Increased isolation during COVID-19 may increase risk of financial exploitation
Social isolation, loneliness and increased reliance on the internet can create a perfect storm for the financial abuse and fraud victimization of seniors.
Social distancing and quarantines intended to protect against the spread of COVID-19 also have increased social isolation for many seniors, making them more vulnerable to financial exploitation.
“Financial abuse can happen anytime, but perpetrators often strike when seniors are most vulnerable, such as during a health or other crisis or after the death of a loved one,” said Ron Thomas, director of the State Corporation Commission’s Division of Securities and Retail Franchising.
“Increased reliance on the internet by isolated seniors for social interaction, shopping, electronic payments, banking and investing also exposes them to online scammers, who can hide behind a cloak of anonymity.”
Seniors lose billions of dollars annually to financial fraud, with the loss to individual victims averaging tens of thousands of dollars. Perpetrators may be strangers, family members, trusted friends, members of a senior’s social or support groups, financial professionals or others.
Although in-person visits may not be possible due to COVID-19, there are ways to reduce the likelihood of isolation and financial exploitation. Thomas urges Virginians to stay in touch with older family members, friends and neighbors by phone, text, email, video calls or other means. “Remind seniors that scammers follow the headlines and may try to exploit the pandemic. Warn them about the red flags of fraud, which are often the same regardless of the type of scam,” he said.
Warning flags that may indicate financial abuse include the following:
- Surrendering passwords and control of finances to a new or overly protective friend or caregiver.
- Fear of or sudden change in feelings toward friends or family members.
- A lack of knowledge about their financial status or reluctance to discuss financial matters.
- Sudden or unexplained changes in spending habits, or to their will, trust or beneficiary designations.
- Unexplained financial activities, such as checks made out to cash, unusual loans or disappearance of assets, valuables or securities.
- Suspicious signatures on checks or other documents.
Before making any investment decision, Thomas suggests the following:
- Contact a trusted friend, family member, company or advisor for advice.
- Make sure an offer and the person offering it are properly licensed or registered, as well as the person’s registration/license status and disciplinary history.
- Investigate before you invest or provide personal or financial information or money.
- Avoid “can’t miss” opportunities promising “guaranteed returns” or big returns with little or no risk.
- Understand the types of scams and tactics scammers use so you can protect yourself against them.
- Be wary of high-pressure sales tactics that urge you to act quickly and without giving you time to do your research.
Thomas urges Virginians who suspect they or a loved one are the victims of investment fraud or possible senior financial exploitation to contact the Division of Securities and Retail Franchising at 804-371-9051 in Richmond or toll-free at 1-800-552-7945.
For more information, visit the Division’s website at scc.virginia.gov/pages/Consumer-Investments or the North American Securities Administrators Association’s website at nasaa.org/56731/social-isolation-and-the-risk-of-investment-frau/ or visit serveourseniors.org.