Senior crypto scams are on the rise

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Cryptocurrency scams involving seniors are on the rise, with the FBI reporting that victims of seniors lost over $1 billion last year. Seniors have long been easy targets of financial abuse; Abundant data shows that older Americans hold much of this country’s wealth and are particularly susceptible to falling for phishing and other online scams due to their confident nature and lack of fraud prevention awareness. Not to mention, many are also hesitant to seek advice or help from family members, as they fear that their family will restrict their financial independence.

Combined, these factors and more create the perfect storm, especially for scams involving cryptocurrency investments. According to a study by the US Department of Justice, over 3,000 seniors have fallen victim to cryptocurrency scams. The most common of these scams usually start with advertisements on social media, such as Facebook, featuring individuals with incredible success stories of how they have gained great wealth by investing in cryptocurrency, such as stated in a recent Bankless Times article. These so-called success stories usually turn out to be Ponzi schemes.

Red flags

In her Bankless Times report, Emily Sherlock outlines five red flags of potential senior citizen fraud involving crypto, which estate planners and financial advisors might want to watch out for:

An elderly client who opens an account in a crypto asset exchange (and begins making transfers to an associated crypto wallet), despite having minimal or no knowledge of cryptocurrency; An elderly customer who begins to use their debit or credit card to make frequent and/or high-value purchases of crypto assets; An elderly client finances his purchase of crypto assets with substantial savings from a retirement account; An elderly customer begins making large cash withdrawals from his bank account and indicates that he intends to deposit the funds into a bitcoin ATM; or A caregiver of an elderly client begins trading crypto assets in inexplicably large amounts that seem beyond the means of the caregivers.

Notify customers

Although crypto investment scams are the most common, other scams involving digital currency should not be overlooked. A recent case in Alabama involved targeted pop-up ads on a computer that fraudulently instructed the victim to contact customer service regarding an issue with their Apple account. A representative of the scammer then asked the victim to withdraw $20,000 to take to the bitcoin machine to fix a problem with his account. Alerted citizens spotted the victim depositing the large sum of money and the police were able to intervene. A similar scam in Connecticut involved withdrawing $60,000 and converting it to bitcoin. A quick Google search shows that cases like these are on the rise across the country.

Proactive practitioners can help protect older clients by warning them to be skeptical of unsolicited too-good-to-be-true crypto investment opportunities and some of the common modus operandi of these scams.

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