Senior-on-Senior Fraud On the Rise

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NEW YORK (MainStreet) — State regulators are starting to openly discuss what might once have been unthinkable: senior-on-senior fraud. Indeed, there has been a healthy dose of 60- and 70-somethings scamming and defrauding people their own age. What’s behind the trend, and how can regulators stop it?

Let’s get right to the critical data. According to a study from InfoGroup/ORC, about 7.3 million U.S. senior citizens – that’s one out of every five citizens over the age of 65 – have fallen victim to financial fraud.

“Elder financial abuse is becoming the crime of the 21st century,” said Texas Securities Commissioner Denise Voigt Crawford. “[But] investment fraud against seniors too often goes unreported.”

The first red flags include mounting data from state fraud regulators and financial regulators who point to an uptick in senior-on-senior crime.

Perhaps it’s a case where hucksters see seniors as the “low hanging fruit” of financial fraud. According to a study from Harvard University economist David Laibson, an individual’s ability to make focused and accurate financial decisions peaks at approximately age 53. After that, things decline slightly each year until age 70, when an individual’s financial decisionmaking abilities really go off the deep end.

Then there’s new data from the North American Securities Administrators Association that concludes the scam artists themselves are increasingly of the graybeard variety. Crawford, who is also president of the NASAA, says that one reason seniors are getting scammed by other seniors more often is that older Americans may place more trust in people their own age.

The NASAA points to a pair of relevant cases: One 74 year-old Texas man named Ronald Keith was recently sentenced to 60 years in prison of investment fraud charges. Authorities say that Keith netted $2.6 million in the investment scam.

But Keith was a young whipper-snapper compared to William Kirshner, an 84 year-old Texas financial advisor who was recently sentenced to five years in state prison for funneling more than $100,000 out of investor accounts and into his own pockets. (the sentence was later reduced as long as Kirshner paid back the money in full to the victims).

Another senior Texan, 76-year-old John F. Langford, is due in court in Amarillo early this year on charges that he defrauded annuity investors out of $6 million.

It’s not just Texas, either - fraud regulators in states like Louisiana and Alabama have also reported more “senior on senior” fraud cases.

What can American seniors do to stave off such crimes?

For starters, don’t let a financial advisor's “experience” fool you. Just because a financial advisor or stockbroker is 65 with dignified white hair, go with credentials and referrals - not seasoning.

Also, don’t choose a senior advisor based on a one-time seminar or someone you heard on a radio talk show. Take your time and vet any financial professionals you’re considering through the Better Business Bureau and through your state’s consumer affairs office.

Also, don’t accept telemarketer calls (they could be targeting you because of your age), avoid direct mail marketing campaigns and make sure you assign a power of attorney to someone you trust in the event you become incapacitated.

Seniors preying on seniors may be a sign of these increasingly desperate economic times, but that doesn’t mean it has to be a sign of any negligence on your part. Stay alert, vet anyone of any age looking to sell you financial services or products and ask for help from state regulators if you need it.

Do that, and you’re increasing your shot of not being “old-schooled.”

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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