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Elder Abuse Fraud – How You Can Help

Written by Rich Stuppy, Kount’s Chief Customer Experience Officer.
Article originally published on Kount.com

One of the reasons I love being a part of the Kount team is creating fond memories of helping people and “doing the right thing.” Today’s blog reminds me of my Grandma Stuppy. In the late 90’s she lived on her own with a cockatiel bird. When we would visit, she would complain about people calling and hanging up. The phone rang all day long and no one was there when she answered. Turns out the cockatiel had learned to mimic the ringtone of her home phone. We solved the mystery one day and moved the bird to another part of the house away from the phone. This was an easy riddle to solve for me as a 20-something, not so much for my grandma in her 70s.

How does this have anything to do with fraud? The answer is that today vulnerable, elderly individuals’ phones ring all day long. And the person on the other end of the line is a fraudster looking to exploit them.

Elder abuse is a particularly damaging type of fraud/exploitation that hits close to home and impacts our families, neighbors, and communities. Kount and Ekata (previously Whitepages Pro) have used their partnership to provide merchants with a way to protect themselves and their customers from these vile schemes through a simple policy-based approach.

A 2018 statistic that captures exploitation of seniors may surprise you. Criminals steal $37 billion a year from America’s elderly. The favorite money transfer device of fraudsters? High dollar retail gift cards.

More than one in every five complaints received at the nonprofit watchdog Fraud.org* in 2018 came from someone over the age of 65. While seniors are vulnerable targets for scam artists, the 19.6% year-over-year increase in complaints from seniors that this site charts indicates that scammers are aggressively targeting our older generation. The site reports a 25% year-over-year increase in scams where alternate payment methods, particularly gift cards, were demanded by fraudsters. These are often called Grandparent Scams.


Rich Stuppy with his Grandma Thelma Stuppy circa 1999.

Grandparent Scams Tug at Seniors’ Emotions

Various scenarios are reported, but typically a grandparent scam begins when a vulnerable adult receives a phone call saying they must pay money immediately to avoid dire consequences. Imposters phone elderly adults posing as a loved one, or even the IRS, and demand that gift cards be used for services requested over the phone.

For example, in this hypothetical scenario, a caller introduces himself as a friend of a grandchild. They may say, “Unfortunately, your grandchild is not able to make rent this month and would you be able to provide emergency funds so they aren’t put on the street?” He would continue with a gentle, “I know this is inconvenient for you, so I want to make it as easy as possible.” The caller goes on to tell her to purchase gift cards online or from a nearby box store and give him the numbers on the back of the cards with a gentle warning not to answer questions from store employees. The scammer then drains the funds, leaving the grandmother with minimal recourse.

The purchase of the gift card by the vulnerable elder is not fraud. A real person uses their real payment information to conduct an intentional purchase. This is not fraud, it is exploitation.

What Merchants Need to Know About Gift Card Fraud

However, there is a way for merchants to anticipate this exploitation. As part of their robust fraud solution, Kount customers can easily flag and evaluate high-dollar gift card purchases. In this process, there is an automatic call-out to Ekata to understand the age range associated with the purchase and stop the purchase. The merchant can also contact the purchaser to let them know they are a victim of a scam and the loved one is not in danger. This approach protects the vulnerable, saves the merchant money and potential losses, and helps them “do the right thing” for the world.

Kount uses powerful artificial intelligence technologies to quickly and accurately detect complex fraud through a combination of supervised and unsupervised machine learning, a robust policy engine, and deep network of fraud expertise. Kount customers are able to identify fraudulent activity with a high level of precision. We combine the data intelligence, people and platform to stop all types of fraud. We also enable businesses to exercise real-time judgement and make the right call for their business and customers.

Financial scams often go unreported or can be difficult to prosecute. However, they’re devastating to many older adults at all levels of financial wealth and can leave them in a vulnerable position.

Seniors Continue To Be At Risk, But Change Is Happening

Kount’s solution is one avenue to prevent this type of fraud, and there are legal activities in play. In March 2019, more than 200 people were charged in the Justice Department’s “largest-ever nationwide elder fraud sweep.”

Attorney General William Barr announced the law enforcement operation that targeted “financial schemes impacting seniors.” The sweep brought in people who had collectively defrauded seniors of three-quarters of a billion dollars.

More than 260 defendants from around the world are accused of defrauding more than two million elderly Americans.

“Crimes against the elderly target some of the most vulnerable people in our society,” Barr said. “Fraud against the elderly is a massive problem, and one that is often perpetrated by transnational criminal organizations,” Barr said in the Justice Department report. “And due to the victims’ stage in life, the cost is especially high and the losses frequently catastrophic and irreversible.”

*Data and research is pulled from Fraud.org, a project of the National Consumers League. Fraud.org’s Top Ten Scams of 2018 report is compiled from complaints received directly from consumers.

Lesson learned: if someone calls demanding you pay them with a gift card, don’t. Gift cards can’t be used to pay for bail or taxes.