Welcome to Insider Insights, where we dive into hot topics facing the financial services industry. Today, we’re excited to hear from Russ Anderson, Head of Fraud Prevention and Compliance Solutions at LIMRA and LOMA, as he talks about the latest fraud trends happening within the industry during his conversation with AARP’s Senior Advisor for Fraud Prevention, Jessica Prell.
Fraud continues to be on the rise throughout many areas in the daily lives of folks nationwide.
In fact, FraudShare participating companies report incidents occurring in 2024 are up 80 percent over 2023, with the average account value targeted being $192,000, the average fraudulent disbursement requested being $68,000, the stakes have never been higher. It's more important than ever for companies to focus on preventing fraud and protecting customer accounts. One area of particular focus is financial exploitation that targets the elderly or other vulnerable adults. I had the opportunity to sit down with Jessica Prell, Senior Advisor for Fraud Prevention from AARP recently to get her perspective on elder financial fraud, what is driving this uptake, motivations, ways we can protect our elderly, and more. Here's a listen into our conversation.
Hello. Today, I'm here with Jessica Prell, Senior Advisor, for Fraud Prevention with AARP. We're going to talk about a real and growing threat facing the insurance industry today. And that is how can we better protect our elder clientele?
Financial exploitation of vulnerable adults is a growing and significant threat across the industry. When we talk to our members, we find out that about 50 percent of our members have reported significant increases in elder exploitation cases, year over year. So, Jessica, let me know how bad is it.
Yeah. Well, we've seen meteoric rises in fraud over the past five years, and you might wonder, well, what happened five years ago? And, obviously, it was the start of the pandemic when so much of our lives was moved online, from the way we bank to the way we shop to the way we communicate with one another and build community. The Federal Trade Commission just released their data from 2024, and losses related to reported fraud theft topped $12.5 billion. Right? And we all think that's a huge number, but really, it doesn't even begin to tell the story because fraud is so notoriously underreported.
So, the Federal Trade Commission recognized this in a report to Congress last year, and they were able to extrapolate that the $10 billion reported in 2023 was much more likely to be $158.3 billion. So that's, what we're dealing with. And of that, they pegged losses among older adults at $61.5 billion.
That is quite astonishing to think about that and the actual impact on those individuals and their families, you know, that suffer, those significant losses.
Can you talk a little bit about, like, what's driving this? What's enabling this to occur to the extent that it is?
Yeah. So, a lot of us, I think, when we think of fraud victims, we picture older adults, right, who might be cognitively impaired or weren't tech savvy. But the reality is that younger people report losing money to fraud more often. It's just when older adults are the victims, they lose so much more.
Right? It stands to reason. They have a lifetime of savings, presumably. They have wealth in their home.
And so, anybody can be a target of fraud. It doesn't matter your age, your socioeconomic status, or your education level.
And the scammers are really good at what they do. Right? And we're seeing a lot of these, originating from international organized crime enterprises. Right? Rings that are using local people to help facilitate some of these crimes, but it's originating overseas in a lot of cases.
And they're very sophisticated and they run much like a business would. Right? They have corporate headquarters and they have employees. Although, I will say a lot of times these employees are the victims of human trafficking. And they're slave labor that are being forced through physical threats to work as these frontline workers.
And then they're equipping these workers with lead lists, right, from potential scam victims and personal identifiable information that they've gathered through data and security breaches, and they have a script to follow and a playbook on exactly how to get their target into a victim.
Yeah. It’s, again, astounding some of the stories, you know, I've heard about how these people fall into this trap to get lured to these foreign countries with the promise of work and employment. And when they get there, their passport is sealed, you know, or taken away from them by the owner. And then they're forced into perpetrating these schemes against citizens all across the world and it's a significant and growing threat.
You know, when we did a survey of our members, we found out that 97 percent of our industry does indicate they believe they could be doing more when it comes to helping protect vulnerable adults against elder exploitation.
About 30 percent of them have some form of training and education programs in place.
Clearly not enough, but it's really challenging. Right? So, can you talk about why is it so hard to convince someone that they don't necessarily have a boyfriend in in a foreign country, that they shouldn't, you know, cash all their life savings in the gold bars, and give them to somebody else to trust or to invest that they just met online?
Criminals know how to work our emotions against us and they do something that they call putting their target under the ether. Academics call it the amygdala hijack. And they know that when they can get a person into a heightened emotional state, whether that's fear or excitement, or perhaps a new love interest, right, physiologically, our brain bypasses logical thinking.
The amygdala, which is part of our emotion that controls our brain, kind of hijacks everything, and we go straight into reaction mode without really taking time to process and think, oh, wait a minute. Did I actually, you know, buy that lottery ticket or not? And so, scammers know this. They use our emotions against us with great success.
Yeah. People believe what they want to believe and I think it's amazing how easy anybody can fall into this trap.
Lastly, what could/should the industry do to help better protect vulnerable adults?
I think number one, recognizing that this can happen to anyone.
It's not necessarily because your client is experiencing cognitive decline that can be a factor.
But it's a number of reasons. And I think understanding that this person was the victim of a crime, they're not duped or fooled or tricked into something. They are made to believe something that isn't true and are reacting on that. So, I think showing victims of fraud empathy and respect and doing everything within your power as industry professionals to protect them and their assets. And then, please know that AARP is a resource here for you.
We, in addition to all of our fraud outreach and prevention work, also support fraud victims. We have a fraud watch network helpline that anybody can call, whether you want to report a scam, or if somebody is the victim of a scam and is wondering what to do next, and we have family members call as well. How can I help my loved one understand that they didn't win the lottery, that this is indeed a scam? And then if somebody is approached with something and they're just not sure if it's legitimate or not, our trained fraud professionals can really provide that kind of third-party neutral feedback to help them process what they may be facing.
And sadly, even though, you know, the industry will do everything it can to help educate the consumer, the policyholder that, you know, this is not a legitimate transaction they're requesting, that they're you're being duped by somebody else. And while they may have a great conversation with a family member or a trusted contact who also tries to talk them out of it, oftentimes, the money is turned over to the scammer. And when that occurs, it's devastating. Right? Because that's usually when the person realizes this was a scam all along. And in some cases, people have given away their entire life savings nearly with no opportunity to replenish that.
Do you have any resources, to help with those individuals that, unfortunately, you know, have been completely victimized?
Yeah. Absolutely. We recognize that the impact of fraud victimization is equally emotionally, if not more, devastating than the financial losses. We have an online support group where fraud victims and their families can come. It's small group sessions facilitated by a trained professional, but really peer led. So, you can start to recover emotionally from this trauma and heal and build your life back together with the support of people who have also been through it. So, it's really powerful and anybody can join.
Excellent. I want to thank you and the AARP for everything you're doing to help protect the most vulnerable. Thank you.
Thank you for having me.
The work that Jessica mentioned from AARP is pivotal in the fight against fraud for the elderly and everyone. We've continued to see a rise in elder fraud cases reported from our members as well. According to our 2024 Financial Crimes and Fraud Prevention Benchmark Study, 50 percent of respondents reported an increase in senior and vulnerable adult fraud. More generally, 61 percent of respondents from the same study reported an increase in account takeover fraud. With data like this, it's clear that the fight against fraud must continue. Our fraud and compliance team at LIMRA is doing just that through courses that help raise awareness and fight against fraud, like our Recognizing Financial Exploitation course. FraudShare, LIMRA’s application developed by the industry for the industry, allows members to share account takeover incidents and related threat data with each other, helping the industry to work together to better help prevent fraud.
Thanks for listening to LIMRA's Insider Insights podcast series. To hear future podcasts, subscribe at LIMRA.com/podcast.
