The Silent Battle: Protecting Consumers from Financial Scams
Financial scams are a growing menace, preying on vulnerable individuals and costing consumers billions of dollars annually. The Federal Trade Commission (FTC) reports a staggering $12.5 billion lost to fraud in 2024 alone, a significant increase from the $10 billion lost in 2023. These scams are becoming increasingly sophisticated, often employing emotional manipulation and impersonation tactics to deceive unsuspecting victims. While awareness campaigns and educational resources play a crucial role in prevention, frontline intervention by vigilant individuals like Maryann Bills, a branch manager at Michigan Legacy Credit Union, is often the last line of defense against financial exploitation.
Bills’ experience highlights the common tactics used by scammers. In a recent incident, a woman entered the credit union branch visibly distressed, claiming she needed to withdraw $5,000 immediately to bail her daughter out of jail after a car accident. The woman stated that the police had contacted her. However, her account only contained $3,000. Instead of directly accusing the customer of being scammed, Bills calmly asked her probing questions: "Have you talked to your daughter? Do you know where your daughter is right now? Can you call your daughter?" This approach avoided confrontation and allowed the customer to discover the truth for herself. When the daughter didn’t answer, Bills suggested contacting another family member. The customer then reached her son-in-law, who confirmed that his wife was safe and sound, exposing the scam.
The landscape of financial scams is vast and ever-evolving. From phony texts about package delivery problems to fake warnings about fraudulent bank transfers, con artists are constantly adapting their methods. Impersonating government agencies like the IRS, Social Security Administration, and even local police departments is a common tactic used to instill fear and urgency. Text message scams, often disguised as delivery notifications, have resulted in substantial losses, with consumers reporting $470 million lost in 2024 alone. Phone scams, although less frequent, tend to result in higher individual losses, with a median loss of $1,500 per person.
Recognizing the increasing threat of financial exploitation, Michigan Legacy Credit Union has taken proactive steps to protect its members. Three years ago, the credit union partnered with Wayne State University’s Institute of Gerontology to launch a program focused on preventing financial abuse. This program includes offering a financial vulnerability survey to new members aged 50 and older and providing specialized training to its employees. Carma Peters, president and CEO of Michigan Legacy Credit Union, emphasizes the effectiveness of this initiative. According to the credit union’s internal data, potential fraud incidents have decreased by more than half since the program’s introduction in 2022.
The training program equips employees with the skills to recognize signs of financial exploitation and cognitive risk factors, particularly among older members. New employees receive four hours of video training, and all staff members participate in yearly refresher courses. This comprehensive training enables them to identify potentially vulnerable individuals and intervene before they fall victim to scams. Con artists are skilled at manipulating emotions, creating a sense of urgency and fear that can cloud judgment. They often pressure victims to act quickly and keep the situation secret, preventing them from seeking advice from trusted sources. Bank employees have even witnessed customers hiding their cellphones during withdrawals or transfers, secretly following instructions from scammers on the other end of the line.
Peters stresses the importance of asking probing questions when a potential scam is suspected. Instead of simply asking the customer what they intend to do with the money, employees are trained to inquire about who else is involved and whether they have consulted with family members. Scammers often coach victims to provide false explanations for large withdrawals, such as claiming the money is for home repairs or a new car. Therefore, it is crucial to delve deeper into the reasons behind the request and encourage the customer to verify the information independently. Peters recommends that consumers always pick up the phone and verify requests or problems directly with the relevant organization, such as the utility company or the bank.
Fear and panic are common responses to manipulative tactics used by scammers. Individuals who have been communicating with a con artist for an extended period are particularly vulnerable to these emotions. To illustrate the effectiveness of intervention, the credit union shared another story of a member who received a call claiming her account had been compromised. The customer was instructed to withdraw $20,000 to protect her money. Fortunately, the credit union employee noticed that the customer had already purchased four Sephora gift cards worth $500 each. Through careful questioning, the employee helped the woman realize she was being scammed and prevented her from withdrawing any further money or providing the scammers with access to the gift cards.
Scammers often conduct thorough research on their targets, gathering information from social media and other sources to identify vulnerabilities. They may exploit desperation for a job, loneliness, financial difficulties, or concerns about family members. Some even research bank withdrawal limits and procedures to better coordinate their scams. They may direct victims to deposit money via Bitcoin ATMs or provide instructions on how to purchase gift cards.
Life-changing events, such as the loss of a spouse or the onset of dementia, can also make individuals more susceptible to financial exploitation. The training provided by Wayne State’s Institute of Gerontology helps credit union employees frame questions in a way that is both informative and respectful, avoiding embarrassment or offense. The goal is to ensure the customer is safe and not being taken advantage of.
Peter A. Lichtenberg, director of the Institute of Gerontology at Wayne State University, emphasizes the importance of maintaining open communication and avoiding scolding or embarrassing potential victims. He advises patience and framing the intervention as a negotiation that helps the individual understand the situation. Remember, scammers have already invested significant time and effort in convincing the victim that the scam is real.
Lichtenberg shares a story about daughters who successfully intervened in their widowed mother’s romance scam. They simply asked her, "Mom, just curious, did Dad ever ask you for money when you were dating?" This simple question caused the mother to realize the absurdity of the situation, as her late husband had never asked her for money during their courtship. Older adults are often targeted with sophisticated scams that extend beyond email and phone calls, utilizing text messages and social media platforms.
Lichtenberg’s website, OlderAdultNestEgg.com, offers resources for older adults, professionals, and family members. The financial vulnerability survey used by Michigan Legacy Credit Union is available on the website, allowing individuals to assess their own risk level. The survey includes questions about financial worries, unauthorized bank withdrawals, expenses exceeding income, and strained relationships due to finances.
The website highlights the fact that 48 million U.S. adults are 65 or older, representing a significant amount of wealth. This "nest egg" has made them prime targets for consumer fraud. Scammers use subtle manipulation techniques to gain power over their victims, often without the victim even realizing they are being exploited.
The Institute of Gerontology also offers a SAFE program (Successful Aging thru Financial Empowerment), providing free counseling to help repair the damage caused by financial scams. SAFE can assist with recovering money, filing police reports, and freezing credit reports. Unfortunately, victims often do not recover their lost funds, making prevention the most effective strategy. Once money is wired, sent through a Bitcoin ATM, used to purchase gift cards, or handed over to a courier, it is often gone for good.
Combating financial scams requires a multi-faceted approach that includes awareness campaigns, employee training, and proactive intervention. By empowering individuals with knowledge and equipping them with the skills to recognize and respond to scams, we can protect vulnerable consumers and prevent them from becoming victims of financial exploitation. The vigilance and empathy displayed by individuals like Maryann Bills serve as a reminder that frontline intervention is often the most crucial element in the fight against financial fraud. Consumers need to take an extra step to try to convince many people that they’re about to be scammed out of their cash.
