Fraud Comes with Aging, Mental Decline

Sometimes research seems merely to confirm the obvious. One example is a new study showing that the cognitive decline that naturally comes with aging makes a senior more vulnerable to fraud.

This isn’t especially surprising, but it is important. Amid a shortage of solid research about fraud among the elderly, this study provides important insight into how and under what circumstances they are increasingly being taken to the cleaners by scammers.

In their study, Keith Gamble at DePaul University and researchers at the Rush University Medical Center used a survey of older Chicagoans known as the Rush Memory and Aging Project, which contains an unusual amount of information about aging, cognition, and financial fraud.

In addition to measuring changes over time in the cognitive functioning of its participating seniors – mostly women – the annual survey asks if they’ve ever been a victim of fraud.  It also includes six questions designed to get at their susceptibility to fraud – Do they have difficulty ending a phone call? – and two questions asking about their willingness to take undue financial risks.  In this case, the undue risk is whether they’d accept a bet with 50/50 odds that they could either double their annual income or lose 10 percent of that income.

Here are their findings:

• Ten percent of older individuals experiencing cognitive decline said they had recently experienced fraud.
• As cognitive difficulties increase, this study confirms that seniors were more likely to have been victimized.
• Confirming a finding reported in a previous blog post, over-confident older people were more vulnerable to fraud.
• Fraud victims in self-assessments also report that they’ve become slightly more likely over time to take on risks, which also makes them more vulnerable to fraud.
• But people who’ve managed to avoid fraud have less tolerance for fraud than they once did.

At a time retiring baby boomers are being required to manage and rely on personal 401(k) accounts built up over their lifetimes, the warning implicit in this study bears paying attention to.

Full disclosure: The research reported herein was performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement Research Consortium. The opinions and conclusions expressed are solely those of the author(s) and do not represent the opinions or policy of SSA or any agency of the federal government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.