Elder Scams Spike as More Boomers Move Online

As more baby boomers and seniors go online to get their banking done — making payments, investing and paying bills or taxes — the fraudsters are finding elder abuse of a financial nature to be quite lucrative.

Coming into 2024, the PYMNTS Intelligence report “ How the World Does Digital ” found that baby boomers and seniors engage in digital activities less than others, but their growth surpasses the rest, with a 3.6% increase year over year. That growth rate is roughly double that of younger generations.

They are even embracing mobile wallets. The PYMNTS Intelligence report “ The Mobile Wallet Challenge: Replacing Physical With Digital ” found that nearly half of older consumers used at least one mobile wallet feature to make payments or store documents.

More than a quarter have used nonbank financial providers in the past year, per the PYMNTS Intelligence report “ Meeting the Demand for Instant Ad Hoc Payments .”

And “ The Generational Deep Dive Edition ” of the PYMNTS Intelligence Paycheck-to-Paycheck Report found that less than half of boomer and senior consumers live paycheck to paycheck, which indicates that they have some spending power and financial means as compared to the roughly 60% of the population that lives paycheck to paycheck.

Account Takeovers Prove Lucrative

Fraudsters have taken notice of these trends, and the FBI estimated that elder scams jumped 11% year on year in 2023.

The Financial Crimes Enforcement Network (FinCEN) estimated earlier this year that roughly $27 billion in suspicious activity related to “ elder financial exploitation ” took place from June 2022 to June 2023. Suspicious transactions and activity were flagged across 155,415 filings from financial institutions.

A deeper dive into FinCEN’s findings showed that account takeovers were the most common ruses, at 22% of scams. Tech support scams accounted for another 10%.

“Perpetrators either have access to victims’ online banking or trick the victim into performing the transfers on their behalf,” FinCEN said. “Funds are often sent directly to perpetrators, but filers also reported that perpetrators used stolen funds to pay merchants or other individuals.”

Authorized fraud occurs when a legitimate party initiates a payment only to have a fraudster intervene and hijack the money. Unauthorized fraud, on the other hand, happens when fraudsters initiate or redirect a payment through an account takeover or by stealing account-holder credentials.

For financial institutions, the losses are also significant. According to data from the Federal Reserve ’s FraudClassifier model , the bigger the financial institution, the more likely that incidents of authorized fraud climb, peaking at 46% for financial institutions with more than $100 billion in assets under management.

The PYMNTS Intelligence report “ Leveraging AI and ML to Thwart Scammers ” found that small financial institutions — those with between $1 billion and $5 billion in assets under management — are the exception to this rule. They endure the second-highest authorized fraud rate of 43%.

Forty-nine percent of all financial institutions agree that they should be responsible for reimbursing customers victimized by authorized fraud, the report said.