Financial Fraud Among Older Americans: Evidence and Implications.

OBJECTIVES: The consequences of poor financial capability at older ages are serious and include making mistakes with credit, spending retirement assets too quickly, and being defrauded by financial predators. Because older persons are at or past the peak of their wealth accumulation, they are often the targets of fraud. METHODS: Our project analyzes a module we developed and fielded on people aged 50 an older years in the 2016 Health and Retirement Study (HRS). Using this data set, we evaluated the incidence and prospective risk factors (measured in 2010) for investment fraud and prize/lottery fraud using logistic regression (N = 1,220). RESULTS: Relatively few HRS respondents mentioned any single form of fraud over the prior 5 years, but 5.0% reported at least one form of investment fraud and 4.4% recounted prize/lottery fraud. Greater wealth (nonhousing) was associated with investment fraud, whereas lower housing wealth and symptoms of depression were associated with prize/lottery fraud. Hispanics were significantly less likely to report either type of fraud. Other suspected risk factors-low social integration and financial literacy-were not significant. DISCUSSION: Fraud is a complex phenomenon and no single factor uniquely predicts victimization across different types, even within the category of investment fraud. Prevention programs should educate consumers about various types of fraud and increase awareness among financial services professionals.

How Does Survey Context Impact Self-reported Fraud Victimization?

Purpose of the Study: This study examines the effect of survey context on self-reported rates of personal fraud victimization, and explores if the effect is influenced by age and gender. Design and Methods: Participants (3,000U.S. adults) were randomly assigned to 1 of the 3 versions of a fraud victimization questionnaire: questions about fraud were identical across conditions, however, the context varies. One questionnaire asked about crime, one about consumer buying experiences, and a third focused only on fraud. Results: Participants who were asked about fraud victimization in the context of crime reported significantly less victimization (p < .05) than those in the fraud-alone condition, yet the number of reports from those asked within the context of a consumer survey did not differ from the fraud-alone condition. The effect of the crime context interacted with age (p < .05), such that there was no effect of survey context for the middle age group (35-64), and a strong effect for younger (25-34) and older (65 plus) adults. The combined effect of being female and older was associated with the greatest effect of crime context on self-reported fraud victimization. Implications: These findings inform the production of new surveys and guide the development of effective social and health policies.

Forewarning reduces fraud susceptibility in vulnerable consumers.

Telemarketing fraud is pervasive and older consumers are disproportionally targeted. Given laboratory research showing that forewarning can effectively counter influence appeals, we conducted a field experiment to test whether forewarning could protect people who had been victimized in the past. A research assistant with prior experience as a telemarketer pitched a mock scam two or four weeks after participants were warned about the same scam or an entirely different scam. Both warnings reduced unequivocal acceptance of the mock scam although outright refusals (as opposed to expressions of skepticism) were more frequent with the same scam warning than the different scam warning. The same scam warning, but not the different scam warning, lost effectiveness over time. Findings demonstrate that social psychological research can inform effective protection strategies against telemarketing fraud.