Survey: 8% of Older Adults Are Victims of Financial Fraud

A series of questions in the 2016 Health and Retirement Study (HRS) asked respondents over the age of 50 about financial victimization. (The median age was 68.) Eight percent reported to have fallen prey to at least one form of financial fraud within the past 12 months.

The HRS module not only asked respondents if they had been victimized, but also asked about several types of investment fraud situations including, but not limited to, a meeting offering a free meal for some sort of investment (e.g., timeshares or annuities), an email or telephone pitch for an investment by a stranger, a pitch for high-return investments (e.g., oil and gas) and a fraudulent investment recommended by a friend, relative or adviser. Survey participants were also asked about financial scams such as paying money to receive a prize or experiencing or being aware of attempted unauthorized use of their financial accounts.

On a percentage basis, the number of respondents who admitted to being victims of a specific type of investment fraud was small. For example, only 3% said they had invested after being given a free meal. Four percent said they paid to win an award (though the study’s authors noted that the question did not instruct respondents to exclude lottery tickets which, while being very risky, are not fraudulent).

Responses to the financial scam section were higher. Thirty percent of respondents revealed “that others had used or attempted to use one of [their] accounts without permission.” The question was not specific enough to differentiate between those who were victims of such events and those who were targeted, but not victimized. The study’s authors describe the high level of such occurrences as indicative of actual and attempted “financial exploitation by family and friends or identity theft by strangers.”

Not found by the survey were consistent characteristics about which seniors might be more prone to victimization. No systematic association was found among education, wealth, health, age, gender or marital status. Levels of financial literacy also didn’t seem to be a factor, though those with greater financial knowledge were “significantly more likely” to indicate that an account of theirs had been used or was attempted to be accessed without permission.

Source: “Exploring the Risks and Consequences of Elder Fraud Victimization: Evidence from the Health and Retirement Study,” Marguerite DeLiema, Martha Deevy, Annamaria Lusardi and Olivia S. Mitchell; Michigan Retirement Research Center Working Paper; WP 2017-364.