Fraudsters are getting smarter. Here’s how to spot scams and protect your family’s nest egg.
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Older adults lost more than $3.4 billion to fraud in 2023, according to the FBI — and that’s likely an undercount. Only 1 in 25 cases is ever reported.
With artificial intelligence and other technologies making scams more convincing, the threat is growing, said Matt Sommer, managing director at Janus Henderson Investors.
“The fraudsters are becoming more and more sophisticated,” Sommer said in a recent Decoding Retirement podcast. “And as a result, their scams are taking advantage of many more people.”
Fraudsters tend to focus on people over the age of 60.
“They’re going to go where the money is,” he said. “And the people who are ages 60 and older really have amassed more wealth than the younger generations.”
Historically, scammers targeted victims experiencing cognitive decline, and that’s still true. But they now exploit emotional vulnerability as well.
“They’re finding ways to take advantage of older individuals who may be suffering from a little bit of depression, some loneliness,” Sommer said. “Their social needs are not being met. And as a result, fraudsters are finding it easy to connect with these people and weave a story that sounds very, very compelling.”
He said isolation, grief, or limited mobility can make someone a target. Those with health impairments and regular caregivers are also at risk because “that access can create opportunities for exploitation.”
Low financial literacy is another factor. “It would be nice if there was such a thing as 20% guaranteed every year,” Sommer said. “But sadly, that doesn’t exist.”
When interest rates were low, people’s “hunger for yield” drove a spike in investment scams. Those lacking education on compounding, inflation, and diversification, he said, “find themselves a little bit more susceptible.”
Perhaps most disturbingly, many scams don’t come from strangers.
“One of the really sad parts about financial exploitation,” Sommer said, “is that 60% of the time, the fraud is perpetrated by someone we know and trust.”
While anonymous online scams exist, he said, “about 60% of the time it’s someone we actually know.”
Beware of unsolicited phone calls that pressure you to act soon. (Getty Images) ·ArtMarie via Getty Images
Cryptocurrency, Sommer said, often plays a central role in scams — not because crypto itself is fraudulent but because it helps scammers stay hidden.
“If someone is asking for payment in crypto, that’s probably … a warning sign that something just isn’t what it seems,” he said.
Sommer also warned that artificial intelligence is making the grandparent scam more believable. He explained that some scammers are using AI to clone a young person’s voice from TikTok or Instagram. They then use that voice to call a parent or grandparent and impersonate that person.
“It normally goes something like this,” Sommer said: “‘Help, there was a terrible car accident. People are hurt. Because it was my fault, I’m in jail. Can you please bail me out?’”
The calls sound authentic, even desperate, he said. And scammers then pose as “court-appointed attorneys,” demanding immediate payment, usually in cryptocurrency.
To prevent scams like this, Sommer recommends families establish verification passwords known only to them, such as asking questions like “what was your high school mascot?” to weed out the fraudsters.
He also urged people to slow down when pressured to act.
“Sometimes we get an unsolicited call, purportedly from the utility company, a technology company, or even the US Postal Service,” he said. “That person is putting us under a tremendous amount of pressure to do something.”
“There are very few things in life that need to be done now,” Sommer said. Instead, ask for their name and number and offer to call back later. “If it’s a scam,” he added, “that person’s going to look to get off the phone and move on to the next potential victim.”
Sommer also discussed a particularly cruel form of financial exploitation known as “pig butchering.”
In these scams, con artists build emotional connections — often through dating apps or social media — before introducing fake investment opportunities. Victims see “returns,” invest more, and lose everything when the fraudster disappears.
The term, Sommer explained, refers to how scammers “fatten up” a victim’s investment before taking it all. It preys on “trust, loneliness, and the desire for financial gain.”
“The internet is wonderful, and as a result, many of us are finding the love of our life later in life,” he said. “The different types of services available make that easier than it was years ago. … But there are fraudsters out there looking for seniors who are searching for the loves of their life and purporting to be the perfect match,” Sommer warned.
ILLUSTRATION – 11 October 2019, Bavaria, Würzburg: An elderly woman is using a cordless landline phone. Photo: Karl-Josef Hildenbrand/dpa (Photo by Karl-Josef Hildenbrand/picture alliance via Getty Images) ·picture alliance via Getty Images
According to the FBI, the most common scam by complaint volume is tech support fraud, while investment scams lead to the biggest losses. Others, such as romance or grandparent scams, are increasingly common.
For victims, Sommer recommends contacting the Institute of Gerontology at Wayne State University, which operates a free program called Successful Aging Through Financial Empowerment (SAFE). At SAFE, trained experts “have seen it all” and can help walk victims through the next steps.
“It’s a free program where trained, licensed social workers help victims put the pieces back together,” he said. “That includes contacting law enforcement, banks, credit card companies, and credit reporting agencies.”
Many victims feel shame, he added, but it’s important to remember that these fraudsters are professionals.
“You should not be ashamed to talk to a loved one,” Sommer stated. “That could be a son or daughter, a brother or sister, or even a trusted professional such as a financial adviser or CPA.”
Got questions about retirement? Email Robert Powell at [email protected], and we’ll do our best to answer it in a future episode of Decoding Retirement.
Each Tuesday, retirement expert and financial educator Robert Powell gives you the tools to plan for your future on Decoding Retirement. You can find more episodes on our video hub or watch on your preferred streaming service.
