Why Older Adults Become Fraud Victims More Often

http://www.sciencedaily.com/releases/2012/12/121203163430.htm

ScienceDaily (Dec. 3, 2012) — Why are older people especially vulnerable to becoming victims of fraud? A new UCLA study indicates that an important clue may lie in a particular region of the brain that influences the ability to discern who is honest and who is trying to deceive us.

Older people, more than younger adults, may fail to interpret an untrustworthy face as potentially dishonest, the study shows. The reason for this, the UCLA life scientists found, seems to be that a brain region called the anterior insula, which is linked to disgust and is important for discerning untrustworthy faces, is less active in older adults.

"The consequences of misplaced trust for older adults are severe," said Shelley E. Taylor, a distinguished professor of psychology at UCLA and senior author of the new research, which appears Dec. 3 in the journal Proceedings of the National Academy of Sciences (PNAS). "A recent study estimates that adults over age 60 lost at least $2.9 billion in 2010 to financial exploitation, ranging from home repair scams to complex financial swindles. This figure represents a 12 percent increase from 2008.

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The prototypical victim of financial fraud, Taylor said, is a 55-year-old male who is an experienced investor.

"It's people with money, who are comfortable with investing," Taylor said. "Somehow they didn't get the early warning from their brain that said 'Don't invest in that movie, don't buy that land.' The financial losses can be huge."

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What advice does Taylor offer older adults to avoid becoming victims of financial fraud?

"I would tell older adults to just hang up on solicitors. Don't talk to salesmen pushing investments -- just say no. Do not go to the free lunch seminars where there are investment pitches. Stay away from these people," she said. "I'm not saying that all of these are fraudulent, but the best thing that you can do if your brain isn't helping you to make these discriminations is not to have to make them. Be very careful what you do with your money. I don't talk to any solicitors on the phone."

A pivotal point is when people take money from their 401(k) accounts, including when they take required distributions, starting at age 70-and-a-half.

"That's when older adults tend to be targeted -- 401(k) conversions, required minimum distributions and inheritances," Taylor said. "These are points when people need to be wary, and many older adults are insufficiently wary."

What does an untrustworthy face look like?

"The smile is insincere, the eye contact is off; it's a gestalt," Taylor said.