A recent research study published in JAMA Network Open suggests that older adults – including many who are not cognitively impaired – may be falling victim to “Government Impersonation” scams at a rate higher than previously estimated. The study, conducted by the Rush University Medical Center and FINRA’s Investor Education Foundation, is believed to be the first study to objectively examine the vulnerability of older adults in financial fraud scams through the use of a behavioral experiment.
The study’s participants came from the Rush Memory and Aging Project, in which older adults agreed to ongoing clinical evaluations and cognitive assessments to study the common chronic conditions of aging. The participants were recruited through continuous-care retirement communities, subsidized housing, retirement homes, churches and social service agencies. The participants were 85 years old on average, predominantly white females and had high levels of education (a mean of 16 years of education).
The experiment utilized mailers, email and phone calls with a live agent to contact older adults from a fictitious “U.S. Retirement Protection Task Force” that purported to be a U.S. government agency handling “important government files” for Social Security and Medicare benefits. The study participants were told that their files had suspicious activity which the agency wanted to verify.
According to the study, 68.5 percent of participants did not engage, while approximately 31.5 percent of participants either answered the phone calls or called into the number they received on the mailing materials or in emails. Of the individuals who engaged (either by answering calls or calling in), roughly half raised skepticism as to whether the outreach was legitimate. The remainder did not express any skepticism and provided personal information, including roughly a third of the respondents who even provided the last 4 digits of their Social Security numbers.
The group of individuals who called in but raised skepticism were found to have the highest level of cognition and financial literacy, as well as the lowest proportion of individuals with dementia, as compared to the individuals who did not engage or who engaged and provided personal information.
This study suggests that the potential prevalence of older adults falling victim to financial fraud scams may be greater than previously thought. As noted by the study, data on fraud victimization comes largely from complaints filed with government agencies. Financial fraud is often underreported due to several factors, including (i) an older adult’s ability to recognize that they have been defrauded, and (ii) the fear or shame associated with admitting that they have been defrauded. The results from this experiment are perhaps even on the low side given the experiment’s use of a fictitious government agency name. Sophisticated fraudsters utilizing the names of legitimate government agencies (such as the IRS, Social Security Administration, etc.) may be even more successful in obtaining older adults’ personal information.
To read the entire article on the JAMA Open Network website, click here. For more information and assistance, please contact the attorneys in Bressler’s Seniors and Vulnerable Investors practice group.