How Do I Get Restitution?

When we talk about frauds, we use a mix of different terms. At SAFE we often speak of “elder fraud,” a type of fraud defined by the age of the victim. We also talk about varieties of fraud, like romance scams or lottery scams - defined by the story or "pitch" the perpetrator relies on. And occasionally, we even talk about fraud statutes, like mail fraud, wire fraud, or securities fraud.

But no matter what words you use to describe it, all fraud boils down to a single act: lying for money.

This raises an uncomfortable question. Even when the perpetrators are brought to justice, do the victims get their money back? Unfortunately, not often. A 2018 Government Accountability Office report concluded that federal authorities collected as little as 1% of all restitution ordered between 2014 and 2016, an absolutely staggering statistic.

A couple of caveats: This statistic applies to all federal crimes, not just frauds, let alone the narrower category of elder fraud. Also, this statistic reflects restitution in cases in which a perpetrator was criminally charged, arrested, convicted, and sentenced – it doesn’t include the innumerable cases that don’t find their way to court. But it does help quantify the thing that most prosecutors, law enforcement, and defense attorneys know from experience: Our justice system is remarkably bad at delivering restitution to crime victims.

What does this mean for elder fraud? According to the Federal Trade Commission 2019-20 Protecting Older Consumers report, over $440 million have been lost annually in fraud for victims over 60. So each year, hundreds of millions of dollars are taken from older adults – and are never paid back.

But the results can vary depending on each case. For instance, if the perpetrator has a family or fiduciary relationship to the victim – e.g., children, estate attorney, or an asset manager – the stolen sums will be more accessible and potentially easier to recover. If your perpetrator belongs to a professional association – say, a lawyer or doctor – you may be able to approach the State Bar or Medical Board for help. But restitution becomes harder if the underlying transaction was harder to trace. For instance, if it was made in cash or digital currency, or if it involved a cross-border transaction.

Although it is a few years old, this Elder Financial Abuse Restitution Guide from the California Advocates for Nursing Home Reform provides some excellent practical advice on how victims can try to recover their money. Residents of other states may be able to apply some of CANHR’s insights to their own situation.

Elder Fraud, Race & Ethnicity

Recently SAFE analyzed the annual Federal Trade Commission (FTC) “Protecting Older Consumer” reports between 2017 to 2022, using a word count analysis to identify critical trends. One of the more interesting trends is that the FTC has increasingly incorporated race and ethnicity into its analysis of elder fraud.

When assessing the actual costs and trends in financial exploitation, the identity of the victim, including their race and ethnicity, matters. Older adults of color can be more susceptible to fraud for several reasons, including but not limited to a lack of access to anti-fraud tools, low financial resiliency, and sparse education on the matter. To ignore race and ethnicity is to ignore the true impact and on-the-ground reality of elder fraud.

Recognizing the importance of fraud victims’ race and ethnicity, the FTC has increasingly reported on the racial and ethnic dynamics of elder fraud. The FTC’s debut 2017-18 report utilized the language of “Black,” “Latino,” “AAPI”, and “Spanish” sparingly. In subsequent years, references to ethnic identifiers increased but notably rose within the 2020-21 and 2021-22 reports, exponentially increasing references to AAPI, Latino, and Black/African-American victims, as depicted in the chart below. In focusing on these racial and ethnic categories, the FTC managed to open up insights into how different types of fraud impact different communities. For example, Black older adults are less likely to be victims of Romance scams, according to FTC data. AAPI older adults are more likely to be victims of Government Imposters and Investment Scams, according to FTC data.

At SAFE, we commend the FTC for conducting this critical analysis, but it cannot stop there. The FTC should use these insights to adjust its enforcement practices too. In particular, the FTC should consider focusing its enforcement resources on frauds and scams that disparately affect racial and ethnic minorities, who can be among society’s most vulnerable.

Although more research is to be had, this new language has created optimism for the future visibility of the range of victims. We hope this language can make more precise predictions to complement pre-existing information. More posts will come to evaluate future FTC reporting. Stay tuned!

Breaking Up with Romance Scams

In December, we announced our collaboration with Good Judgment, the forecasting firm.

Research shows that the aggregation of many independent predictions – the so-called “wisdom of crowds” – can forecast future events better than any one individual’s assessment. Operating on this premise, Good Judgment has brought together hundreds of individual predictors on its massive open online forum, and frequently asks them to collectively predict social and geopolitical trends.

In December, SAFE asked this group of predictors to assess whether the three costliest elder fraud scams would continue to increase. And if so, by how much.

The results surprised us . . . to some extent. Good Judgment's forecasters predicted that the three top elder fraud scams -- as measured by total aggregate monetary loss (Investment Scams, Business Imposters, and Romance Scams) -- would result in increasingly large monetary losses. But interestingly, the forecasters predicted that losses from Romance Scams would increase at a slower rate. This means that in the FTC's 2022-23 report, Investment Scams and Business Imposters would be expected to surpass Romance Scams as the costliest of elder frauds.

There is a silver lining here. Just in time for Valentine's Day, Romance Scams could be on the wane, at least compared to other forms of elder fraud. And if there is anything we don't love, it's the scam artists who use the promise of affection to prey on older adults! Still, the overall trend is concerning. Losses from elder fraud will continue to increase in the coming years, and that should concern us all.

Here is the chart that traces Good Judgment's predictions:

Here is a little more detail from our recent intelligence bulletin:

According to forecasters, the losses attributable to business imposters and investment scams are likely to accelerate, while the losses attributable to romance scams will increase but at a slower rate than in past years. In particular, 98% of forecasters predicted investment scams would result in losses of at least $147M in 2022, with 55% predicting losses between $304M and $460M. Similarly, 99% of forecasters predicted business imposter scams would result in losses of at least $151M in 2022, with 78% predicting losses between $252M and $353M. By slight contrast, 95% of forecasters predicted romance scams would exceed $213M, with 64% predicting losses between $213M and $270M. Of note, these predictions suggest that both business imposter and investment scams will surpass romance scams (2021’s costliest fraud) in the FTC’s 2022-23 report on Protecting Older Consumers.

SAFE regards these results as largely confirmatory of current trends in the fraudulent narratives that fraudsters most often use. SAFE agrees that fraudsters will continue to use these three fraud types in attempts to prey upon older adults. SAFE cautions that while the rate of increase in monetary loss attributable to romance scams may slow, romance scams will remain one of the costliest, most prevalent, and most emotionally pernicious forms of elder fraud

Because prevailing fraudulent narratives are likely to remain broadly constant, SAFE recommends: Law enforcement agencies and advocates in the aging space should focus their energies on understanding the new and emerging media and other technologies that fraudsters use in perpetrating these common fraud types. Questions should include whether perpetrators are channeling their outreach to victims through mail, telephone, text, email, chat, or some other media. Questions should also include whether perpetrators have begun to leverage artificial intelligence, automated language translation, or other emerging technologies to enhance the credibility of the underlying narratives.