talks to the target about crypto investments and sets up a fake account. He then provides a sample return to entice a greater investment in the rip-off. Once the victim is hooked, the scammer takes more of her money.

“We’ve had investors lose hundreds of thousands of dollars,” Senn said.

The number of elderly Americans who fall victim to fraudulent investments is probably underreported, as the FTC notes.

“This is why investment scams targeting older Americans continue to have the full attention of state securities regulators,” Hartnett said.

Almost three dozen states have adopted the NASAA model rule on senior financial exploitation. Under the rule, states received 1,428 reports of suspected abuse in 2021, up 35% from 2020 and 118% from 2019. State regulators opened 365 investigations last year, 57% increase from 2020 and a 98% increase from 2019.

The organization will host a Nov. 3 webinar on senior issues.

“Education is the key to prevention,” Senn said.

'IN the Office' with journalist and author Julia Boorstin

Latest News

Advisor moves: Atlas tops $1B as Wells Fargo, UBS add bank veterans
Advisor moves: Atlas tops $1B as Wells Fargo, UBS add bank veterans

Wells Fargo adds two bank-channel recruits, UBS lands a JPMorgan Chase veteran, and a multi-family office lifts Atlas past $1B

Advisor mom’s son used her password to log into clients’ accounts, sell deal with conflicts, according to Washington state
Advisor mom’s son used her password to log into clients’ accounts, sell deal with conflicts, according to Washington state

“The state comes down on you in years when you make 40% returns for clients,” said Bill Swayne, the advisor and son of Candace Swayne.

Osaic in talks with Anthropic as AI reshapes advisor workforce
Osaic in talks with Anthropic as AI reshapes advisor workforce

The Independent broker-dealer giant has had “active conversations” with the Claude maker, which is days away from its expected IPO

The retirement milestone advisors aren't tracking
The retirement milestone advisors aren't tracking

For Gen X clients entering life after work, answering the financial question isn't enough to solve the entire retirement equation.

Wealthtech firms target stock pay, pensions and heirs for advisors
Wealthtech firms target stock pay, pensions and heirs for advisors

Tools from Grantd, Income Lab and Healthspan Wealth aim to keep RIAs involved in clients’ biggest money decisions

SPONSORED Best Practices for Engaging Women Around Alternatives

Growing wealth, evolving priorities, and untapped opportunities are reshaping how women approach long-term investing.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.