Fraud investigators have puzzled for years about why older folks seem more vulnerable to telemarketing scams than young people.
New research could offer a partial explanation: Older people's brains may be less likely to pick up on the "red flags" in a telemarketer's pitch.
At least that's the conclusion of neuropsychologist Stacey Wood, an assistant professor and researcher at Scripps College. Wood, who studies how our brains change as we age, was prompted to research the subject after her own, highly educated uncle -- a Georgetown University-trained attorney -- fell victim to a common telemarketing scam.
More on her results in a minute. First, you should understand that, contrary to popular belief, older folks aren't necessarily more vulnerable to all fraud than younger people. It's just that the type of frauds they fall for tend to be different:
- A 2004 Federal Trade Commission study of 2,500 consumers found fraud-victimization rates actually dropped with age, with 11% of those 25 to 44 reporting that they'd been scammed, compared to 5% of those over 65. When the FTC controlled for other factors, like marital status and income, older people turned out to be no more or less likely than younger people to become fraud victims.
- On the other hand, telemarketing scams seem more likely to target older Americans. A 1995 AARP study found half of the consumers targeted for such scams were 50 or older (an age group that comprises about 40% of the adult U.S. population), while a more recent report by the National Fraud Information Center showed 34% of those victimized were over 60 (an age group that comprises 23% of the adult population).
- An AARP study of a phone-based lottery scam where victims were induced to pay a fee to get supposed winnings found the vast majority of victims (71%) were 75 or older.
- Lottery-scam victims the AARP studied also were more likely to be female (65%) and low income (half had incomes under $30,000). The older folks who fell for a phone-based investment scam, by contrast, were more likely to be male (80%) and have higher incomes (half made more than $75,000).
The downside of an optimistic outlookFraud investigators often speculate that older folks are more vulnerable to telemarketing scams because they're more likely to be home to answer the phone and less likely to hang up on intrusive callers, perhaps from a fear of being impolite.
But Wood thinks there's an additional culprit: our own brains, which seem to process negative information differently as we age.
Wood and her researchers presented subjects with pictures that were positive (such as a bowl of ice cream), neutral (a hair dryer) and negative (a decomposing animal), then measured their brain reactions. Young people tended to have much stronger reactions to negative than positive pictures, but the older people's response to the two kinds of images was about the same.The older subjects' failure to respond more strongly to negative images backs up previous research showing older folks tend to be more positive and happy than younger people, Wood said.
But that tendency to accentuate the positive, combined with an unwillingness or inability to hang up on a telemarketer, can spell trouble.
Some of the effect could be cultural, Wood said -- the difference between the plucky greatest generation and the whiny, pessimistic baby boomers. But the fact that the responses seem to be hard-wired into the brain indicate this may be a natural consequence of aging.
Knowledge is powerThe AARP says it's had some success counteracting telemarketing scams by using what's known as the "reverse boiler room" approach: having peer counselors call potential and previous victims to warn them about the perils of telemarketing scams. AARP's studies show an educational approach succeeds in cutting the victims' response rate to telemarketing calls by about half.
What doesn't work well, the AARP found, are scare tactics or any approach that makes the older person feel like an idiot for having been victimized.
"Information must be provided in a way that reflects empathy for the victim -- the notion anyone can fall prey to telemarketing fraud and that the victim is not stupid for doing so," the AARP researchers concluded.
Otherwise, victims may try to rationalize away the situation by denying they've been had, or avoiding the subject altogether, which means they may not pay attention to a discussion of techniques to help them avoid future scams.
How to helpThe upshot? If you know someone who's been victimized by a telemarketing scam, or who may be vulnerable, consider the following approaches:
- Don't preach. Being negative or condescending increases the chances your message will be tuned out.
- Discuss the signs. Con artists often press victims to make a quick decision, citing some impending deadline. They often want credit card numbers or other personal information; seniors should be warned not to provide such information to anyone they don't know. The FTC has a pamphlet on telemarketing scams that discusses the various warning flags. AARP also offers information about spotting scams of all types.
- Talk about concrete coping strategies. Your friend or family member needs to know it's OK to hang up on telemarketers. If they've been repeatedly victimized, discuss the possibility of changing their phone number; scam artists trade "sucker lists" of prior victims, and the only way to get off may be to abandon the old number.
Liz Pulliam Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "Your Credit Score: Your Money & What's at Stake." Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.
Updated May 20, 2009