Study Finds Senior Fraud Victims Tend to Be Overconfident

Category: Financial and taxes in retirement

December 8, 2012 — Researchers at DePaul University and the Rush University Medical Center think they have found the underlying reason for an alarming rise in fraud committed against our rapidly aging baby boom generation. The explanation often arises from “that combination of not knowing but thinking you know”, according to Keith Gamble, an assistant finance professor in DePaul’s Driehaus College of Business. In other words, overestimating what you think you know, to your detriment. There is a helpful summary of the “Overconfidence Linked to Senior Fraud” study over at the Financial Security Project at Boston College.

The researchers were trying to determine if declining cognitive abilities were behind the susceptibility to fraud, but were surprised to find that faultier decision making is more of the problem. Gamble said in the study that “They (seniors) are actually more confident in their financial decision-making capabilities. The problem is they don’t have the decision-making ability they once had.” In the study people were asked various questions about financial literacy, and then asked how confident they were about their answers. The folks who were most often victimized tended to be the ones who gave wrong answers and were the most confident they were correct.

Complaints of financial fraud compiled by the Federal Trade Commission surged to 1.5 million last year, an increase of more than 60 percent from a few years ago.


Some of the top frauds perpetrated against the elderly are: free financial seminars, unsolicited calls about financial products, too good to be true offers, power of attorney or advisor abuse, overcharged medical expenses, reverse mortgage offers.

For further reference:
Download the entire study from DePaul University.

Comments: Have you been the victim of financial fraud – or have you had a near-miss? Please share your experiences and thoughts in the Comments section below.

Posted by Admin on December 8th, 2012

3 Comments »

  1. I would add fraud by a building or remodeling contractor to the list.

    by Virginia — December 12, 2012

  2. went to a new dentist in Tampa, Florida. Was told my teeth needed extra cleaning for a $35 charge above insurance. But the worst was when I was told I needed two root canals and crowns. Neither of the teeth had been bothering me and when I asked if we could talk about just a filling, dentist became beligerent and demanded I book my appointment for root canals Went for a second opinion and found I don’t even have a cavity in either tooth!! Also the cleaning was so poorly done that I had to have it done over. Am now in touch with our dental insurance as this dentist was going to charge them as well as me for very expensive and health altering work that was not needed.

    by Jackie Loeper — December 12, 2012

  3. We have been defrauded twice by real estate rental agents hired to manage our apartment building. Both were absolutely facile liars about the rental market, real estate law, quality of tenant secured, amounts spent on repairs, missing property, and charges to tenants. When we discovered their activities and wished to terminated our agreements with them for cause, we were threatened with litigation, slander to our reputation, and blacklisting us in acquiring new tenants. Their treatement of our tenants and the property was no better. That is why we still manage our own rentals despite the fact that we would like to be retired.

    by Retta — December 12, 2012

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