FORECASTS & TRENDS E-LETTER
By Phil Denney
June 25, 2024

IN THIS ISSUE:

1.  US Seniors Lost $1.2B to Investment Fraud

2.  Several Common Scams

3.  Fraud Often Unreported

4.  Final Thoughts

As a follow up to my previous article about the importance of Cybersecurity Awareness, let’s look at investment fraud committed against seniors. After completing a couple of continuing education courses on the subject, I became very aware of how rampant investment fraud has become.

Since I am also a senior, it honestly scared the heck out of me. It amazes me that there are people with no moral compass who are committing this fraud. It also saddens me that good people will fall for their scams. You should be on the alert for investment fraud, crypto scams and romance scams.

Folks, this problem is serious! Remember, if it is too good to be true, run from it!

US Seniors Lost $1.2B to Investment Fraud

An FBI report states that thousands of Americans across the country were taken by con artists running sophisticated investment scams last year, leading to more than a billion dollars in losses.

According to the FBI’s Elder Fraud Report for 2023, which compiles data from its Internet Crime Complaint Center (IC3), the total losses reported to the IC3 last year by those over the age of 60 surpassed $3.4 billion, a nearly 11 percent rise from 2022.

Based on what we know, investment scams have an outsized financial impact on elderly fraud victims. Out of the more than 100,000 complainants over 60 captured in the report, just 6,443 fell prey to such schemes, but they reported a total loss of roughly $1.24 billion – more than a third of the estimated $3.4 billion in losses across all forms of elder fraud combined.

“Investment fraud involves complex financial crimes often characterized as low-risk investments with guaranteed returns,” the report said. The FBI highlighted several variants of investment fraud impacting seniors, including advanced fee frauds, Ponzi schemes, pyramid schemes, market manipulation fraud and real estate investing.

Several Common Scams

Here are a few of the most common types of scams con artists are using against seniors.

The report cast a spotlight on cryptocurrency investment scams, noting they mostly involve social engineering and gaining the victim’s trust. Using fictitious identities, scammers would often target individuals on dating applications, social media, professional networking sites or encrypted messaging applications.

“In 2023, the IC3 received over 15,000 complaints from individuals over the age of 60 involving the use of cryptocurrency, such as Bitcoin, Ethereum, Litecoin, or Ripple,” the report said, noting reported losses from crypto scams amounted to $1.1 billion in 2023.

Cryptocurrency investment scams were the leading category of crypto fraud among elderly investors, it said, representing around 64 percent of all crypto-related losses for the cohort. All told, crypto investment scams led to some $716 million in losses for elderly victims.

Keep in mind that not all Crypto is bad. The fraudsters are the problem. Crypto is a real investment that is speculative. Spencer Wright explained Crypto in his F&T article Decoding Crypto this past April, which provided a basic understanding of cryptocurrencies.

The FBI’s elder fraud report also made special note of romance scams, where scammers fabricate a romantic or close relationship to manipulate or steal from their victims. A related type of fraud, confidence scams, involves perpetrators eliciting sympathy or a sense of affection from their marks in other ways. “In 2023, the IC3 received reports from 6,740 individuals over the age of 60 who experienced almost $357 million in losses to Confidence/Romance scams,” the report said.

Grandparent scams, where con artists impersonate a panicked loved one in desperate and immediate need of money, accounted for 200 complaints from 60-plus-year-old Americans, who suffered a collective $2.3 million in losses. A close friend of mine fell for this one. Her grandson was supposedly going to jail if she didn’t send money right away. He was fine, it was a scam.

Now with the introduction of artificial intelligence (AI) technology attackers are leveraging it to craft highly convincing voice or video messages and emails to enable fraud schemes against individuals and businesses alike. The FBI warns of this increasing threat. These sophisticated tactics can result in devastating financial losses, reputational damage, and compromise of sensitive data.

Fraud Often Unreported

Unfortunately, much of the fraud goes unreported. The following are some of the many reasons why fraud goes unreported.

• To report this abuse would require involving police, community protective services, family members, and others who have the resources to stop the fraud.
• There is a lack of information on perpetrators and their methods.
• Oftentimes, the elderly feel ashamed or perhaps under the impression that their family members or friends would think they are unable to protect themselves properly.
• The victim does not know to whom the crime should be reported.
• Offenders may be close family members or friends. As such, the victim may not want the offender(s) charged with a crime and punished.
• The elderly may not be able to remember specific details of the fraudulent act that are necessary to the investigation.
• Seniors may be mentally or physically challenged, and the thought of an ongoing investigation, which could involve numerous trips to the police station or court for a criminal trial, creates doubt about reporting the fraud.

If you think that you or someone in your life has been the target of a scam, contact the National Elder Fraud Hotline at 833–372–8311. You can also contact your local police department or the attorney general of your state or territory , and you can report the scam to the Federal Trade Commission. If you're not able to use ReportFraud.ftc.gov to file a report, you can call the FTC's Consumer Response Center at 877-382-4357.

Final Thoughts

• Stay vigilant. Be wary of urgent messages asking for money or credentials.
• Wealth from get-rich-quick schemes quickly disappears; wealth from hard work grows over time.
• "Don't wear yourself out trying to get rich. Be wise enough to know when to quit. In the blink of an eye wealth disappears, for it will sprout wings and fly away like an eagle."

Thanks for reading,

 

Forecasts & Trends is published by Halbert Wealth Management, Inc., a Registered Investment Adviser under the Investment Advisers Act of 1940. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of the named author and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific advice. Readers are urged to check with their financial counselors before making any decisions. This does not constitute an offer of sale of any securities. Halbert Wealth Management, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have their own money in markets or programs mentioned herein. Past results are not necessarily indicative of future results. All investments have a risk of loss. Be sure to read all offering materials and disclosures before making a decision to invest. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.