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Financial Vulnerability and Social Isolation with Marti DeLiema, PhD

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“Social isolation among older adults makes them more vulnerable.” - Marti DeLiema Share on X

If you experience any high pressure tactics or urgency that someone needs you to make a financial decision fast, take a pause and realize that you might be talking to a scammer. Today’s guest is Professor Marti DeLiema. Marti is an Assistant Professor and Gerontologist at the University of Minnesota. Her work focuses on identifying the extent and cost of financial fraud in the US as well as factors related to financial victimization of the aging. 

“We need to take a pause. If there are any high pressure sales tactics, that is such a red flag.” - Marti DeLiema Share on X

Show Notes:

“Never make a financial decision in the moment.” - Marti DeLiema Share on X

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Transcript:

Dr. DeLiema, thank you so much for coming on the Easy Prey Podcast today.

Thanks for having me.

Can you give the audience a little bit of background about who you are and what you do?

I am an assistant professor at the University of Minnesota School of Social Work. I'm actually a gerontologist, which is the study of human aging. But my specialty is on financial scams and fraud, particularly among older adults.

Awesome. Not that these scams are limited to older adults, but that's just where the focus of your research is, right?

Right. I actually came into this area by studying financial exploitation and abuse by friends and family members. It was really the scam cases by an external perpetrator or someone who starts out as a stranger to the older adult that really drew me in, so I decided to focus on that area.

Was there a particular incident in a relative's life that got you interested in this field in general? Or was there some other happenstance that got you interested in this field?

Fortunately, no. No one in my personal life, to my knowledge, has been exploited by friends and family. Although, when I was a graduate student back at USC School of Gerontology, I actually sat in on many of the elder abuse cases that were discussed by the Los Angeles County Elder Abuse Forensic Center.

It was the financial exploitation cases that really required that multidisciplinary team approach because you needed detectives, prosecutors, cognitive psychologists, geriatricians, everyone to really weigh in to decide what happened, what was this person's capacity, understanding the exploitation and the money transfers, and how do you follow the money?

It's not a simple task to unwind these things.

No. It's not something that your local adult protective services or even the police departments are trained to do.

Let's dig into some of the research that you've done. I'll start with a question that I know the answer to because I've been doing this and we talked earlier. This is not financial crimes and being a victim or target of financial crimes. It's not just limited to the elderly, is it?

No. When I started off doing this research, I really did take a larger focus on older adults. But then as I got more acquainted with all the different agencies that are looking at fraud and got access to different data sets on fraud, we discovered that fraud really impacts people across the life course. We do find that older adults—that is people 65 and older—tend to lose more money per incident that they report compared to younger adults. But in terms of who's vulnerable, it's all of us.

We do find that older adults—that is people 65 and older—tend to lose more money per incident that they report compared to younger adults. But in terms of who's vulnerable, it's all of us. -Marti DeLiema Share on X

I always say, if there hasn't been a scam that you succumb to yet, it's just coming. They're very tailored, they're very targeted, and they're very specific. That's what I always like to warn people about. It's coming. It's coming for me, too. I haven't met my scam yet, but I'm sure I will.

I always say, if there hasn't been a scam that you succumb to yet, it's just coming. They're very tailored, they're very targeted, and they're very specific. -Marti DeLiema Share on X

I don't know if you've done much research in the targeting. Is the reasoning why the scammers are targeting older people because there's a perception that they're more likely to fall for the scams, or is it just that they're more likely to have a nest egg, a larger sum of money, or some other reason?

We think it's a combination of those factors. If you're a cunning criminal, and you want to get the biggest bang for your buck, who are you going to go after? The really wealthy retiree who's sitting on a multimillion-dollar nest egg or the broke college student? It makes good financial sense to target those who are wealthier.

Also, there is some evidence that, especially with COVID, social isolation among older adults has made them more vulnerable. There's also substantial evidence that there are changes in the brain that affect financial decision-making. Those changes in the brain actually are areas that are distinct from the areas that we see declining in diseases like Alzheimer's and other forms of dementia. People can be experiencing these declines in their financial decision-making, even when they are disease-free and don't have Alzheimer's disease.

Have you guys figured out what causes that decline in decision-making?

That's where the research is happening now—what are the causes and changes in financial decision-making? It's more frontal lobe areas. This is reasoning, this is planning, this is executive functioning. This isn't a memory.

Of course, that is important as well when we're making these decisions in the moment, when we're being targeted, but really, it's those executive-functioning capabilities that decline. They decline earlier than all other cognitive detriments, so it's really hard for friends and family members, or even the person themselves, to understand and recognize that it's happening, which makes them even more susceptible.

That was my next question that I was writing down when you started talking about this—decline in financial decision-making. In your research, when does it start happening?

For many people, it's typically in the late 60s and 70s. Like I said, it's the earliest area of cognitive functioning to be affected just by the normal aging process, so outside of the disease process.

Again, what makes it so insidious is that it's happening, people don't recognize it's happening, individuals who are experiencing these declines are still able to drive, do all the grocery shopping, their meal planning. It's really those complex decisions that are affected, the ones that require you to weigh a lot of different types of evidence that might be affected by emotional arousal, and a lot of the tactics that scammers use to get us in these states where we can't make the best decisions for ourselves. That's why it becomes so problematic.

Got you. You talked about the social isolation during COVID and scammers leveraging that. How has that played out in the research as well? Why is it that social isolation makes us more susceptible?

Social isolation has a two-pronged effect. One is simply the act of being alone. It means there's not another person available for you as the target of a scam to say, “Hey, I'm just getting this phone call. Does this sound reasonable? Did we pay our taxes? So and so. Are our grandson actually in trouble?” There's just not another body to bounce an idea or something that was pitched to you off of.

The second reason that social isolation has a negative impact and increases susceptibility is that for some people, being alone increases feelings of loneliness. When you feel alone, you might be more open and susceptible to those pitches about friendship, romance, get-rich-quick schemes, anything that makes you feel more valued as an individual or as a member of society. It's another way that criminals pitch their scam.

Is it even some aspect of just having that conversation? If I'm only talking to one person a day that happens to be a scammer, we normally build friendship feelings towards the people that we interact with. If that's the only one that we're interacting with, we're a little bit more trusting of them? 

It absolutely fills an unmet need. I often think about scam, vulnerability as fraud criminals find those areas of unmet need. One risk factor that we find to be significant in a lot of our studies is financial vulnerability. 

One risk factor that we find to be significant in a lot of our studies is financial vulnerability. -Marti DeLiema Share on X

We ask people questions like, “If an unexpected emergency came up really recently, would you be able to cover a $1000 expense without borrowing the money or putting it on your credit card?” The people that say, “No, I probably couldn't do that,” that we found were more likely to endorse that they've been victimized. 

Similar to folks that say, “Yeah, I have too much debt. I have more debt than I can handle.” It's the financial vulnerability that increases susceptibility and the emotional vulnerability. Loneliness tends to correlate with scam victimization.

It's the financial vulnerability that increases susceptibility and the emotional vulnerability. Loneliness tends to correlate with scam victimization. -Marti DeLiema Share on X

The emotional vulnerability, would that also tie in with people that have experienced loss recently?

Yeah. Those that are trying to recover from a loss, they also, I would say, are more susceptible to another pitch to make up for those losses because we're loss-averse. We're willing to take a risk when we're in those feelings of loss. It comes back to behavioral economics.

Even with just the emotional losses, like if a spouse passes away, is there a generalized timeline of when people are more or less vulnerable during the recovery process?

Anecdotally, I've seen that people seem to be more vulnerable in the months following becoming a widow or a widower. It's been really hard to bear that out with quantitative data. One is that if you're asking people about events that happened in the past, they're really bad at organizing the timeline for themselves.

It's hard as a researcher to prime those historical events to assess which came first. Were they victims of a scam, then they lost money? Did they lose money first? Then they were a victim of a scam, and things like widowhood fall into that category. Qualitatively, anecdotally, we see that. But in the data, we haven't been able to show that.

Interesting. It's not like, “OK, 10,000 seniors. We're just going to talk to you every month to find out what's going on.” I guess that's the way to do it.

That is. Longitudinal data, that's the best way to do it, but it's the most expensive way to do it.

There's no guarantee. Not that you want them to be scammed, but there's no guarantee that they're going to suffer a loss or that they're going to be a target of a scam during the study.

A huge problem in our research is underreporting, particularly among older adults and particularly among victims. People don't want to admit it. -Marti LeLiema Share on X

Right. Or if it happens, they'll report it to you. A huge problem in our research is underreporting, particularly among older adults and particularly among victims. People don't want to admit it. It's a couple of things that are going on with older populations. Maybe they were a victim and they know they were a victim, but they don't want to share it. Maybe because the consequences feel really high. “This could lead to me losing my financial autonomy, and my kids are going to take over.”

Others might have experienced the scam, but they're true believers. They still think that $1 million sweepstakes is coming to them. They will also report that they haven't been a victim of a scam. It becomes really tricky when we're looking at what are the links between certain vulnerability factors and scams because people are miscategorizing themselves as non-victims.

What percentage, as far as your best guesstimate, of elderly or seniors that do get scammed actually report?

Research has been showing less than 1 in 40. Some recent research from the FTC or using the Consumer Sentinel data and then real data from criminals on scams found that for low-dollar loss scams under $100, fewer than 1 in 3000 victims report to the Federal Trade Commission.

For high-dollar loss scams losing over $1000, it's more like 1 in 10 people report. Still, that's not just looking at older adults, that's everyone. I think it really shows that we're just seeing a tiny proportion of those who have actually been victimized in the complaint data.

I think it makes sense that if I lost a couple of hundred dollars to a scam with where I'm at in my life, it's like, “OK, this is a lesson learned. It's not worth the hassle of my time and effort to file a complaint anywhere.” Whereas the larger amounts would make sense that the loss is more impacting to their day-to-day lifestyle.

Right. People are looking for some sort of retribution, possibly, down the road. I do want to encourage people to report no matter the dollar loss because you want to put your name in the hat, raise your hand, and say, “I've been affected by this scam.” Not only does it help federal agencies target resources, but if there was ever a big case and money recovered from that scam, you want to be on the list of people to have a recovery. That's why I think reporting takes 10 minutes of your time, but it could be absolutely worth it in the end.

In terms of reporting, do you have particular organizations where should people report different types of things?

Depending on the type of fraud that we're talking about, people should report most types of scams to the Federal Trade Commission. Other types of crimes, especially any scams that involve the Internet, I recommend reporting through IC3, the Internet Crime Complaint Center. That has a number of people looking at the cases, looking at the dollar losses, and trying to see if there's anything that they can do in the moment to help stop the loss of funds, especially when we're talking about the $10,000-plus losses.

Got you. Let's look at how to deal with these from a couple of different perspectives. For ourselves, as we age, what are some of the things that we can put in place to either offset that financial decision-making or things that we can set up in our lives to help prevent us from falling victim?

I think there are a couple of things that we can do. We want to take a shot at just early prevention. I believe in delegating and pulling people in your life into your financial affairs prior to any cognitive issues that may or may not arise in later life. 

I'm talking about post-retirement. That's when you should have your estate plan done, thinking about who in my family or close circle of friends would I trust to step into my shoes and make my financial decisions for me? 

Just like how we all think about a healthcare power of attorney, you need a financial power of attorney, then start bringing them in, and then use them as your go-to backup. If you ever have a question about something, if you ever get a phone call, or something you don't recognize, that could be the person you’ll call and say, “Does this sound suspicious to you?”

In fact, my father-in-law constantly sends me emails. He knows they're a scam, but he wants me to see how good they are at times. I think that's great. Pick a buddy. Just send them things that you see, and just get a second opinion.

For our parents, as they're aging, how can we help them still have that sense of, “I'm running my own life, and my kids aren't micromanaging me,” but also be able to insert ourselves in a way that can help prevent loss?

That's the thing I always want to emphasize. By naming and designating your power of attorney, by bringing them into your financial decisions, you're actually extending the period in which you can be financially autonomous and make your own decisions, because you're protecting yourself from loss. Because the minute that you lose half of your retirement is the minute your family members are going to just do what they can to stop you from having access to your own funds.

The more that you can show and showcase how you're still in the driver's seat, and this is how you make decisions, actually it extends the period in which people will see how you make decisions and mimic that if they ever had to fully take over for you. You're more financially protected by doing this and you're more in control.

The other thing I would say for adult children as they approach their parents, bring it into their own personal experiences. Like, “Mom, you will not believe the scam that I almost fell for the other day. This is what happened. This is what they said.”

You'd be surprised how many times they'd be like, “No way. Similar thing happened to me. I actually did pay money.” It can open up those communication channels to talk about finance and money. You never think about taking advice from adult children. Sometimes they have great advice.

I think that vulnerability, not vulnerability to a scam but being personally vulnerable with the things that you've experienced, also elicits a likewise response in the other person. If you say, “Oh, my gosh. I got a call from a scammer.” You talk about it. They're going to say, “Oh, yeah. I got the same call,” or maybe, “I even fell for the scam.”

I know that there's a certain amount of stigma in society of people that have fallen for scams. It was one of the things I talked to my guests about and why I ask them, “Have you fallen for a scam?” is because I've dealt with cybersecurity experts that they'll say, “Yeah, I had a cybersecurity blunder, and I had a computer compromised.” It helps people realize if this is happening to the experts, then it's not surprising that it's happened to me also, and I shouldn't be ashamed about it.

Right, normalize the experience. The reality is every person 65 and older knows a friend, a family member that's experienced fraud. They know friends and family members that have been totally taken advantage of by adult children, by professionals that come into their lives late in life. Those are also great conversation starters to say, “Gosh, look what happened to Aunt Deborah. Make sure that doesn't happen to you. Let's work together.”

The reality is every person 65 and older knows a friend, a family member that's experienced fraud. They know friends and family members that have been totally taken advantage of by adult children, by professionals that come into… Share on X

Make it collaborative. This isn't about taking over. We live in a really complex society now. Financially complex, our communication systems are complex. Let's set ourselves up for safety and protection as we age.

Are there any trends and scams that you're seeing that are particularly concerning or newer that we should be watching out for?

I think that there are some broad trends that we should be looking out for. One is the aging of the population. By 2034 or 2035, the Census Bureau estimates that for the first time in US history, there are going to be more older adults in the United States than children and teenagers. It's a huge shift in our population and our demographics.

Another big trend that's on the horizon is going to be the greatest wealth transfer of all time, as the baby boomers pass on and pass on their wealth to the millennials, largely the millennial generation. I think that that's going to have a lot of criminals coming out of the woodwork looking to see how they can cash in on that, too.

You keep hearing things in the news about financial markets, a lot of things to be concerned about, and a lot of fraud happening under our nose. I don't think scams and fraud are anything that we're getting control over that's going to go away anytime soon. With all those other trends happening at the same time, we just need to be really, really weary. Again, think about how we can protect ourselves in this new world.

I guess it's talking to our parents when big financial things happen in the news as a starting point to have a discussion. When we're recording this, this is Silicon Valley Bank, and Signature Bank has just been taken over by the FDIC. People are going to be a little bit more paranoid about their own banks and maybe more susceptible to scams saying, “Hey, I've got this bank that's more secure and more safe. We have the safeguards to prevent this thing.”

Yeah. I would hope that those claims are legitimate, but you have to really second guess everything, all these new technologies, new ways to transfer money. I know in Germany, there was that payment app that got so many investors that turned out largely just to be entirely a fraud. We have all these cryptocurrencies now that you have to be really skeptical about. I think just having conversations about financial markets and money with different generations really helps educate everyone.

I don't want to blame everything on COVID, but COVID accelerated a lot of these transitions to us moving away from credit cards and cash to using payment apps because everyone was like, “I don't want to touch anything.” That accelerated transition exposes that maybe some of these apps aren't as well designed as we'd hoped them to be, as well as people just taking advantage of them with fake apps, and people feeling the pressure to, “This is just the way things are now. I've got to make the sudden change that I'm not comfortable with.”

Absolutely. We really saw that with the peer-to-peer apps and older adults. We saw with the pandemic, the big shift from government imposter scams to business imposter scams. Everyone was like, “Wait a second. Everybody now has an account at Amazon. Why don't we just pretend to be Amazon?”

“Why are we pretending to be the SSA? Very few people feel that they have a very close connection with the Social Security Administration, but everyone has an Amazon account or is waiting for a package from UPS. Let's just be them.” I think scammers are so good at taking advantage of whatever big societal shift is happening at the moment.

I think scammers are so good at taking advantage of whatever big societal shift is happening at the moment. -Marti DeLiema Share on X

Do you think there are things that businesses should be looking to do to change the way they operate their businesses to help protect their customers from being scammed indirectly?

Better customer service. If someone calls, pick up the phone and have it be a real person, because criminals take advantage of poor customer service. It's pretty easy to convince someone you're their financial institution if they can't get ahold of their real financial institution or if they're given the runaround. That's what I would say. Invest in employees and people.

Take the time that you have with customers to educate them on imposter scams. If you are Amazon, there should be so much stuff out on your front page. “Beware, if you're getting these text messages or this, we will never text you this information, or we will never call you and request this information.” I'm seeing that a little bit more from some of the major financial institutions, like, “We will never ask for your passcode.” But you'd hope that they would do that a little bit more.

People don't know what entities will or won't text me, what ones will and won't call me. There are some entities that I deal with that want a PIN code to have a conversation with me that I've set up on their platform that's just separate from the two-factor authentication PIN code, and it all just gets very blurry very, very quickly.

Right.

Do you still see a trend of seniors being taken advantage of with gift cards and things like that?

We definitely see gift cards still trending, and older adults are one of the largest consumer segments that seem to be purchasing gift cards as a result of some scam solicitation. -Marti DeLiema Share on X

We definitely see gift cards still trending, and older adults are one of the largest consumer segments that seem to be purchasing gift cards as a result of some scam solicitation. I think it's a tricky issue. You can see why scammers love them. They're anonymous. They’re easily accessible. They're not having to walk an older adult through how to use Zelle or any cryptocurrency transaction, so they're so much easier.

Retailers, I think, are starting to wise up. In fact, I was at a major pharmacy chain a couple of weeks ago. I must have been eavesdropping for 15-20 minutes, trying to convince this older woman that he was not going to sell her any more gift cards. She was so upset and so combative with him, and he was so calm. He explained why he was concerned. He did a really good job. I almost wanted to call and congratulate him afterward.

I do think that they're starting to wise up. But in some of my research, I found that it's not even sufficient that a person will just leave and go to the next store. The criminals are so good at turning their target to get them to mistrust the retailer, the actual human being standing in front of them, and trust the stranger on the phone. It becomes really difficult.

I've had research participants and interviews. “I saw the signs. They tried to tell me, but I just ignored it because I just said, ‘Yeah, but those are other people who are being victims of scams. This isn't a scam.’” It's really hard.

I'm curious about that. Were you able to figure out why the person was so convinced that if it's happening to somebody else, it's a scam, but for me, it wasn't?

It was the things that they were learning from the person on the phone. It could have been a computer virus. They had flashing lights and siren sounds coming out of their machine, and they're just not in a mental state to process those warning messages when the person is in front of them. Sometimes they just assume, “Really, it was my boss that asked me to go and buy these gift cards. Oh, yeah, I can see how this would seem concerning spending $500 in gift cards, but that's not me.”

Some of my participants said that what really got through to them was when the retailer took an empathetic human-centered approach. Like, “I see what's happening. I'm concerned, and this is why.” Some said that when the questions seem really rote and routine, “Do you know who you're purchasing this for?” They just ignored it and kept going through.

I think what happens is the fraud criminal forewarns people. “You're probably going to get questions about this just like fraud fighters do. You're probably going to get this. This is what the pitch is going to sound like, and this is what they're going to say.” That really just inoculates them from the protection message that they're getting.

It's so problematic that I actually think that there should just be limits on what gift cards people can buy and how much. I think the limits should be way lower, the payment amounts, no buying in multiples, and also we need to think about how to protect people who are purchasing these gift cards online.

Yeah, because they're not getting the pushback from attentive retailers.

No, there's no person there.

I've listened to some of the scambaiter calls with the scammers, and it's really crazy to hear that the scammers are coaching the person on what to say. “If they ask you what it's for, tell them this. If they question why you're doing it, tell them this.” If someone is coaching you, that should be a red flag in and of itself.

Right. They're getting the target to say, “You and I are in on this together. The world is our combatant, so we have to overcome this together.” Some people think that what they're doing is secret and secretive. It's really hard. When we already have an antagonistic relationship with our own financial institutions now, that doesn't help.

I think everyone has had an antagonistic experience with a financial institution at some point in their lives. There were some overdraft fees, some junk fees that you experienced, or something went wrong, and it was not a good experience resolving it.

Absolutely.

Any other parting advice or suggestions that you have before we wrap up today?

If anything sounds like a sales pitch, or there are any high-pressure sales tactics, that is such a red flag. -Marti DeLiema Share on X

I'm sure other guests in your show have said the same thing, but we just need to take a pause. If anything sounds like a sales pitch, or there are any high-pressure sales tactics, that is such a red flag. Most legitimate advertisers and marketers, I feel moved a little bit backed up from high-pressure sales. Anyone comes to your door and tries to sell, take their literature and that you'll call them. Just never make a decision in the moment.

Another thing that criminals are so good at is they make a financial transaction not seem like a financial transaction. With the SSA imposter scam, “Go buy gift cards to protect your money.” It doesn't feel like you're paying money for something, it feels like you're just moving it from one form to another. Thinking that you're Zelle-ing money from your checking to your savings when you're not. It’s not even financial literacy that's at play here. It's our ability to detect if someone's trying to persuade us.

So anytime anyone's asking us to do a financial transaction of any amount, we should be concerned.

Yeah, even if it doesn't feel like money is even involved.

Even more if it doesn't feel like money is being involved, we should be more concerned.

Yeah.

That's crazy. Dr. DeLiema, thank you so much for coming on the Easy Prey Podcast today.

I'm happy to be here.

If people want to find out more about the research that you're doing, where can they find you online?

They can find me. They can search my name, Marti DeLiema. My faculty profile comes up, and you can learn more about the work I do on fraud, scams, and aging.

Awesome. Thank you very much.

Thank you. Bye.

 

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