A United Front: Financial Institutions Leading the Fight Against Elder Fraud

Over the past five years, financial institutions have experienced a steady rise in fraud, impacting customers across various channels. Fraud comes in many forms, including check fraud, wire fraud, credit and debit card fraud, and identity theft. However, one of the most alarming and rapidly growing threats targets the most vulnerable—elder fraud exploitation. 

Historically, elder fraud involved family members taking advantage of their relatives or unethical contractors overcharging and under-delivering. Today, fraudsters have developed more sophisticated and widespread tactics to deceive and exploit seniors. Common scams include healthcare fraud, fake charities, robocalls, tech support scams, funeral and investment fraud, IRS impersonation, grandparent scams, counterfeit prescription drug schemes, and fraudulent prize winnings. While these scams can affect people of all ages, fraudsters primarily target the elderly due to their higher susceptibility. 

But why are older adults prime targets? Many seniors grew up in an era where trust was the norm, making them more likely to believe a scammer’s fabricated story. Additionally, they may be less familiar with modern digital scams, phishing attempts, and fraudulent calls, increasing their vulnerability. Those who live alone may also experience loneliness, making them more willing to engage in conversations and trust individuals who appear kind or helpful. 

Due to the severity of this issue, on December 4, 2024, the Consumer Financial Protection Bureau (CFPB) released a joint statement with multiple financial regulatory agencies titled “Agencies Issued Statement on Elder Financial Exploitation.” This statement provided financial institutions with examples of effective risk management strategies and best practices to combat elder fraud. 

Financial institutions play a crucial role in protecting and educating elderly customers about financial exploitation. The CFPB's guidance outlined key measures that institutions should consider implementing: 

• Policies and Procedures – Develop and enforce an Elder Fraud Policy and Procedures framework. 

• Employee Training – Educate staff on recognizing and responding to the “red flags” of elder fraud. 

• Dedicated Support Personnel – Appoint trained employees to assist customers who fall victim to fraud. 

• Suspicious Activity Reports (SARs) – Ensure timely filing of SARs for suspected fraudulent activity. 

• Collaboration with Law Enforcement – Work closely with law enforcement agencies, providing documentation and timelines for fraud cases. 

• Fraud Prevention Measures – Implement security protocols to detect and prevent elder financial exploitation. 

• Educational Resources – Provide elder customers with guidance, resources, and financial literacy education. 

A significant portion of a financial institution’s deposits—such as money market accounts, IRAs, and certificates of deposit—are held by elderly customers. Protecting their assets is not only in the best interest of the customer but also vital to the financial institution’s stability. While younger generations often invest in the stock market, the foundation of traditional banking remains built on the trust and deposits of elderly customers. By proactively addressing elder fraud, financial institutions can safeguard their customers' financial well-being while reinforcing trust and security in the banking system.