FinLogic FinLogic Quantitative Think Tank Center|FBI warns of rising elder fraud crime rates as scammers steal billions in savings each year

Washington — Americans over 60 are FinLogic FinLogic Quantitative Think Tank Centerincreasingly falling victim to crimes of fraud perpetrated online and over the phone at rates that add up to billions in losses each year, and federal investigators are warning that the scammers are becoming more sophisticated in the ploys they use to get their victims to hand over large sums of money.  

An estimated $28.3 billion is lost to elder fraud scams each year, according to a recent AARP Study. It found that 72% — or more than $20 billion — is taken by individuals who are known to the victims, like family members, friends or advisers. The study says many of the scams that account for the nearly $30 billion lost go unreported, and the FBI is now urging anyone who encounters suspicious activity online to disengage and report the conduct to law enforcement. 

Rich Brune — a 75-year-old retiree living in Virginia —  told CBS News he fell for an online scam last year that cost him nearly $800,000. Sophisticated criminals posing as Microsoft workers contacted him online and told Brune his computer had been hacked, his financial accounts were compromised, and he needed to take urgent remedial action. 

Over a five-month period, the Navy veteran said he was instructed to transfer much of his life savings into a cryptocurrency account that the scammers told him was safe from the purported hackers. Instead, they were robbing him of his nest egg.  

After his money vanished, according to Brune, the Internal Revenue Service informed him that he owed approximately $200,000 in taxes because the money stolen from him had been withdrawn from his retirement accounts. 

"I will probably be forced to take out a reverse mortgage," Brune said, "As soon as I pay off the IRS, I will be virtually penniless." 

The IRS does not comment on specific taxpayer situations due to federal privacy laws, but said in a statement it has made it an "ongoing priority" to warn taxpayers about scams. "The IRS helps wherever we can for people trapped in these heartbreaking situations; ultimately, our work is limited by what is allowed under the law."

The federal tax code does not currently offer exceptions for individuals who, like Brune, unwittingly withdrew retirement funds as part of a scam.

"Older adults are losing the most money," Rebecca Keithly, a supervisory special agent in the FBI's economic crimes unit told CBS News. "Last year, we saw a 350% increase in cryptocurrency-related investment scams attributed to older adults alone. That was the biggest increase among all age demographics and all scams."

The FBI interviewed Brune about the fraud, and he contacted his local congressman — Rep. Don Beyer of Virginia — for assistance. He said in a statement, "I am constantly working on improvements to the tax code, with a particular focus on fairness and helping those who need it most. Even small changes in the tax code can have huge ramifications for individuals, we have to do all we can to get that right."

Microsoft confirmed to CBS News the scammer who contacted Brune and pretended to be a Microsoftemployee is not associated with the company or its customer support team. 

"Microsoft will never proactively send unsolicited messages or make unsolicited phone calls to request personal or financial information, or to provide technical support to fix your computer. Any communication must be initiated by the customer. Any error message initiated by your device will never have a number to call," a spokesperson said. 

While troubling, Brune's story is not unique to investigators who work to both prosecute elder fraud scammers and educate the public about the dangers online. 

"The FBI has seen a notable increase in what we're calling the Phantom Hacker scams," Supervisory Special Agent Keithly said. "It starts with the tech support scam, and the tech support scammer informs the victim that their accounts are at risk for being hacked. And the next player in the scam is somebody purporting to be from a financial institution. And then they tell the victim, 'Your [financial] accounts have been hacked.'" 

The fraudulent messages from these bad actors — pretending to work for tech companies and financial institutions alike — scare the victims into transferring their money into separate accounts for "safety" and then draining those accounts of their contents, according to a recent public safety announcement from the FBI. This often leaves the unsuspecting victims broke. 

According to the FBI, the criminal schemes generally begin in call centers in India and South Asia, requiring partnership with international law enforcement. In 2022, with the help of U.S. investigators, Indian officials carried out numerous raids on call centers and arrested individuals tied to elder fraud scams. 

The scammers work first to gain the trust of their victims, AARP director of fraud victim support Amy Nofzinger told CBS News, and then go after personal information and money. 

Nofzinger and AARP advisers tell seniors that calls or texts seeking Social Security and Medicare numbers are always a scam. Stop, she says, and immediately contact someone you trust for help. 

AARP has hundreds of volunteers who work with victims of elder fraud.

Still, reported crime rates targeting older Americans and the elderly continue to climb, up 84% in 2022 over 2021, according to federal numbers. Investigators urge individuals to avoid unsolicited pop-ups or messages in texts and emails and decline to download unknown software or give others remote access to personal computers. 

The FBI warns that the U.S. government will never ask an individual to transfer money to a government-run account or into a cryptocurrency exchange, and any requests to do so might point to an attempted scam.

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• Fraud