NEW YORK (MainStreet) — State regulators are starting to openly discuss what might once have been unthinkable: senior-on-senior fraud. Indeed, there has been a healthy dose of 60- and 70-somethings scamming and defrauding people their own age. What’s behind the trend, and how can regulators stop it?
Let’s get right to the critical data. According to a study from InfoGroup/ORC, about 7.3 million U.S. senior citizens – that’s one out of every five citizens over the age of 65 – have fallen victim to financial fraud.
“Elder financial abuse is becoming the crime of the 21st century,” said Texas Securities Commissioner Denise Voigt Crawford. “[But] investment fraud against seniors too often goes unreported.”
The first red flags include mounting data from state fraud regulators and financial regulators who point to an uptick in senior-on-senior crime.
Perhaps it’s a case where hucksters see seniors as the “low hanging fruit” of financial fraud. According to a study from Harvard University economist David Laibson, an individual’s ability to make focused and accurate financial decisions peaks at approximately age 53. After that, things decline slightly each year until age 70, when an individual’s financial decisionmaking abilities really go off the deep end.
Then there’s new data from the North American Securities Administrators Association that concludes the scam artists themselves are increasingly of the graybeard variety. Crawford, who is also president of the NASAA, says that one reason seniors are getting scammed by other seniors more often is that older Americans may place more trust in people their own age.
The NASAA points to a pair of relevant cases: One 74 year-old Texas man named Ronald Keith was recently sentenced to 60 years in prison of investment fraud charges. Authorities say that Keith netted $2.6 million in the investment scam.