Elder Financial Exploitation: What Businesses Need to Know
You may have heard about elder financial exploitation, but did you know that it can affect your business? Kount data has uncovered patterns that suggest businesses can unknowingly be conduits of this activity. Yikes. Fortunately, there is a way to detect and stop it.
What is Elder Financial Exploitation?
Elder financial exploitation is a form of elder abuse that involves the use of undue influence to gain control of an older person’s debit and credit cards, benefits, resources, belongings, or assets.
Criminals — and sometimes family members — target older adults because they may be socially isolated or not tech savvy, which makes it easier to scam or control them. Criminals may even illegally obtain a power of attorney to act on the elder person’s behalf.
But how do criminals use your business to commit elder financial abuse? They use social engineering tactics, like scams and threats, to convince elders to make purchases they wouldn’t normally make.
For example, a criminal calls an elderly person and says a family member is in jail. The only way to get that family member out of jail is to send money in the form of gift cards or digital currency. So the elderly person buys gift cards worth thousands of dollars from your business and transfers the activation codes to the scammer.
How Elder Financial Exploitation Negatively Impacts Your Business
Elder financial abuse and exploitation might not seem like a big issue for your business.
After all, you can easily fight chargebacks from disputed gift card purchases and win. But fighting those chargebacks may not be a valuable use of your time. Plus, do you really want to fight a chargeback from an elder who got scammed? You don’t want to make the victim feel worse.
But more importantly, you don’t want people to have a negative perception of your business.
On average, a dissatisfied customer will tell 9-15 people about their bad experience. That’s an alarming statistic that needs to be taken seriously. Because negative word-of-mouth or online reviews can significantly damage your brand reputation. In fact, 86% of consumers hesitate to make purchases from a business with negative online reviews.
Most people wouldn’t be okay with a criminal taking advantage of an elderly person. And consumers probably wouldn’t be ok with your business if they learned it was a conduit for that type of behavior and did nothing to stop it.
Ways to Spot Elder Financial Abuse and Exploitation
So how can you tell if elder financial abuse is happening at your business? There are a few red flags to look for that can indicate improper use of an older person’s funds or assets by another individual.
Keep in mind that these warning signs may indicate financial exploitation only when they come from persons over a certain age.
1. Increase in chargebacks
Kount® carefully monitors elder abuse and exploitation trends. In one particular case study, customers over the age of 80 accounted for just 2% of a business’s purchase volume. Yet they were associated with 14% of the business’s total fraud claims.
2. Sudden changes in account activity
If you notice an older customer making unexplained large withdrawals from bank accounts or draining stored value from online accounts, it could be that the customer was coerced by a criminal or family member.
3. Large gift card purchases
A person making multiple purchases of gift cards in high dollar amounts is unusual and could be suspicious. But when older adults make those kinds of purchases, it’s likely that someone has manipulated them.
Elder financial exploitation may be more common than you realize. Nearly 5 million older Americans are victims of abuse and exploitation each year. And the overall loss by victims is somewhere between $2.6 – $36.5 billion.
How to Stop Elder Financial Exploitation
Though most state laws penalize those who victimize elders, many cases of elder financial exploitation go unreported. As a business owner, there are ways you can help prevent this kind of unlawful behavior.
1. Train staff on elder financial abuse.
You can try to stop financial abuse from happening in the first place by training your staff. Encourage staff members handling purchases to engage in friendly, yet probing conversations when people make large gift card purchases — especially if the customer appears to be in a targeted age group, or under duress.
3. Evaluate fraud data.
Use the data provided by your fraud detection software to perform a risk analysis on products and services that provide monetary exchange, such as gift cards, cryptocurrency, or account withdrawals. If you notice high levels of fraud claims or chargebacks, look for patterns in the customer data of those transactions.
There’s a close correlation between age and fraud. So high levels of fraud coming from customers over the age of 70, for example, could indicate that elder financial abuse is going on.
2. Flag certain purchases for review.
You can set up policies and controls to flag certain purchases for manual review. For example, if someone over the age of 70 is buying more than $1,000 worth of gift cards or other cash-like instruments, you can mark that transaction with a special reason code and escalate it to a customer care team. From there, a staff member can reach out to the customer for more details about the purchase.
4. Report suspected financial abuse.
If you suspect financial abuse, report it to local adult protective services or local police. Additionally, you can call the National Elder Fraud Hotline created by the Department of Justice to report an incident.
The National Elder Fraud Hotline can be reached at 1-833–FRAUD–11 (or 833–372–8311).
CASE STUDY: National Retail Chain Stops Elder Financial Abuse with Kount
Kount worked with a national retail chain that was having problems with chargebacks and disputes. A strange pattern started to occur — the disputes kept coming from customers who bought thousands of dollars worth of gift cards.
So the retail chain reached out and discovered those customers were significantly older than the average customer. And they were being coerced into buying gift cards to send to criminals.
Using Kount, the retail chain was able to set up policies to flag gift card purchases over a certain amount from customers in a target age group. From there, a customer care representative contacts the customer for details and ultimately stops the financial exploitation scam.
If your business sells gift cards, cryptocurrency, or any other monetary instruments, it’s susceptible to elder financial exploitation. But we can help. Kount technology can detect this type of fraud and flag suspicious activity in milliseconds. Reach out to learn more.