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In the first installment - Why Baby Boomers Are Prime Targets for Cyber Scams and Financial Fraud - we examined the rising trend of Baby Boomers being targeted by cyber scams and financial fraud.

It’s not a stretch to say that the threats are real, and seemingly everywhere - from phishing emails and investment frauds to slick impersonation schemes and romance scams.

These scammers target trust. And once they get it, the resulting damage can be devastating — both financially and emotionally.

So, for financial advisors, knowing how these scams work is crucial.

This article dives into common scams that can bleed retirees dry. We’ll also look at real cases and show why your role as an advisor may be more important than ever before.

The insights you’ll find here aren’t just helpful - they’re necessary. Understanding these scams and how to fight back could be the difference between security and disaster for your clients.

Let’s get to it. . .

How Financial Scams and Cyber Frauds Are Exploiting Retirees

As we highlighted in Part I, the amount the elderly are losing in these scams is surging. For instance, in 2023, seniors lost over $3.4 billion to financial scams – marking a 600% increase compared to 2018.

Taking a closer look at the FBI’s Elder Fraud Report¹, we can see the type of scams that the elderly were most likely to fall for.

Here are some of the big ones you need to be aware of. . .

1. Investment Fraud: Investment fraud is one of the most financially devastating scams targeting retirees – costing them roughly half the all fraud-related losses last year (over $1.2 billion)². Scammers often lure victims with promises of high returns and low risk, appealing to those who may be looking to bolster their retirement savings. These scams typically take the form of fake investments, such as Ponzi schemes, where early investors are paid returns from the contributions of newer investors rather than from legitimate profits. Retirees are particularly vulnerable to these schemes due to their accumulated savings and the desire to cement their retirement (which according to recent studies, shows there’s a massive 1,700% gap between what retirees have compared to what they believe they’ll need to retire comfortably³).
   
2. Phishing and Email Scams: Phishing is relentless. These scammers will send emails that mimic legitimate sources – like banks, government agencies, or security sites - demanding personal information. Phishing and email scams often top the list, targeting older adults who may be less familiar with digital security​. For instance, in 2023, tech support scams (which are most often from phishing) alone resulted in nearly 18,000 reported victims aged 60 and older - causing a whopping $600 million in reported losses⁴.
   
3. Impersonation Scams: Scammers pose as IRS agents, law enforcement, debt collectors, or anyone else while demanding immediate payment to avoid further trouble. These scams play on fear and urgency, contributing significantly to the billions lost by seniors each year. Impersonation scams are becoming more sophisticated – especially with the use of artificial intelligence - making them even harder to detect​.
   
4. Romance Scams: Romance scams strike at the heart of retirees - not just their wallets. These criminals prey on the trust and affection of unsuspecting elders – who only want someone to care about - as they weave lies of love and whisper sweet nothings before demanding money to fix some invented crisis. In 2022, these scams drained over $730 million from victims, each losing an average of $4,400. As loneliness deepens, so does the cost of these ruthless betrayals⁵.
   
5. Medicare/Health Insurance Scams: Medicare scams exploit the complexity of the healthcare system. Scammers pretend to be from Medicare, asking for personal information or offering fake services. These scams not only cause financial loss but also compromise sensitive medical data that could be used against them.
   
6. Grandparent Scams: This scam pulls at the heartstrings. Scammers call, pretending to be a grandchild in trouble (sometimes using A.I. to mimic their voices), and say that they need money urgently⁶. For example, the imposter-grandchild often claims they've been in an accident or arrested. They beg the grandparent, "Please, don't tell Mom and Dad." Then, they pass the phone to someone pretending to be a lawyer, demanding money right away. Retirees, driven by love for their grandkids, send money quickly, only to realize too late it was a cruel trick​.

Scammers are getting clever – adapting just as fast as being discovered. They’re using AI to create lifelike impersonations and scouring social media to gather personal details that make their scams more convincing. It’s like a digital jungle, and retirees are their targets.

But remember, these targets are our parents, our grandparents, our older family friends - those who spent their lives working so that they can retire. Now, in their most vulnerable years, they find themselves under attack from faceless criminals - preying on their trust and robbing them of the security they’ve earned.

The stakes are heartbreakingly personal.

Case Study: How One Retiree Fell Victim to Financial Fraud

In late 2023, an 84-year-old woman on the West Coast found herself the victim of fraud. A real estate agent and her husband, who I'll call "Husband X," entered the woman's life. And despite having a caregiver, Husband X - a supposed financial advisor - became a constant presence, offering to help with taxes and more, thus gradually taking control of her finances.

The woman’s daughter sensed something was wrong. She dug into Husband X’s background and discovered a harsh truth: he was no financial advisor as he claimed, but a man with a history of fraud and grand theft. Whether the real estate agent (his wife) knew about his actions remains a mystery.

But by the time the family pieced it together – with the help of their own trusted financial advisor - nearly $3,000 had been drained from the woman’s accounts through small, frequent withdrawals. They acted fast - shutting down accounts, changing locks (the home keys went missing), and calling the police.

But the damage was already done. The elderly woman, already battling undiagnosed Alzheimer’s, declined rapidly and was haunted by the belief that Husband X was still breaking into her home.

This case shows the brutal reality of elder fraud. The financial loss of $3,000 was just the surface. The deeper wounds – like the fear, the betrayal, the stress, and the rapid decline in health - cut far deeper.

It’s a key reminder of the need to protect our elders from those who would take advantage of their trust and old age.

How Financial Advisors Can Spot Red Flags and Protect Retirees

Financial advisors must educate their clients on the red flags of scams. Look out for unsolicited contacts, urgent requests for money, and offers that seem too good to be true. Encourage clients to double-check who’s asking for money and consult with you before making any financial decisions​.

By staying in close touch with clients - especially those most vulnerable - and keeping them informed about these evolving threats, you can make a real difference in helping their financial futures.

Scams targeting retirees are not just increasing in number - they’re getting more sophisticated. But with the right awareness and proactive measures, retirees and their advisors can fend off these threats​.

Then, in the final segment - Part III - we’ll dive into the legal tools, moral responsibilities, and trust-building strategies that financial advisors can use to protect their most vulnerable clients.

Sources:

1. 2023_IC3ElderFraudReport.pdf
2. Elder Fraud, in Focus — FBI
3. Preparing for Retirement: Understanding Challenges and Options | Dunham
4. FBI Releases 2023 Elder Fraud Report with Tech Support Scams Generating the Most Complaints and Investment Scams Proving the Costliest — FBI
5. Romance scams in 2024 + online dating statistics - Norton
6. 'Grandparent' Scams Get More Sophisticated | Federal Communications Commission (fcc.gov)

Disclosures:

This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Any investment products or services named herein are for illustrative purposes only and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance. All examples are hypothetical and are for illustrative purposes only.

Information contained in the materials included is believed to be from reliable sources, but no representations or guarantees are made as to the accuracy or completeness of information.  This document is provided for information purposes only and should not be considered as investment advice.

Dunham & Associates Investment Counsel, Inc. is a Registered Investment Adviser and Broker/Dealer. Member FINRA/SIPC. Advisory services and securities offered through Dunham & Associates Investment Counsel, Inc.