Thursday, September 03, 2020

NASAA panelists emphasize uptick in senior fraud during pandemic

By Jay Fishman, J.D.

A panel at this year’s fall conference of the North American Securities Administrators Association, Inc. (NASAA), held virtually, discussed the current scams targeting senior citizens and other vulnerable adults, but emphasized an increase in the fraud during the Coronavirus pandemic by fraudsters preying on the seniors’ declining physical and mental health and fears of getting COVID-19.

Lynne Egan, the Montana Securities Department’s deputy commissioner and NASAA’s Investor Education chair, moderated the panel titled "Protecting Seniors During Times of Increased Social Isolation." Speakers on the panel included: (1) Liz Loewy, co-founder and COO of EverSafe, a FinTech company designed to protect seniors; (2) Tina Kotsalos, chair of the NASAA Life Stages Project Group; and (3) Bernice Geiger, the New Mexico Securities Division’s head of investor education and consumer outreach.

Why an increase in scams against seniors during the pandemic? Loewy explained that while financial scams against seniors and other vulnerable adults were occurring before the Coronavirus, they have increased during the pandemic because elders are the most susceptible population for get COVID-19 and, knowing this statistic, they have socially isolated themselves from their friends, families, and caregivers.

Additionally, the fraudsters, whose ever more sophisticated schemes are now hard to distinguish from legitimate enterprises, take advantage of the seniors’ isolation by sending them fake texts or emails or phoning them about their need to pay large sums of money to test for the virus or antibodies or to retrieve N95 masks or PPE equipment to protect themselves from getting infected. And what exacerbates the seniors’ plight is that a significant percentage of this population has a cognitive impairment such as Alzheimer’s Disease, making it almost impossible for them to see the wolf behind the schemer’s charms. Also, said Loewy, the fraudsters primarily target seniors because they know that a significant percent of U.S. household wealth is held by people over 50.

Ways to protect seniors and other vulnerable adults. Loewy stated that one of the hardest things to do in creating ways to protect seniors from financial exploitation is to avoid presenting the protocols as ageist; in other words you don’t want the seniors or their families to feel that the plans are being implemented because the seniors are weak minded or unable to care for themselves. Instead, she said, you want to "get in front of the problem" by having the senior’s family members and trusted financial professionals work as a team to keep a continuing eye on the individual and his or her finances, and to be the people the vulnerable adult can reach out to for help. And Loewy declared that while investor education and Acts to protect seniors like the Senior Safe Act and the NASAA Model Act are terrific, the technology used at her FinTech company and similar firms is starting to play a big part in the vulnerable adult protection effort.

Her company, EverSafe, and others like it monitor a senior-client’s finances for erratic online activity and then email alert the entire team (e.g., the senior and the senior’s family, caregivers, and trusted financial professionals) when suspicious activity appears. She proclaimed that these tech companies often find fraud when credit bureaus do not since credit bureaus focus only on activities that affect a person’s credit score. What often happens, she said, is that a scammer’s activity will go under the radar so as not to affect the credit score, leaving the vulnerable adult believing that nothing negative is happening to his or her financial accounts.

Podcasts. Kotsalos excitedly discussed NASAA’s Life Stages Project Group spearheading the start of a continuing series of podcasts on real life frauds that have victimized seniors and other vulnerable adults. The plan is for the project group to release one podcast per month hosted by a securities regulator from a different state. The podcasts, she said, would unfold as stories first highlighting how the senior was lured into a seemingly legitimate investment followed by how the scheme came to the securities regulator’s attention and what the regulator and his or her staff did to combat the fraud. Kotsalos encouraged the NASAA membership to consider telling their real life stories especially because they will reach a wide audience, since statistics show viewers listen to podcasts at home the way they would watch a television show and because the podcasts can be produced and edited very easily with the tech team she works with.

Senior outreach toolkit. Geiger, the final panelist, told of the NASAA Senior Outreach Project Group’s creation of a toolkit for seniors and their caregivers to protect themselves and each other from financial exploitation. The toolkit, to soon appear on the NASAA website, contains a number of materials such as the red flags designating schemes to watch out for, as well as budget worksheets to help keep the seniors’ finances intact.