Source: United States Department of Justice
It is a great honor to present at the ABA/ABA Financial Crimes Enforcement Conference and to contribute to this important panel discussion on Elder Financial Exploitation in the COVID-Era. I am an Associate Deputy Attorney General and the National Elder Justice Coordinator at the United States Department of Justice. I am going to spend some time today discussing recent trends that the Department has seen in elder exploitation schemes and scams, what the Department is doing to fight elder fraud, and what banks and other financial institutions can do to help.
Trends in Elder Exploitation Schemes and Scams
It will come as no surprise to this audience that the losses to seniors from schemes and scams is staggering. Although the total loss is difficult to ascertain due to underreporting, it is in the billions of dollars every year. Based on an analysis of Bank Secrecy Act filings by the Consumer Financial Protection Bureau, elderly consumers may lose approximately $34,000 when they fall prey to elder exploitation. The Federal Trade Commission reports that consumers over 80 years old suffer higher losses than those who are younger.
The threat to seniors is growing as well, particularly due to overseas fraudsters—including transnational criminal organizations. An analysis of Suspicious Activity Report filings by the Financial Crime Enforcement Network indicates that 66% of scams appear to have foreign origins. Of course, strangers are not the only perpetrations of elder fraud—family members and caregivers sadly also exploit seniors. And these losses are growing too.
On top of all this, we also are facing the COVID-19 pandemic. And while it is difficult to quantify its full impact on the elder fraud landscape, we can say a couple things for certain. First, many of the risk factors for elder exploitation, including loneliness and isolation, have become more pronounced.
For example, added isolation from family and friends makes seniors more susceptible to exploitation. Isolation also prevents a loved one from intervening in a scheme before it’s too late. And second, fraudsters are using the pandemic to create heightened emotional states in their victims, and then using the victims’ emotions against them. For instance, we’ve seen romance fraudsters claim that they’re sick with COVID, and then use the victims’ genuine affections and sympathy to steal money.
Elder Fraud Typologies
It is this heightened emotional state that is at the core of nearly all instances of elder fraud, and we have seen fraudsters using the virus as part of their pitch in each of the dominant elder fraud typologies. This includes romance scams, government imposter scams, lottery fraud, person-in-need scams, and even technical support scams—where we have seen some fraudsters try to trick seniors into believing that their computer needs protection from the coronavirus. We also have seen an uptick in the number of seniors being used as money mules. These often are individuals victimized by a scam, and then used by the fraudster to move money. While some of these money mules are aware their actions are assisting fraud, others are not.
Romance Scams and Government Imposter Fraud
A quick look at two of these typologies demonstrates the pervasiveness of these schemes and their rapid growth.
First, let’s consider romance scams. Millions of Americans use dating sites, social networking sites, and chat rooms to meet people and forge successful relationships. But scammers use these sites to find potential victims. According to the Federal Trade Commission, romance scams account for larger losses than any other type of fraud reported. And these losses have grown six-fold in the last five years. Other countries are seeing similar increases in romance fraud activity.
Second, let’s look at government imposter fraud. These types of schemes involve imposters of government officials, such as the Social Security Administration, the IRS, FBI, DEA, and CMS, contacting prospective victims by telephone and telling them that they need to quickly provide personal information or to send money, at times in unconventional ways such as gift cards or virtual currency. Perpetrators often use robocalls to reach victims and caller ID spoofing to make it look like a government agency is calling. Government imposter fraud causes the second highest losses to seniors.
It is worth repeating that most of these schemes are global. The perpetrators reside overseas, increasing the complexity of these investigations and the challenges to legal enforcement. That complexity calls for greater emphasis on the problem, better partnerships, and creative solutions.
The Department of Justice is Aggressively Fighting Elder Fraud
In that vein, the Department of Justice is aggressively fighting elder fraud. We are increasing resources and building capacity. We are collaborating with federal, state, and tribal governments, and private industry, including banks and other financial institutions. And we are educating communities across the United States.
In November of 2020, the Department issued its annual report to Congress on its work to combat elder fraud and abuse. I encourage you to access that report online, but let me highlight three recent efforts included in that report.
First, the Department has identified an Elder Justice Coordinator in each of the 93 U.S. Attorney’s Offices throughout our country. That person is tasked with furthering the Department’s elder fraud work, assisting with finding and coordinating cases, building local partnerships, and engaging with their communities. In the past year alone, our Elder Justice Coordinators have been involved in over 500 outreach and training events. These Coordinators are a fantastic resource for the Department and for the communities in which they live and work.
Second, the Department has created the Transnational Elder Fraud Strike Force, composed of the Civil Division’s Consumer Protection Branch and six U.S. Attorney’s Offices. This Strike Force is charged with investigating and dismantling transnational criminal organizations perpetrating elder fraud schemes. In its first year, the Strike Force prosecuted 140 defendants.
And third, through grant and other programs, the Department is building capacity across the country’s entire law enforcement community and in local communities. As one example, this year the Department awarded $2 million in grants for law enforcement training to improve the identification of elder fraud victims and connecting victims with resources.
Delivering Results in the Fight Against Elder Fraud
The Department’s diligent work to fight elder fraud has resulted in numerous significant achievements—many of them as a result of filings made under the Bank Secrecy Act and other collaborative efforts with financial institutions.
First, in March of 2020, the Department announced its largest ever elder fraud sweep – charging more than 400 defendants for causing over $1 billion in victim losses. These cases included a 252-count indictment in the Central District of California charging 80 defendants with offenses related to romance schemes and business email compromise fraud. They also included two civil injunction actions filed in the Eastern District of New York against Voice Over IP providers, which stopped millions of fraudulent robocalls, including fraudsters impersonating the Social Security Administration, from ever reaching U.S. consumers.
For many of the cases included in the Department’s 2020 Elder Fraud Sweep, Suspicious Activity Report filings (or “SAR” for short) were instrumental to our success. Our offices and agents open cases, at times, based on a single SAR. Other times, it is a collection of filings as a subject hops from institution to institution, often to avoid scrutiny, that gives us what we need to open a case. And even when cases are generated in other ways, SARs give our investigators insight into money movement that is difficult to glean from other law enforcement tools.
Second, in November of 2020, the U.S. Attorney’s Office for the District of Minnesota indicted 60 defendants in a fraudulent magazine sales scheme, which stole an estimated $300 million from over 150,000 victims, including seniors.
And third, the Department and its law enforcement partners have made great strides in disrupting large fraud operations by hitting them where it hurts—their ability to get money from U.S. fraud victims to foreign perpetrators. During our 2019 Money Mule Initiative, law enforcement took action against 600 money mules; warned over 500 individuals that by assisting with money movement, they were fueling fraud and exposing themselves to potential civil and criminal consequences; and charged 30 individuals. And soon, we will announce the results of our 2020 Money Mule Initiative, which will include a significant public outreach component.
How Financial Institutions Can Help Fight Elder Fraud
Before turning the conversation over to my colleagues, I would be remiss if I did not emphasize the importance of your efforts to the Department’s elder fraud work. Financial institutions, including banks, truly are on the front lines of the fight against elder fraud. Because of your unique role, you often are in a position to stop elder fraud before it occurs.
Your tellers, call center staff, and bankers can help prevent seniors from sending their life savings to a foreign fraudster or allowing their caregiver to steal their hard-earned money. By training your employees to watch for signs of senior victimization and to intervene and ask questions or escalate a concern, your institution can save your customers from losing their savings and from months of heartache, and can save law enforcement from ever opening a case or adding your customer to a victim list.
Your employees are best equipped for such interventions and conversations when they understand the most pervasive schemes and the signs of exploitation. The knowledge acquired by your investigators and analysts, and what you learn from law enforcement and community groups, can inform your employees about the newest scam or trend. This information will empower them to do even more to protect your customers.
And your customers need education too. Consumers who have heard of a scam or know the tactics scammers use are significantly less likely to fall victim. We can work together to increase consumer awareness. Around Valentine’s Day, for example, talk about romance fraud. Tax time—talk about government imposter scams. The holidays are a great time to remind people that gift cards are for gifts—not lottery fees, taxes, or bail.
Of course, you cannot prevent all schemes or scams—and for that reason, the work of your fraud departments is critical. Filings made under the Bank Secrecy Act are the backbone of much of the Department’s elder fraud work. As I have already mentioned, agents, prosecutors, and analysts pour over Suspicious Activity Report filings to identify the largest elder fraud schemes, the largest and most complex networks of fraudsters, and the victims suffering the most harm. Any one SAR can be the key to unraveling a transnational criminal organization and allowing law enforcement to identify, investigate, and prosecute wrongdoers who exploit elderly Americans. Whether it is disrupting fraud networks or pursuing overseas perpetrators, our prosecutors and agents stand ready to work with your investigators.
Information exchange between financial institutions and law enforcement can extend beyond Bank Secrecy Act filings. The Department is eager to learn what fraud trends you are seeing. And we in law enforcement have valuable information to share with you. By learning about the challenges we face in our investigations, you may be able to improve your procedures and protections that will better enable you to prevent fraudsters from exploiting your institution.
Finally, where appropriate, talk with one another and share your best ideas. We know all too well that fraudsters are savvy and have an incredible understanding of where the weaknesses are in our defenses. But when we collaborate and exchange ideas, we help each other strengthen these weaknesses. By confronting challenges together, we can do so much more to protect America’s seniors.
Thank you for the opportunity to discuss this very important issue. The Department of Justice appreciates your efforts and values your continued contributions.