Financial Fraud Among Older Americans: Evidence and Implications

DeLiema, Marguerite; Deevy, Martha; Lusardi, Annamaria; Mitchell, Olivia S.

doi:10.1093/geronb/gby151

Cited by 70 publications

(50 citation statements)

References 16 publications

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“…These findings also lend support to notions forwarded by DeLiema et al (2019), Wood and Lichtenberg (2017), and the Consumer Financial Protection Bureau (March 2016) that financial institutions can play an essential role in helping reduce exposure of vulnerable elderly to poor outcomes and that collaboration across sectors, including health, financial, and social services, may be likewise important to improving outcomes. More needs to be known about the specific financial decisions and choices that lead to reduced assets and reduced wealth during the early-stage AD period, including individuals' susceptibility to making poor financial decisions on their own and their vulnerability to the opportunism of others, so that solutions for helping to ameliorate these outcomes can be considered.…”

Section: Discussionsupporting

confidence: 65%

“…Burnes et al (August 1, 2017) estimate that financial fraud affects one out of every 18 cognitively intact, community dwelling older adults each year, and DeLiema, Deevy, Lusardi, and Mitchell (2019) find that 5% of adults aged 50 and over experienced at least one form of investment fraud and 4.4% were subjected to prize or lottery fraud. DeLiema et al (2019) find no relationship between financial literacy and cognitive status and exposure to fraud, using a small subsample of Health and Retirement Study (HRS) respondents. Judges, Gallant, Yang, and Lee (2017), studying a nondemented sample of older adults, find that fraud victims have relatively low levels of cognitive ability.…”

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confidence: 98%

“…The Consumer Fraud Research Group (2006) finds that low levels of financial literacy are associated with susceptibility to lottery scams, whereas high levels of financial literacy are associated with investment fraud, with scammers targeting individuals with a particular scam depending on their traits and psychological profile. DeLiema et al (2019) find no relationship between financial literacy and cognitive status and exposure to fraud, using a small subsample of Health and Retirement Study (HRS) respondents. Though the empirical evidence to date is mixed, Wood and Lichtenberg reflect that individuals who are mildly impaired prior to AD are, conceptually, the "perfect victim," as they have control of their assets but have impairments that may not be recognized and have broad exposure to the community.…”

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confidence: 98%

“…Previous research has found that elder financial exploitation and fraud is common. Burnes et al (August 1, 2017) estimate that financial fraud affects one out of every 18 cognitively intact, community dwelling older adults each year, and DeLiema, Deevy, Lusardi, and Mitchell (2019) find that 5% of adults aged 50 and over experienced at least one form of investment fraud and 4.4% were subjected to prize or lottery fraud. The Consumer Financial Protection Bureau documents a quadrupling in suspicious activity reports filed on elder financial exploitation between 2013(Consumer Financial Protection Bureau, 2019.…”

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confidence: 99%

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Effect of early‐stage Alzheimer's disease on household financial outcomes

et al. 2019

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Significant limitations and rapid declines in financial capacity are a hallmark of patients with early-stage Alzheimer's disease (AD). We use linked Health and Retirement Study and Medicare claims data spanning 1992-2014 to examine the effect of early-stage AD, from the start of first symptoms to diagnosis, on household financial outcomes. We estimate household fixed-effects models and examine continuous measures of liquid assets and net wealth, as well as dichotomous indicators for a large change in either outcome. We find robust evidence that early-stage AD places households at significant risk for large adverse changes in liquid assets. Further, we find some, but more limited, evidence that early-stage AD reduces net wealth. Our findings are consequential because financial vulnerability during the disease's early-stage impacts the ability of afflicted individuals and their families to pay for care in the disease's later stage. Additionally, the findings speak to the value that earlier diagnosis may provide by helping avert adverse financial outcomes that occur before the disease is currently diagnosable with available tools. These results also point to a potentially important role for financial institutions in helping reduce exposure of vulnerable elderly to poor outcomes.

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Section: Discussionsupporting

confidence: 65%

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confidence: 98%

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confidence: 98%

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confidence: 99%

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Effect of early‐stage Alzheimer's disease on household financial outcomes

et al. 2019

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“…Moreover, information can have high returns at older ages: for example, more financially literate individuals are better prepared to deal with the intricacies of social insurance eligibility for long-term care needs (Liu and Mukherjee 2018). Financial and health literacy can also reduce vulnerability to financial fraud and other forms of financial abuse, which are significant problems in present day (DeLiema et al 2018;DeLiema and Conrad 2017).…”

Section: Introductionmentioning

confidence: 99%

Building Financial and Health Literacy at Older Ages: The Role of Online Information

Bavafa¹,

Liu²,

Mukherjee³

2019

Journal of Consumer Affairs

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Improving financial and health literacy is an important step in reducing economic vulnerability in older age, yet the means by which individuals accumulate these types of human capital remains an open question. This article evaluates the impact of online search activities on the levels of financial and health literacy. We find that using the internet for such information increases literacy significantly: doing so frequently (versus not at all) increases financial literacy by 16%, and health literacy by 12%. Our results are robust to alternative measures of financial literacy. They are also robust to an instrumental variable approach using other web skills such as email use to proxy for how individuals use the internet.

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Vulnerability of Older Adults to Government Impersonation Scams

Yu,

Mottola,

Kieffer

et al. 2023

JAMA Netw Open

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ImportanceFinancial fraud and scams targeting older adults are on the rise and pose serious public health and economic threats. Research on the vulnerability of older adults to fraud and scams relies almost exclusively on self-reported data, which have several intrinsic limitations. Thus, how older adults truly respond to fraud attempts remains unclear.ObjectiveTo explore the vulnerability of older adults to a US government impersonation scam.Design, Setting, and ParticipantsThis cross-sectional study, conducted from October to December 2021 among communities in the greater Chicago metropolitan area, was framed as a fictitious government agency reaching out to older adults about a potential compromise of personal information relevant to their Social Security and Medicare benefits. Participants were older adults participating in the Rush Memory and Aging Project, an ongoing cohort study of chronic conditions of aging. Data analysis was performed from February to August 2023.ExposuresParticipants were exposed to deceptive materials through mailers, emails, and phone calls by a live agent.Main Outcomes and MeasuresBased on the phone call data, participants were classified into 3 groups: no engagement (participants who did not answer the phone or call in), engagement (those who answered or called in but were skeptical about the legitimacy of the outreach and did not give away personal information), and conversion (participants who answered or called in without skepticism, or confirmed that they did not change their personal information, or provided the last 4 digits of their Social Security number).ResultsA total of 644 older adults (501 [77.8%] female, 143 [22.2%] male), with a mean (SD) age of 85.6 (7.5) years, were included. A total of 441 (68.5%) participants did not engage, 97 (15.1%) engaged but raised skepticism, and 106 (16.4%) converted. Older adults who engaged but with skepticism had the highest cognition and financial literacy, while those in the conversion group had the lowest scam awareness. No differences were observed in psychological and other behavioral measures by the levels of engagement.Conclusions and RelevanceIn this cross-sectional study using a behavioral experiment that mimicked a real-world imposter scam, a sizable number of older adults engaged without skepticism. Results suggest that many older adults, including those without cognitive impairment, are vulnerable to fraud and scams.

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Financial Fraud Among Older Americans: Evidence and Implications

Cited by 70 publications

References 16 publications

Effect of early‐stage Alzheimer's disease on household financial outcomes

Effect of early‐stage Alzheimer's disease on household financial outcomes

Building Financial and Health Literacy at Older Ages: The Role of Online Information

Vulnerability of Older Adults to Government Impersonation Scams

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