You’ve Won…. or Have You Been Scammed? Marketing Company to Pay $150 Million for Facilitating Elder Fraud Schemes


Oldsters Fall Prey to Fake Sweepstakes, Astrologers and Other Scams

The nation’s elderly population is on the rise, and so are the incidences of elder fraud. According to a National Institutes of Health (NIH) report, one of every 18 “cognitively intact older adults” are the victims of financial fraud or scams each year in the U.S.

Earlier this year, marketing giant Epsilon Data Management LLC entered into a $150 million settlement with the Department of Justice (DOJ) and the U.S. Attorney’s Office for the District of Colorado. As part of the agreement, Epsilon admitted that from July 2008 through July 17, it knowingly sold more than 30 million elderly and otherwise vulnerable customers’ data to legitimate clients, along with some mass-mailing fraudsters. The scammers then sent fake sweepstakes and astrology solicitations to the victims, telling them that they had won a large prize or individualized psychic service that they could obtain for a price. Those who paid the fee “received nothing of value,” according to the DOJ.

According to court documents, Epsilon’s employees persisted in selling the data to clients who were engaged in fraud, despite knowing that these clients had been arrested, charged with crimes, and convicted of false and misleading practices. Under the settlement, Epsilon must select and cover the costs of an independent claims administrator, who will distribute $127.5 million to identified victims with confirmed losses caused by the scheme. Epsilon agreed to take steps to protect consumer data and prevent its sale to fraudulent or deceptive marketing campaigns.

According to research by the Stanford Center on Longevity and the Financial Industry Regulatory Authority’s Investor Education Foundation, people age 65 or older are more likely to have been duped in a financial scam than someone 20 years younger. Older adults are often targeted “because they are believed to be more trusting, be socially isolated, and have more assets to exploit,” researchers found. The National Adult Protective Services Association (NAPSA) estimates that only one in 44 financial fraud victims report what has happened to them, perhaps out of embarrassment or concern that their children will want to take control of their finances. Fraudsters are often hard to identify because they use many of the same persuasion tactics that legitimate businesses use, tend to operate overseas, and utilize a variety of methods to transfer and hide the money they acquire from their trusting targets.

According to the Stanford Center for Longevity, there is no typical fraud victim, and different people fall for different types of scams. However, the elderly are frequent targets of lottery and sweepstakes scams, home repair con men, online dating sites, predatory lenders, identity theft, internet phishing and IRS imposters. One MetLife study concluded women are more likely than men to fall victim, perhaps because they frequently outlive men and may not have the financial knowledge to identify a fraudster. The “typical” elder fraud victim is a white woman between the ages of 70 and 89 who is lonely, isolated or suffers from cognitive impairment.

Organizations and government agencies are taking steps to spot and stop elder financial fraud and abuse:

  • The AARP offers an online Fraud Resource Center that provides tips about how to spot and avoid common scams.
  • The National Elder Fraud Hotline counsels fraud victims age 60 and older seven days a week.
  • In February 2021, U.S. Senators Amy Klobuchar, D-Minn., and Susan Collins, R-Maine, reintroduced (for the third time) The Seniors Fraud Prevention Act, legislation intended to curb fraud targeting seniors.

Elder fraud schemes are not taken lightly by the U.S. Postal Inspection Service, which investigated the Epsilon case.

“Postal inspectors have always held consumer protection as a core tenet of our efforts to ensure the integrity of the U.S. Mail, said Deputy Chief Postal Inspector Craig Goldberg. “When data firms such as Epsilon use their extraordinary access to consumers’ personal information to provide laser-focused marketing lists supporting deceptive practices, more American consumers are placed in harm’s way. Firms that amass big data assume a big responsibility to ensure this data is not used by malicious actors. If you cater to criminals who are exploiting Americans through the U.S. Mail, Postal Inspectors are coming for you,” he said

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