Pandemic-Induced Uptick in Financial Exploitation May be Here to Stay

AARP report shows how COVID-19 led to skyrocketing instances of financial exploitation and how financial institutions can combat its lingering effects

The rate of financial exploitation targeting older adults has more than doubled since the start of the COVID-19 pandemic, according to a new report from AARP. In the report, experts identify how the pandemic created new trends in financial exploitation—some of which are likely here to stay. The report also offers guidance on how the financial industry can combat future losses for millions of older Americans.

“This report illustrates how the pandemic created a number of shifts in the behaviors of older adults that criminals are adapting to exploit,” said Jilenne Gunther, National Director of AARP’s BankSafe Initiative. “Together, in collaboration with financial organizations, we can all do more to better protect the hard-earned assets of older adults.”

The report, titled “Responding to the Pandemic-Era Uptick in Financial Exploitation,” explores the different methods of financial exploitation employed by strangers and trusted others, such as a family member. While the report finds that financial exploitation has more than doubled in both categories, that’s likely a modest estimate since exploitation of older adults is woefully underreported. In fact, only one in 44 older adult victims report that they have been financially exploited to authorities, according to a 2020 AARP report. Even fewer victims report the theft when it is perpetrated by someone they know and trust.

And the pandemic has made matters worse. For older adults, existing risk factors such as isolation, cognitive impairment, dependence on others and increased risk for illness were exacerbated by the role that isolation plays in slowing the spread of COVID-19. At the same time, other risk factors emerged as many older adults were navigating the use of technology, peer-to-peer payment services and other online platforms to tend to financial affairs for the first time. This technology adoption, along with the ever-evolving public health guidance of isolation and other measures, are among the most prominent trends that are likely here to stay. 

Couple this increased vulnerability with a heightened motivation to steal by family members or strangers struggling with their own economic hardship, job loss and increased substance abuse throughout the last couple of years, and the big picture sets in. The pandemic created an environment that was ripe for theft.

Key findings highlighted in the report include:

• In the United States, financial exploitation of older adults perpetrated by trusted others more than doubled.
• Some data suggests that family members and trusted others steal more money than strangers do, with the CFPB estimating that family members steal more than twice as much money as strangers.
• 87.5% of older adults victimized by trusted others do not report the abuse versus 33% victimized by a stranger who do not report.
• In 2021 perpetrators stole more than $547 million through romance scams, five times greater than the amount stolen in 2019.
• Peer-to-peer payment fraud has skyrocketed before and during the pandemic with a 733% increase from 2016 to 2019, and P2P fraud complaints doubled during the pandemic.

The report also recommends solutions that come from all angles and emphasizes the proven effectiveness of freezing, delaying or rejecting suspicious transactions to prevent theft before it occurs. By implementing resources and policies that allow employees to take these actions, financial organizations can empower the front line to activate as a critical last line of defense. Another proven method is the adoption of a trusted contact form, which offers customers a chance to designate someone they trust to be contacted by the financial institution if support is needed.

Training programs like AARP’s BankSafe Initiative have proven to be an affordable and effective tool. By effectively teaching financial professionals, they can more effectively spot and stop instances of exploitation before the money leaves the customer’s account. In addition to educational resources specifically tailored to financial exploitation, financial institutions are also adopting sophisticated software programs that automatically analyze online transactions for deviations from a person’s regular banking behaviors and other red flags.

For further information: Colby Nelson, cnelson@aarp.org, 202-706-8416