Protect yourself against financial fraud during the pandemic

Thomas Schultz

March 16, 2021

Financial fraud is increasing, and it is affecting consumers and businesses alike. Learn how you can protect yourself from online fraudsters.

Fraud is rising at an alarming rate. Scammers are quick to leverage the latest technologies to deceive consumers and are becoming more creative and sophisticated with their deceptions.

In addition, COVID-19 has played a significant role in the dramatic growth in scams and fraudulent activity. The pandemic has resulted in varying degrees of challenges for consumers and businesses. Unfortunately, fraudsters have created a number of challenges by leveraging the pandemic to perpetrate their schemes.


Financial fraud targeting elders

Elders are often the targets of scams and financial fraud. They could be particularly vulnerable during the pandemic as they may be isolated from regular contact with caregivers, friends and family who might otherwise be able to identify suspicious activity and raise red flags. In addition, prolonged isolation may be a source of stress that can impair an elder’s judgement and cause them to behave uncharacteristically when asked for money.

However, it’s not just strangers perpetrating financial elder fraud. According to the American Association of Retired Persons, 51% of financial elder fraud cases were committed by strangers and 36% by acquaintances, including fiduciaries and family members.

Scammers may offer to help run errands and perform tasks around the house for an older person, but instead of performing the job or service, they disappear with the money. Telephone scams are also commonly used to target elderly people, with the caller claiming a loved one urgently needs money to pay a medical bill, return from a foreign country, or to pay off a debt.

Sometimes, a caretaker may commit fraud by exaggerating expenses (e.g., vehicle mileage, groceries, medication and service fees) to support a gambling addiction or a substance abuse problem, or to maintain a lifestyle that is beyond their means.

Financial exploitation of older people is evolving with technology

Prior to the growth of email and social media, fraudsters were limited to scams involving face-to-face contact, the telephone and mail sent through the United States Postal Service. While these avenues for perpetrating fraud persist, fraudsters have shifted many of their tactics to digital platforms.

Given the rise of the internet and social media, email and digital banking platforms, fraudsters are no longer hindered by geography and can target older persons across the globe. Electronic fraud allows fraudsters to remain anonymous, which can make it difficult for loved ones and bank staff to detect and prevent fraud.

Common online fraud schemes include:    

  • Online romance scams―victims are lured in with the promise to meet in-person after travel expenses are paid
  • Digital account takeovers―credential phishing is executed through email or text messages
  • Rogue websites―fake websites targeted at the elderly population (e.g., funeral planning, medications) siphon credentials

Pandemic-related fraud

The COVID-19 pandemic has created a dynamic environment for fraudsters. Scams involving COVID-19 vaccines are occurring and involve phony websites and email campaigns designed to trick people into sending money, disclose personal information, or click on emails and websites that deliver computer malware onto the recipient’s computer or network.

Pandemic scams also include:

  • Fake charitable organizations seeking donations for pandemic-related causes
  • Scammers posing as legitimate medical or health organizations offering to sell hard-to-find medical supplies or products that claim to prevent, mitigate, treat, diagnose or cure COVID-19
  • Emails that look like legitimate business correspondence offering work-from-home opportunities
  • Correspondence from imposters claiming to represent government organizations that have information about COVID-19

Ultimately, the endgame for all fraudsters is to separate vulnerable persons from their funds and/or obtain their personally identifiable information.

A not so fun fact:
Between January 1, 2020 and February 8, 2021, the Federal Trade Commission (FTC) received over 28,000 reports of COVID-19 fraud schemes with $114 million in victim losses for individuals over the age of 50.

Recognizing the red flags

The persistence of fraudsters; the surge in social media, email and digital banking; and the continued impact of the pandemic has made it more challenging to protect older persons from financial fraud. As a result, we must remain vigilant in our awareness of the risks.

Red flags to look for include:

  • Uncharacteristic, unusual or unexplained withdrawals (large sums and/or increasingly frequent)
  • Sudden insufficient funds activity, reaching daily ATM withdrawal maximums or closing a certificate of deposit (CD) without regard for penalties
  • Nervous, fearful or submissive behavior when accompanied by another individual
  • New signatories added to an account, particularly non-family or distant relatives
  • Signatures that do not match previously obtained signatures
  • Others who constantly intervene and speak for the elder person
  • Reluctance or inability to explain account activity

Take action and prevent fraud

It is important to realize that fraud can happen at any time and any one of us can be targeted. Below are some things you can do to help prevent fraud:

  • Review all of your financial accounts (such as checking, savings and credit card accounts) to identify any unauthorized activity
  • Install reputable antivirus software on your computer and run scans regularly to identify and remove viruses
  • Use strong passwords with a mix of characters, avoid reusing passwords across multiple websites, and change passwords frequently, especially those affiliated with financial institutions and email accounts  

Action items to take if you are a victim of fraud

  • Notify applicable financial institutions immediately
  • Contact credit reporting agencies to request a fraud alert be placed on your file
  • Change your passwords, including those affiliated with financial institutions and email platforms
  • Change of passwords should be done on a clean device free of software

If you believe you or someone you know has been a victim of pandemic related  fraud, notify the Department of Justice National Center for Disaster Fraud and report any instances of identity theft to the Federal Trade Commission (FTC).

CASE STUDY: CIBC Private Wealth digital fraud controls

At CIBC Private Wealth, we work hard to protect the safety and security of our client accounts and have measures in place to detect fraudulent payment requests. A recent client story illustrates our process in action. A relationship manager received a message from a client’s email address requesting a large wire transfer to an account at another financial institution. The email said the wire was to pay an invoice for a purchase the client had recently made.

To verify the request, the relationship manager called the client, who said she had not sent the message and was surprised to learn her email account had been compromised. Someone with access to the client’s computer may have accessed her email, or a stranger may have been able to figure out her password and find the email address of her relationship manager. Through their conversation, the client was alerted to this fraudster and was able to take action to protect her digital accounts.

To learn more about common fraud schemes, please visit our Fraud Prevention page.

Tom Schultz has 20 years of experience within the fraud industry in both private and government sectors. He began his career investigating financial crimes for a financial institution and then moved on to conducting fraud and corruption investigations for a government agency prior to returning to the private sector. Since returning to the private sector, he has focused on building fraud risk management programs for financial institutions. He is currently responsible for leading the Fraud Risk Management Program for CIBC’s US Region.