The Consumer Protection Division in the N.C. Department of Justice is home to the Elder Fraud Unit, a group of four individuals dedicated to preventing and assisting elderly victims of internet, phone, and home repair fraud. David Kirkman, a Special Deputy Attorney General with the Consumer Protection Division, answered a few questions about the Unit’s work and the new legislation.
What is the role of the Elder Fraud Unit in the N.C. Attorney General’s Consumer Protection Division?
The Governor’s Crime Commission grant that funds the Unit is called “Elder Fraud— Break Re-victimization Cycle Project 2013.” As the name implies, the Unit’s mission is to identify elderly victims of fraud and prevent their re-victimization. Re-victimization is a major feature of elder fraud, something that differentiates it from almost all the other types of scams and frauds addressed by the Attorney General.
What types of scams has the Unit confronted in North Carolina recently? Have scammers changed the way they target older adults over the past few years?
Mostly, we are still seeing the sorts of repeat victimization scams that we saw 8–10 years ago. Elderly North Carolinians continue to suffer heavy losses to home repair scam- mers, who patrol older residential neighborhoods looking for targets. As for the frauds perpetrated against seniors from overseas, 2014 saw only a slight decrease in heavy losses to sweepstakes, lottery, grandparent, and sweetheart scams. With respect to the overseas scammers’ targeting techniques, they still seem to work from lists of older consumers who have good credit. What was new in 2014 was the widespread and high-tech IRS and Treasury Agent phone scam. Millions of us across the country got those ominous-sounding robocalls warning about our pending arrest for outstanding tax liabilities or other govern- ment debts. We were told that we needed to press a certain number on our phone or dial a specific number in order to talk to an IRS or Treasury Agent.
The targeting technique for the IRS scam was rather clever. They robocalled everybody. Consumers who might be vulnerable to the scam essentially self-selected and took steps to speak to the “agent.” The rest of us ignored the robocalls or simply reported them to authorities. Guess who responded the way the scammers wanted? They tended to be older consumers.
The sweetheart scams and grandparent scams continued to plague older North Carolinians in 2014, just as they did the previous two years. Reports of the scam died down somewhat during the second half of the 2014. We did notice the scammers resorting more and more to threats or reports of violence against the grandchild or online love interest who supposedly was in trouble overseas. Some of our victims even reported phone calls featuring what they thought was their grandchild or their boyfriend/fiancée screaming and being beaten up in the background. These tactics probably extended the series of money transfers the scammers could extract from their victims. As for targeting techniques, those scammers utilized social media (Facebook, singles websites, etc.) to spot their targets.
The N.C. General Assembly passed legislation in the 2013–14 session designed to increase protections against elder fraud. What changes in procedure and impact has the Elder Fraud Unit seen as a result of the law?
Financial institutions began contacting us almost immediately about cross-border scams that were afflicting their customers. Local law enforcement officials seem to be receiving reports of home repair fraud directly and in real time, which is the key to foiling it. Within days of the statute going into effect, we were contacted by a large national bank and told of a man in the Charlotte area who had been in the throes of a Nigerian money transfer scam for almost two years. His losses totaled $3.2 million, according to the bank. The scammers told him that a wealthy distant relative of his had died in that country. They repeatedly persuaded him to send funds for things like attorneys’ fees, probate fees, inher- itance taxes, administrative fees, litigation costs, bribes for government officials, customs duties, and similar expenses. We immediately contacted the victim, initiated counseling, and got him some much needed support. The losses stopped. Prior to the effective date of SB 140, the bank felt that it could do nothing more than file a Suspicious Activity Report with the federal government and contact the local Adult Protective Services office.
One thing that jumped out when we ran the Unit’s 2014 statistics was a drop in the average loss per victim served. During the preceding five years, the average loss per victim seemed to be stuck at $10,000 per victim. In 2014, it was just over $7,500. It will take some time to determine whether and how SB 140 might have contributed to that decrease. Perhaps certain changes in the wire services industry contributed to the drop. Perhaps it was just a statistical anomaly. My hunch is that SB 140 is causing elder fraud incidents to be spotted and broken up much earlier in the repeat victimization cycle.
Have other changes in policy or procedure impacted the way the Elder Fraud Unit identifies and pursues exploitation of older adults in our state?
Yes. Financial institutions contact us with much more regularity. In addition, we also hear of more and more instances where bank personnel have been quite proactive in spotting and thwarting the scams themselves, freezing transactions, and contacting us so that we might work with the victims and their families. This appears to be a direct conse- quence of SB 140, which encouraged, but did not mandate, training for financial institution personnel to help them address suspected elder fraud incidents.
Have attitudes toward financial fraud committed against older adults changed?
Yes, without question. It is rare anymore that we hear a financial, medical, or legal profes- sional express the sentiment, “They haven’t been declared incompetent. It’s their money. It’s none of our business!” I remember when similar sentiments were expressed regularly about domestic violence. For example, 35–40 years ago, it was, “We shouldn’t get involved in matters between a husband and wife. It’s their business.” Then, North Carolina adopted the Domestic Violence Act. Attitudes started to change significantly. Communities adopted a holistic approach to the problem, creating DV shelters and special DV courts, and training professionals of all stripes to recognize the problem and address it. I think the passage of SB 140 represents a tipping point in the fight against Elder Fraud, not unlike the passage of the Domestic Violence Act three and a half decades ago.
Paige C. Worsham is Senior Policy Counsel with the North Carolina Center for Public Policy Research