AARP’s director of fraud prevention discusses the growing threat of crypto-related scams and what older adults can do to protect themselves.
Our guest on the podcast today is Kathy Stokes. Kathy is director of Fraud Prevention Programs with AARP, where she leads AARP’s efforts to educate older adults on the risks that fraud represents to their financial security. Kathy currently serves on the advisory council to the board of the International Association of Financial Crimes Investigators and on the advisory council to the Senior Issues Committee of the North American Securities Administrators Association. Kathy also serves on a Federal Reserve Working Group on scam information sharing. Before joining AARP, Kathy managed her own company, KSM Communications, and she also held various roles in public affairs at the Brookings Institution, Ernst & Young, Mercer, and the Employee Benefit Research Institute. She received her bachelor’s degree in rhetoric and communications at the University of Pittsburgh and her master’s in American government at Johns Hopkins University.
Background
International Association of Financial Crimes Investigators
Senior Issues Committee of the North American Securities Administrators Association
Federal Reserve Fraud Definitions Work Group
Financial Fraud
“6 Common Types of Investment Fraud and How to Identify Them,” by Cheryl Winokur Munk, aarp.org, April 11, 2024.
“Data Spotlight: Who Experiences Scams? A Story for All Ages,” by Emma Fletcher, ftc.gov, Dec. 8, 2022.
“Data Spotlight: Social Media: A Golden Goose for Scammers,” by Emma Fletcher, ftc.gov, Oct. 6, 2023.
“Americans Reported Losing a Record $10 Billion to Scams and Fraud in 2023,” by Christina Ianzito, aarp.org, Feb. 9, 2024.
“Many Americans Worry About Becoming Scam Victims, New Report Finds,” by Christina Ianzito, aarp.org, May 8, 2024.
“Precious Metals Scams Target Investors Amid the Pandemic,” by Hanna Kozlowska, aarp.org, Jan. 19, 2022.
“What You Need to Know to Protect Yourself Against Bank Scams,” by Patrick J. Kiger, aarp.org, Aug. 12, 2024.
Crypto and AI
“What to Know About Cryptocurrency Scams,” by Patrick J. Kiger, aarp.org, March 15, 2024.
“New Technology Has Supercharged an Old, Formidable Foe: Fraud,” by Martha Boudreau, linkedin.com, April 18, 2024.
“AI Fuels New, Frighteningly Effective Scams,” by Christina Ianzito, aarp.org, April 3, 2024.
Senior Fraud
“‛She Hooked Me’: How an Online Scam Cost a Senior Citizen His Life’s Savings,” by Feliz Solomon, wsj.com, June 8, 2024.
“5 Ways to Prevent Elder Financial Exploitation,” by John Rosengren, aarp.org, June 10, 2024.
“How to Keep a Loved One With Cognitive Decline Safe From Scams,” by Christina Ianzito, aarp.org, June 28, 2024.
Resources
AARP Fraud Watch Network Helpline: 877-908-3360
Internet Crime Complaint Center (IC3)
Christine Benz: Hi and welcome to The Long View. I’m Christine Benz, director of personal finance and retirement planning for Morningstar.
Amy Arnott: And I’m Amy Arnott, portfolio strategist for Morningstar.
Benz: Our guest on the podcast today is Kathy Stokes. Kathy is director of Fraud Prevention Programs with AARP, where she leads AARP’s efforts to educate older adults on the risks that fraud represents to their financial security. Kathy currently serves on the advisory council to the board of the International Association of Financial Crimes Investigators and on the advisory council to the Senior Issues Committee of the North American Securities Administrators Association. Kathy also serves on a Federal Reserve Working Group on scam information sharing. Before joining AARP, Kathy managed her own company, KSM Communications, and she also held various roles in public affairs at the Brookings Institution, Ernst & Young, Mercer, and the Employee Benefit Research Institute. She received her bachelor’s degree in rhetoric and communications at the University of Pittsburgh and her master’s in American government at Johns Hopkins University.
Kathy, welcome to The Long View.
Kathy Stokes: Thank you so much for having me.
Benz: Well, thanks for being here. This is an important topic. We wanted to start by talking about your background and how you found your way to your current role as director of fraud prevention for AARP. What piqued your interest in that subject matter?
Stokes: Well, I’ve always had an interest in financial matters, financial education, and literacy. I had an early passion in my career for pensions. I know it sounds a little strange, but I had taken a job in D.C. for a nonprofit that was focused on healthcare and pension issues. And I got hired to do health. And the first day I got there, my boss said, “I’m going to have you do pensions.” And I’m like, “Oh, what’s a pension?” And then I fell in love with the area from a policy standpoint, from concerns about what the movement from a pension to a defined-contribution world means for the future retirement of American workers. I ended up getting my graduate degree from Johns Hopkins and wrote all about pensions and 401(k) plans and the changes for the 21st century—all that kind of stuff. And I loved it.
And then I moved into actually doing financial education with Ernst & Young. Back then, we had a national practice where we were going around and educating our big clients, employees, about their 401(k), their pension, their cash balance. So, taking it from policy down to the grassroots. Then I had my own business for 10 years. And I did a lot in financial literacy, financial education. AARP was one of my biggest clients. And honestly, I would have stayed independent for the rest of my life, but I had a health issue and the insurance, even with the Affordable Care Act was just too expensive for me. So, I took a job with AARP.
And literally, it was a port in the storm. I had no intention of being with an employer anymore. And honestly, in my first year, I’m like, I’m supposed to be a retirement educator and I didn’t really even know what that meant. But in that second year, the organization was taking a look at all of the work it was doing in this space of fraud prevention. And they did a reboot in 2018. And I was the first interim director, fell in love with the issue as much as I had with pensions. And it seems to really make a lot of sense. If you look back and realize, like, I was doing all this work to try to help workers save plan for a secure retirement. And now I’m looking at retirees who now are at really great risk for their financial security because of the crisis of fraud in this country.
Arnott: Before we start with the topic at hand, we wanted to just level-set and talk about the different types of fraud and how investment fraud differs from financial fraud more generally. Would you say that investment fraud is a subset of financial fraud? So, for example, we often hear about family members or caregivers stealing assets from elderly parents. But that wouldn’t necessarily be investment fraud, right?
Stokes: Correct. That would be financial exploitation. We look at it in two buckets at AARP. And it’s really confusing because every organization talks about these things a bit differently. But when we’re talking about financial exploitation, that’s the known perpetrator. That is the adult son, or the crooked lawyer, or the paid caregiver who is stealing from that older adult. And then there’s the other section, which I commonly refer to as stranger danger. It’s typically that call out of the blue that there’s a problem and it needs to be solved financially. And then within that, there are people out there pretending to be investment advisors, brokers, who are trying to steal from people. It could be that investment fraud is perpetrated by an advisor or a broker, but I would say definitely way more than not it’s criminals just pretending to be something, someone they are not.
Benz: AARP had an article saying that people over 50 lost a combined $950 million due to investment-related fraud in 2023. Does that likely understate the problem given that I would guess that some older adults might be too embarrassed to report that they have been scammed or maybe they’re just not aware?
Stokes: I don’t even use terms like “they’ve been scammed,” because it suggests that someone got over on them. And what it is, is a crime. A criminal, many criminals intentionally target a victim to make them believe something that isn’t true and then they steal from them. The victim experienced crime. When people say things like “they got duped,” or “they got swindled,” or “they fell for it,” or questioning their cognitive abilities, we’re looking at the wrong thing. We need to be looking at this as a crime. And yes, shame is an absolutely huge factor regardless of your age. Federal Trade Commission data suggests that when they get reports from fraud victims, younger people actually report losing money more often, which I think sometimes really blows your mind to think about that. But the reality is when that older adult is the victim, they have so much more potentially to lose because that’s generally where the wealth is in our society.
Arnott: Exactly. So, Christine mentioned that $950 million estimated figure, and it looks like investment fraud has increased pretty dramatically over the past few years. Why do you think that has happened?
Stokes: Well, the $950 million is a huge undercount by everybody’s estimation. The overall losses, according to the Federal Trade Commission in 2023—and I won’t even call them losses, the money was stolen; they didn’t lose it, somebody stole it from them—was somewhere in the neighborhood of $10 billion in 2023. And that’s an increase from just before the pandemic of $2.4 billion. So, you see that meteoric rise. But taking what experts presume is the underreporting, the FTC in 2022 thinks that fraud was more like maybe $137 billion. Let that sink in for a minute—$137 billion in one year, leaving our economy through this crime. Investment fraud is huge because of cryptocurrency. That is what we’re seeing jump off the page these days.
Benz: What about crypto, do you think, has been an especially rich vein for people perpetrating fraud on consumers?
Stokes: Well, I can tell you, what was it, three years ago, two years ago, when all those Super Bowl ads were all about getting rich on cryptocurrency, it totally normalized it. And criminals have just jumped on the bandwagon. When there’s something new and consumers don’t know a lot about it, it’s just a treasure trove for criminals because they can make you believe anything about it. And cryptocurrency is one of those spaces right now. And largely, from what I understand, it’s coming from Chinese mobs. They are victimizing people on both ends of this, where they are enslaving people through convincing them that they’re coming for a job, and they’re actually employees in their scam center, and they’re making calls, they’re finding people online, they’re sending what seems to be a text made in error just to try to connect to somebody to become a friend, to become eventually a trusted person in that other’s life. And then they use that to tell them, “Hey, you see how big I’m living. I’m doing this because I’m an expert in investing in cryptocurrency, and I can help you get started.” And that’s where it begins. And the money lost, the money stolen is just unbelievable. People are losing everything. And by everything I’m saying, everything they initially invested that they actually had the cash for, then taking money out of the college funds for the kids, remortgaging the house, people are losing everything.
Arnott: So, is that what we often hear described as “a pig butchering scam,” where someone will try to build trust and an emotional connection and then use that to exploit the person on the other side?
Stokes: Yeah, exactly. And I don’t user that term because it’s just so painful for a victim to be then again victimized by what it’s being called. And it’s being called that because that’s what the criminals call it. But it’s that name for the slaughter. I use “financial grooming.” I think it’s a much more direct explanation of what’s happening.
Benz: The journal had a really good piece a couple of weeks ago about investment fraud, similar to what you’ve been talking about, Kathy, but it was about exploiting lonely older adults. But it was an investment scam all the same where this gentleman profiled in the article really staked his whole fortune. I think it was maybe foreign-exchange-related or something with coaching from an entity to effectively send them all of his retirement assets.
Stokes: This is what happens. Isolation, loneliness are a plague. When you don’t have somebody to bounce something off, when you’re not having regular social connection, the call coming in is an opportunity to have a conversation. The text made in error is an opportunity to engage with somebody. Even just going online and connecting with people that have similar interests of yours. It’s things that we do because we’re isolated, we’re alone, we’re lonely. And then that’s where the susceptibility really comes in.
Arnott: Do you think that artificial intelligence has made this type of theft more pervasive or more difficult for victims to realize that there’s something going on that’s not right? It used to be maybe five or 10 years ago you would get these scam emails. And it was kind of obvious that it was a scam because you could tell that it was being written in broken English with improper grammar, and it was much easier to ignore.
Stokes: Absolutely. With generative artificial intelligence, you can now craft the perfect email, the perfect text message. You can use it to animate a still image to make it look like the picture on my driver’s license is actually talking to you and I look real. And then there’s the voice cloning. We have a victim support program and one of the people that was recently on these Zoom sessions was talking about how she had experienced a romance scam. And it was someone pretending to be in the military in the US but working abroad. And he stole everything from her, which for her, I think was around $40,000. And then when she finally realized it was fraud, and that it was from India—some of the people she was working with had told her it was based in India—she was like, how could that be? I talked to a man every day, and he sounded like he was from the United States. Well, she believes it was because he was using AI to make his voice not have that accent.
Benz: Kathy, you referenced your interest in your previous work on pensions and the shift that we’ve experienced in this country to the defined-contribution system. I’d like to hear your perspective on how that transition has affected older adults’ susceptibility to investment fraud, because you do have folks controlling their own investment assets in a way that they weren’t 50 years ago, necessarily. Can you talk about that dimension and how it seems logical that that would have exacerbated the potential for investment fraud among older adults?
Stokes: Yeah, and I can tell you back in the early/mid-90s, when I was writing about this and thinking about this, the last thing I thought was vulnerability, susceptibility to investment fraud. But of course, that’s what it is. And there’s this presumption people have that everybody who retired back in the ‘50s and earlier had pensions, and they didn’t. So, there’s always been a large segment of our retirees who are managing their own money. But, that’s writ large now. Who has a pension anymore? I’m very proud to say at AARP that I do. I’m very proud to say that at Ernst & Young, I worked there long enough to earn a right to a pension there as well, but most people don’t. And that’s a lot of cash, sitting around there. It’s not something coming from a managed investment from the employer, from the provider who is sending you that monthly check. So, it stands to reason, doesn’t it?
Arnott: So, you mentioned that investment fraud or other types of fraud aren’t just impacting the elderly, but it’s the younger generations as well. But are there any commonalities among the people who have been victimized or are more vulnerable to these types of frauds?
Stokes: I would say less about the people that are being targeted and victimized, and it’s more about the commonality of the fraud attack. See, a lot of people don’t understand that these criminals have a playbook. And it used to work for the lone grifter, and it works for transnational criminal enterprises now. And that is to get the target into a heightened emotional state, whether it’s fear, panic, there’s something wrong with your grandson—he needs your help right away. It’s excitement: I just won a lottery and a car. Fear that your computer has just been taken over by a horrible virus. Getting someone into that state of heightened emotion is what the criminals use to refer to as “getting them under the ether.” Because they know that when we occupy that spot in our brain where emotions are happening, it’s hard to back out to access logical thinking. So, it’s less about the commonality of the person who is vulnerable and much more about the playbook that the criminals operate with.
Benz: I wanted to ask about aging and the role of aging and cognitive decline in all of this. Maybe you can address that and to what extent that’s a factor. And I guess another factor among older adults is often that you just don’t want to believe that you will age. Your faculties may decline. And so, there’s just a denial that is, I think, human instinct as we age. We don’t want to think about it. And so, we put off adding safeguards. But maybe you can discuss that whole dimension of cognitive decline and maybe our judgment diminishing as we age.
Stokes: Well, I’m not a neurologist or a brain researcher, but I have read a lot about this. And I think it’s important for people to understand that aging does not mean cognitive decline by any sense of the imagination. But for people who experience it, they’re at much greater risk. And I can say that it doesn’t just happen to older people because if it just happened to older people, then there might be something to say about vulnerability associated with aging. But these criminals know no demographic bounds. They’re targeting everybody.
And when you see our reaction, because we’ve assumed for so long that it’s only happening to older people and they’re in cognitive decline, it means that we can say it’s never going to happen to us. I think that’s changing now, though. We’re seeing so much more coverage in the media about fraud, how sophisticated the crimes are. We did a survey that we put out in May, a nationally represented survey, and 42%, I think it was, of people have actually experienced fraud themselves, whether money or sensitive personal information was stolen from them. Ninety-one percent worry about fraud. That is a huge finding. Our biggest worry is becoming a victim ourselves. So, I think there’s some good news, bad news there. The bad news is fraud is everywhere, and we’re scared about it. And the good news is we’re scared about it and maybe that means that we’re going to act to do some things that are more protective to stay away from the attack.
Arnott: You mentioned Chinese mobs as some of the biggest perpetrators of these crimes. Are there any other generalizations you could make about who is conducting and benefiting from these types of frauds?
Stokes: Well, a lot of it is driven by these transnational criminal enterprises, whether it’s in Myanmar or Cambodia or India or Africa or Costa Rica or Canada. But there are a lot of people on the ground in the United States that are aiding and abetting these criminals. So, when you get the rote reaction from law enforcement that, well, they’re overseas, we can’t do anything anyway. That’s a shortsighted response because there are a heck of a lot of people on the ground here that you can pick up and give real prison time to begin to disrupt that fraud business model.
Benz: I wanted to follow up on Amy’s question about who is most vulnerable to some of these investment-related frauds. I had seen some research several years ago that pointed to actually somewhat sophisticated investors, like not absolute novices or sometimes vulnerable in a way that novices were not. Have you seen any data on that, on the individual’s perceived level of sophistication and how that might interplay with susceptibility to investment fraud?
Stokes: Yes, I remember AARP being involved in some of that research before I came on board in 2016, 2017, somewhere around there. And I do recall that the research suggested it was people who had more knowledge of investing and maybe there was a false sense of security, like when we hear about when there are car accidents—most of them happen within five miles of our home. Because we’re comfortable, we’re used to being in that space and we might just take our eye off the ball or something when we’re driving. Maybe it’s similar to the sophisticated investor who really believes in their own skills.
Arnott: It seems like some of the areas that are hot spots for investment-related fraud are precious metals, coins, and commodities. Could you talk a little bit more about why those areas seem to be more commonly used as part of these crimes?
Stokes: Well, I don’t know that we’ve done research on it, but we can make some broad assumptions and one of them is with cryptocurrency being so hot, it’s something, again, that the criminals are able to take advantage of. Not a lot of knowledge about it to make people believe basically anything about investing in it. But you also see the precious metals and whatnot. And I hear that the criminals will use anything that seems to work. And in the case of precious metals, I understand that some of the criminal gangs were using precious metals to get away from crypto because they felt people might be catching on. So, I think it’s really just opportunity. It might be a little to do with current sentiment in the United States of a lack of trust in government. So maybe that leads to a lack of trust in the economic system. And maybe that’s some of the strings that these criminals are pulling.
Benz: Are there any areas of the investment landscape that you’re keeping an eye on that have not emerged as really key investment fraud areas currently but may become so in the future? Any emerging problem spots?
Stokes: Well, it occurs to me that I think we’re going to see what we’re seeing in the banking industry right now happen more in the investment advisory space of impersonations. We can talk about that. I also think that certain insurance products are probably ripe once the criminals catch on that people are holding onto a lot of wealth in an insurance plan that they’re going to go after that as well.
Arnott: So, you mentioned investment advisory impersonations. Can you talk a little bit more about what that is and what it involves?
Stokes: Well, I can tell you what’s happening right now in banking. One of the hottest frauds out there is the bank impersonation scam where you get an email. We’re all probably used to getting the email from our bank saying, can you confirm this transaction was yours? And these come from your bank. So, if I’m with Bank of America, it will say Bank of America. This transaction, is it yours. Why? For yes and for no. Your immediate reaction is wait, that’s not my transaction. You’re reacting emotionally. You click no. And the next thing that happens, which never happens in real life, but the next thing that happens with this crime is you get a phone call. And it’s Bank of America fraud investigations. And they have enough information about your account. The call comes in with the number from the bank that you’re accustomed to. And they are telling you that your account is actively being hacked. But don’t worry, we’re going to help you. And it becomes a very complex scheme, but it ends up where the criminals make the accountholder believe that they have to keep their money safe by moving the money somewhere. And then it turns out that that somewhere means into the criminal’s pocket, and they are completely wiped out. They call their bank the next day or later that day because they’re worried about it. And the bank’s like, what are you talking about? That wasn’t us. I can see that happening in the advisory space as well.
Benz: I wanted to follow up on that. Your group has put together a lot of great resources to help people do their due diligence. If someone is purporting to be an investment advisor, steps they should take to check up on that individual’s legitimacy. Can you walk through the key things? So, for consumers who might be listening, and you want to make sure that an advisor is legit, what should you be looking for?
Stokes: You’ve got to do your research. There are tools out there. If someone is purporting to be an advisor, find out if they really are. If they’re a broker, go to brokercheck.finra.org. Finra is the body that regulates the brokerage industry. You can look them up. If it’s an investment advisor, there’s also really great resources from the Securities and Exchange Commission. I think the easiest way to get those resources is just go to investor.gov. That is the site for investor education and resources from the Securities and Exchange Commission. You can look up investment advisors there as well. But use those sources.
Most of these people that are in this game are not registered. So that’s your first big flag. But it’s also important to take that step back. Every time there’s one of these crimes, it’s because the person is being forced, being pressured into acting quickly. You don’t have that chance to step back and hang up the phone, talk to somebody, resist that demand. But if we could just remind ourselves that right now in this world, communications coming into us really can’t be trusted. So, picking up a phone call and it ends up being someone allegedly a broker trying to sell an investment opportunity. I know this is going to not sound great to the investment community that’s trying to do this, but don’t trust it. Can’t trust those incoming calls right now.
Arnott: I think that’s a great point that anything that you’re receiving from a call or an email or a text, you have to automatically be skeptical, even if it looks like it’s a legitimate communication. So, if we go back to the example of you receive a text or an email from your bank that appears to be legitimate, saying your account has been hacked, your card has been stolen, what would be the best approach to take to handle that? Instead of engaging with the email or the text, would you want to call your bank directly using the number on your debit card?
Stokes: Exactly. So, if it is card related, flip that card over and call that number. Even if it looks like it’s coming from that number, it’s so easily spoofed is the term they use. So don’t trust the number as an indicator of legitimacy. Anytime you get a contact email, text, voice, and it’s from somebody that you do do business with, don’t engage with it. You can’t know for sure that that’s Amazon or that that’s Bank of America. If you have an account, an online account with any of these companies that are potentially trying to be impersonated, go to that account. If it’s a website, login. If it’s an app, login. If you have a relationship by phone, you know what the number is, go find it off your account paperwork. But just don’t trust those incoming communications right now.
Benz: It seems like the financial-services firms, the legitimate financial-services firms, have really tried to get their client-facing personnel to be cognizant of these issues and to work with clients to help them navigate. Do you feel like those efforts have gone far enough on the part of banks and investment institutions to help protect consumers from falling prey to some of these nefarious actors?
Stokes: It’s really hard to make a blanket statement. I know of banks and financial advisors that work really, really hard to educate people on the signs that somebody may be making decisions under duress, made to believe something that isn’t true. And sometimes you get someone who is under this ether, as you say, and they are made to believe that you can’t trust anybody at your bank. You can’t trust your financial advisory firm. You can only trust the person on the phone. So even if the front-line employee picks up on something, they may have a really hard time because that victim really believes what’s happening is real and that you may be as the bank employee trying to deceive them. It’s a hard thing. Social engineering is a hard thing to combat. But education is key of the bank employees. AARP does have a program, it’s called BankSafe. And it’s educational to get those front-line employees to see what the signs are that somebody is being exploited or deceived.
Arnott: It seems like one good rule of thumb might be to only do business with established providers, Fidelity, Vanguard, Morgan Stanley, and so on. But are there also instances where a fraud has been perpetrated by someone claiming to be from one of those big firms?
Stokes: It’s what I mentioned before as maybe the next vector. I don’t hear of that now, but I don’t think it’s not happening. If it’s working at the bank level, it certainly could be an impersonation at the financial advisory firm level. And certainly, criminals are getting people who have those advisory accounts to withdraw the money. So, a lot of that is happening. And I think the advisors have a little bit more tools at their disposal. The trusted contact is more common in the advisory firms than the banks. The recognition that if this money is leaving their advisory account to go into a bank account that there’s a threat there and they can put a pause on the funds while they’re trying to figure out what’s going on. So yeah, I think any vector where there’s money and lots of it, the criminals are following.
Benz: I wanted to ask about older adults who really are enthusiastic about managing their own portfolios. And these are a lot of individuals we have on Morningstar.com. They’re really active, engaged individual investors. How should they protect themselves and maybe decide to not be a DIY investor? What are the signals they should look for to make sure that they are putting in safeguards against investment-related fraud?
Stokes: I think anybody should be thinking about the things they can do if down the road they do experience some cognitive impairment and have those protections in place. AARP sponsored a project. And if you go to thinkingaheadroadmap.org, you’ll find this really well-thought-out guide on how to choose a financial power of attorney. And it’s geared to people who are younger-older who are thinking down the road and knowing that they want the protections of health directors and powers of attorney and things like that. So, I think all of us should be thinking about that sooner than later. And the trusted contact is really important. You can do that with your financial advisor. Banks may not offer it, but you can ask for it. A lot of people think that if I’m putting a trusted contact on my account, that means they’re going to have access to my money. And that’s not the case at all. It’s having that other person to call if my financial advisor or my bank can’t reach me. Maybe I’m in Tahiti and I didn’t tell them about it. And so, they can call someone who I trust. Or if they think that someone is trying to deceive me to steal my money, they can call that person in and help me understand what might be happening.
Arnott: So, it sounds like that might be something that an adult child might be able to use to help protect their parents, to talk to their parents about getting themselves listed as a trusted contact.
Stokes: Yes. And it doesn’t always have to be a child. It could be a friend. It could be a niece or a nephew, the person that you would trust the most with your financial decision-making.
Benz: I wanted to ask about the role of government in all this. Do you see the growth in investment fraud as a failure of laws and regulation? And if so, are there any obvious adjustments that should be made in your view, in AARP’s view, to help protect older adults?
Stokes: Well, I’m not sure it’s necessarily about laws and regulations per se. And that’s really the domain of our government affairs group anyway. But I would say that this massive growth of fraud lacks any really meaningful law enforcement response right now. We’re just not up to the task from a law enforcement perspective to fight this threat. And there are a lot of valid reasons: under-resourced, people not even understanding that this is a crime. And what I really am looking for myself and what I’m trying to get support for broadly is a new way of helping law enforcement, federal law enforcement, be able to tie these seemingly disparate cases together. So, in the scam world, a big one is the grandparent scam where you get that call in the middle of the night and it’s your grandson, Mikey, and he’s gotten himself into real trouble with a DUI and an accident and he needs your help right away. That’s not just happening in one county at one time. It’s happening all over the country. And if you had the resources to tie those cases together, instead of being singular $9,000 or $10,000 theft cases, they get tied together to the common perpetrator, and there are millions of dollars of cases. And that helps to bring the FBI into this because it meets their thresholds. And if you have those cases already pulled together, then that helps them on their work. Instead of them starting at level one, they’re like at level eight and they go out and put the bad guys in prison.
And there’s an initiative afoot now to focus just like this on elder fraud. And you probably will see something launch in the fall. It’s called the National Elder Fraud Coordination Center. And it’s to do just this—starting with elder fraud because that’s where the massive losses are. And maybe recognizing that all fraud is conducted by all the same criminal organization. So, getting them on elder fraud is going to also pull them away from fraud targeting other demographics.
Arnott: I was looking at the AARP site in preparation for this call and it looks like there’s a page where you can put in your Zip code and see reports of frauds that people have reported within a certain distance of where you’re located. But is there also an area where you can go to report fraud on the AARP site?
Stokes: What you’re talking about is our scam map and the quick shortcut to that is aarp.org/scammap. You can report there as well as look and see what’s being reported in your geography. But we also have a national helpline. It’s called the Fraud Watch Network Helpline. You don’t have to be an AARP member. You don’t have to be of a certain age. If you want to report a scam that you didn’t interact with, but you want to make sure people know about it, you give us a call and we’ll share that with Federal Trade Commission. If you’re not sure that that letter from the Publishers Clearing House is legit or not, give us a call. And if you’ve experienced fraud, or a loved one is in the midst of something and you’re trying to get them to break out of that ether, call that number. We have live specialists, probably about 200 of them around the country that will talk to you about what’s happening. And that number is 877-908-3360.
Benz: A related question, Kathy, is if I see an email come through that seems to be like a phishing scheme or something, I’ll usually report that. But what sort of formal steps should I take when I see things come through my transom to make sure that whatever is happening is getting reported correctly?
Stokes: It’s important, if you get a text that’s clearly it’s a scam attempt, of course, you don’t want to engage with it. But at least with Apple iPhones right now, you should get a prompt that says this caller, or this number isn’t in your list, report it. And you say, “report it,” and then you can pick one—a half a dozen options like it’s political spam, or it’s general spam, or it’s a scam attempt. And click the scam attempt—whatever the terminology, it isn’t quite that—but they, in real time, the companies behind texting, can add that information into their algorithms to be able to stop those attacks from hitting other people. It’s pretty cool to be able to do that. So reporting is important.
And if you actually experienced theft, whether it was information or money, the first place to go, if it’s money, is to contact your bank if they’re involved in it, in the transaction in any way and see if there’s anything they can do to help you recover the funds or stop the funds from getting to their final destination. But call the police. You want to have a police report. The response by law enforcement is a bit uneven around the country. I think there’s a growing recognition that this is a crime, and you should at least allow someone to file a police report. But I’m thinking even if they’re not going to be able to do much to help you, you have now a record of what happened. And maybe that can be used down the road if there’s an opportunity for restitution, whether it’s a state-level fund, a federal fund. Some people may find that their homeowners insurance covers financial loss like this.
Arnott: You also mentioned the FBI getting involved in some of these bigger frauds and larger criminal organizations. How do frauds typically get surfaced to that level?
Stokes: There’s a reporting portal right to the FBI. It’s the Internet Crime Complaint Center, or IC3.gov, and reporting it in there—make sure that it’s in the FBI database. If you’ve had a significant loss to you, though, if the theft is affecting your life, report it there, but then print that and find the closest FBI office and walk in there and say, “I need help.” And that report will help them be able to pull it up and see what they can do to help you out there.
Benz: You and your team have mounted a campaign to change the narrative about how we talk about fraud victims. And I’ve even noticed at the outset of the conversation, you said, no, it’s not a scam, it’s a crime. So, things like that. What was the old narrative and what’s a better way to discuss victims of fraud?
Stokes: We have this societal tendency to blame the fraud victim: “Oh my God, I can’t believe you fell for that.” Or, “How could they be so stupid? That was clearly a scam.” Or using the words that “they were tricked,” or “they were duped,” or “they were swindled,” “they fell for it.” When we say those words, we’re essentially blaming the victim by saying there was something you didn’t know or something you didn’t do that made you a victim of this. And we don’t even see it as a crime. We’re starting to a lot more. But our focus is wrong. It should be on the perpetrators. It should be on these transnational criminal enterprises and the money launderers and the money movers that are behind all of this and treat it for the crime that it is because we’ve allowed ourselves to just believe it only happens to older people and it’s because of cognitive decline that it will never happen to me, we’ve deprioritized fraud as a crime. And I would submit that the largest crime happening in this country today is fraud.
Arnott: As you’ve been in your role, are there things that you’ve changed about how you handle your own finances or steps that you’ve taken to avoid these types of crimes?
Stokes: I feel that I’m pretty well prepared because I know what to look for. And it’s more than anything, it’s that emotional reaction that they’re trying to get. But that doesn’t necessarily mean that I’m going to catch everything. But the really important piece of information in all of this is that education does matter. We can’t educate our way out of this crime. But if you know about a specific fraud scheme, like we talked about the grandparent scam or investment fraud or things like that, there’s data that shows you’re 80% less likely to engage with that fraud attempt. So, knowledge really is power here.
Benz: Well, Kathy, this has been really eye-opening and such a worthwhile conversation. Thank you so much for being with us to share your insights today.
Stokes: Well, thank you for having me. I really appreciate it.
Arnott: Thanks again, Kathy.
Benz: Thank you for joining us on The Long View. If you could, please take a moment to subscribe to and rate the podcast on Apple, Spotify, or wherever you get your podcasts.
You can follow me on social media @Christine_Benz on X or at Christine Benz on LinkedIn.
Arnott: And at Amy Arnott on LinkedIn.
Benz: George Castady is our engineer for the podcast and Kari Greczek produces the show notes each week.
Finally, we’d love to get your feedback. If you have a comment or a guest idea, please email us at TheLongView@Morningstar.com. Until next time, thanks for joining us.
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