She lost $661,000 in the fraud.
In the spring of 2021, Marjorie Bloom waited for a phone call that would never come. She lost $661,000 in the fraud.
In the spring of 2021, Marjorie Bloom waited for a phone call that would never come.
Over the course of the previous month, the retiree had wired hundreds of thousands of dollars into cryptocurrency per the suggestion of someone she believed to be a trusted confidant. The man claimed to be a “fraud investigator” at PNC Bank, where she’d been a longtime customer.
At his behest, Bloom, a widow who is now 77, liquidated her nest egg — savings, stocks, an annuity — for a total of $661,000.
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The action was supposedly preventative: The “investigator” persuaded Bloom that criminals, using stolen personal data, were in the process of pilfering her life savings. He said that to protect her savings, she needed to do it quickly and covertly. He said that if she had alerted her family, she could have avoided this scam. Ester Bloom, Bloom’s daughter is the deputy managing director of CNBC Make It. Ester Bloom put CNBC into contact with her mother, but she was not involved in reporting or editing this story. The “investigator” was a wolf dressed as a sheep. Bloom, a retired civil service employee, fell victim to a “technical support” scam. The criminals convince victims that they have serious computer issues, such as a computer virus. They then pose as computer technicians for well-known companies to cover up the theft. They often convince victims to wire money to fraudulent accounts. On that Friday morning, Bloom waited for a phone call to get instructions on how she could access her life savings, which she had worked so hard to secure. She became increasingly nervous and called the “investigator.” His number had been disconnected. She called PNC, but the bank didn’t have a record of the employee.
“All of a sudden, this grayness lifted,” said Bloom, who lives in Chevy Chase, Maryland. “I realized that I’d been cheated out of everything. The money is there. The scammers know that’
Bloom’s experience reveals an unsettling reality at a time when technological advancement, little-understood investment options and a patchwork of protections in the U.S. financial system expose more older Americans to financial fraud.
Americans 60 and older lost $3.1 billion to cyber fraud in 2022, an 84% increase from 2021, according to the FBI. FBI data show that losses have increased nine-fold from $342m in 2017 to $3.1bn in 2022. Because fraud statistics are based only on reported incidents, its true scope may be far greater.
Older adults, many of whom have saved their entire careers for retirement, can have the most to lose. They may have additional sources of income or wealth, such as home equity, Social Security, pensions, and life insurance payouts, in addition to their retirement savings. The scammers are aware of this. “
Keithley — also the FBI’s national program coordinator for frauds and swindles — is not involved in the investigation of Bloom’s case.
Meanwhile, the U.S. is undergoing a massive demographic shift as an average of 10,000 baby boomers hit retirement age every day. This generation has shouldered more responsibility for their retirement preparations as employers began shifting away from pensions to 401(k)-type retirement plans decades ago.
Consumers ages 65 and older had an average of $232,710 in 401(k) plan savings in 2022, according to Vanguard Group, one of the nation’s largest retirement-plan administrators. Further, 65- to 74-year-olds had a net worth of more than $1.2 million, on average, in 2019, according to the Federal Reserve’s most recent Survey of Consumer Finances.
Fraud may deprive victims of funds for basic living expenses such as food and shelter, or for the travel and leisure they’d worked so hard to attain in their post-work life.
Beyond the immediate financial hit, fraud has several knock-on effects: Victims who raid their tax-preferred retirement funds may owe the IRS a hefty bill. Taking out a second mortgage or maxing out credit cards carry regular debt payments.
Older adults don’t have the same ability as younger victims to earn in the workforce, and it’s often challenging to recoup money from criminals or financial institutions.
“Most victims will say, ‘I’m devastated financially, I’m ruined,'” said Kathy Stokes, director of fraud prevention programs at AARP, an advocacy group for older adults. But emotionally, it can be just as bad if not even worse. The FBI says that these scams are “call center” frauds, which “overwhelmingly” target older adults. About half of people victimized by illegal call centers are 60 or older, and they experience 69% of the total financial losses relative to other age groups.
Nearly 18,000 Americans ages 60 and over reported being a victim of tech support scams in 2022, the FBI said. The FBI said that victims 60 and older suffered more losses than other age groups. FBI reported that the average victim lost $33,000 but losses could reach over $1 million. In Bloom’s case her computer suddenly froze on April 22, 2021. A popup window alerted her to call a customer support phone number listed on the screen,
supposedly for Microsoft.
Bloom then made a key mistake: She called the number, an action that real tech companies won’t ever ask of customers in a security pop-up warning.
During the call, a “Microsoft engineer” told her that foreign hackers had hijacked her computer and stolen sensitive personal data. He suggested that her financial accounts were at risk as well. The scammer told Bloom to move her money immediately into a new account. Her money had to be moved without delay to a new account, the scammer urged.
None of it was true.
“I fell for it,” said Bloom, who retired in December 2017 after serving 42 years as a federal attorney, including stints at the Department of Energy and, most recently, the Pension Benefit Guaranty Corporation.
“I didn’t tell anybody,” Bloom added.
The appearance of an immediate threat is an “age-old psychological technique” common in frauds that tends to be “more successful with the aging brain,” said Keithley of the FBI.
In this technique, known as an “amygdala hijack” in reference to the brain’s fear and threat response center, criminals trigger strong emotional reactions that overwhelm the rational part of our brains. We act rather than think, a classic fight-or-flight response — in this case induced by nefarious social engineers, often part of sophisticated organized crime networks.
Older adults tend to be home more often, use landline phones and be generally unsophisticated about technology and safe online behavior — all of which make them vulnerable and therefore frequent targets, Keithley said.
The Covid pandemic was a disproportionate threat to older adults, keeping Americans indoors and quickly pushing them online. The health emergency “ushered in a new wave of exploitative practices targeted at older Americans,” U.S. Attorney General Merrick Garland said in a 2022 report to Congress.
‘Somebody should have asked’ Marjorie Bloom on a trip to Vietnam in 2019, before she was defrauded. Bloom expects she’ll have to make sacrifices, such as traveling less, after she lost her life savings in the scam.
Bloom, an avid traveler, is undeniably tough. She trekked up Mount Everest in 2013, when she was 67. The base camp is at 18,000 feet. She had a panic episode five days into the trip. The right side of her was in severe pain. Bloom made five wire transfers in 28 days totaling $661,000 before she realized that she had been scammed. CNBC reviewed the receipts. Bloom also liquidated a large portion of an annuity that was worth over $200,000, which would have paid her $2,700 per month in guaranteed income for the next 30 years, beginning in 2023, if it had been left intact. It was what I planned to live off as a retired person. “
Hikers walk to Everest Base Camp in Nepal.
Kriangkrai Thitimakorn | Moment | Getty Images
When she discovered the loss, Bloom’s immediate thought was of her three kids: a “profound disappointment” at squandering the reserves she’d intended to bequeath them. Bloom wanted to provide her children with the same financial support that her parents provided to her. She said that much of the money was gone. Bloom continues to receive regular checks through a federal pension as well as Social Security. These are her primary sources of income for retirement. It’s enough to cover her mortgage, condo fee, car payment and other necessities — but the financial loss exposes Bloom to sacrifices nonetheless.
For one, she laments an inability to travel as frequently as she’d hoped in retirement. She is a member of the North Bethesda Camera Club and uses trips as an outlet for photography, a hobby that developed during her Everest expedition.
“I’m not starving,” Bloom said. “But I could have done a lot more
. I realized that everything had been stolen from me. I realized I had been defrauded of everything.
Bloom sued PNC Bank — where she’d been a customer for over a decade — in May 2022 for full financial restitution and other damages, such as interest and attorney’s fees.
In her lawsuit, Bloom argued that the fraud was ultimately successful because PNC ignored “obvious red flags” and “textbook evidence” of financial exploitation raised by her wire transfer requests, which were inconsistent with her typical pattern of banking.
According to the lawsuit, the bank didn’t take steps to investigate or determine whether her money was at risk. The lawsuit alleged that the bank breached their contractual duty of care and acted negligently. There’s no doubt. “
Someone should have asked,” added she.
In the District of Columbia, a federal court judge dismissed the negligence claim in February but allowed the breach of contract claim to proceed in court. Bloom and the bank settled their lawsuit in September. Bloom refused to reveal the terms of the settlement to CNBC. When asked about Bloom’s case and statements made against the bank, a spokesperson for PNC Bank declined to comment on the settlement.
Asked about the lawsuit in the spring the bank said it acted within the scope of its legal duty.
Sergio Flores/Bloomberg via Getty Images
“PNC maintains a comprehensive set of security controls to help protect our customers from increasingly sophisticated fraud threats. We do our best to recover funds on behalf impacted customers,” )
A spokesperson for PNC Bank declined comment on the settlement.
Asked about the lawsuit in the spring, the bank said it acted within the scope of its legal duty.
Sergio Flores/Bloomberg via Getty Images
“PNC maintains a comprehensive set of security controls to help protect our customers from increasingly sophisticated fraud threats and, when possible, we do our best to recover funds on behalf of impacted customers,” a spokesperson told CNBC, when asked about Bloom’s case and statements about the bank.
“While PNC regrets any losses incurred by a customer, we disagree with the allegations in this case and believe we acted appropriately with respect to these transactions,” the spokesperson added.
‘You’re basically at the mercy of your bank’
Lawsuits such as Bloom’s are rarely successful, legal experts said. Outcomes hinge on a complex web of federal and state rules that govern banking and elder financial fraud.
For instance, there’s a distinction between “unauthorized” and “authorized” banking transactions.[if I hadn’t lost money]Unauthorized transactions occur when criminals get hold of a customer’s personal information — a debit card number, let’s say — and buy something without approval. Customers are often reimbursed in such instances.
However, in Bloom’s case, she made the wire transfers. Sanchez-Adams says that customers who initiate transactions are considered to be “authorized”. They also receive weaker customer protections. It’s a fact. Somebody should have asked.
And there’s an additional tension: Banks and other financial institutions have to weigh issues such as consumer privacy when choosing to intervene, said Marve Ann Alaimo, a partner and elder law expert at Porter Wright Morris & Arthur.
If the bank reasonably does its best to protect a client and there’s still financial damage, it isn’t necessarily the bank’s fault, she said.
“We live in a free-market economy. And when you own something, you have the ultimate right to dispose of it as you wish,” Alaimo said, referring to money held in a financial account.
“There’s only so much protection a third party can provide for you,” she added. They “aren’t the ultimate arbiter for free will.” “[and]Cryptocurrency gives thieves ‘new advantages’
Meanwhile, Bloom’s money apparently went on a global tour.
Scammers had her wire funds from her PNC bank account to an account at the now-defunct Signature Bank in New York. The lawsuit claims that scammers used Bloom’s personal information and picture to create an account at the cryptocurrency trading platform Coinbase. The assets were then converted into cryptocurrency — a type of virtual asset — and, an investigation later showed, moved to offshore accounts on the Binance crypto trading platform in the Cayman Islands.
Thieves have successfully used crypto to steal increasing amounts of money across all types of internet scams, according to the FBI.
In this context, cryptocurrency — examples of which include bitcoin and ethereum — is like cash; it’s just another way to move money from Point A to Point B. Patrick Wyman is the chief of FBI’s Virtual Asset Unit. He said that crypto offers “new advantages” to thieves who launder and transfer illicit proceeds. Wyman is not involved in the investigation of Bloom’s case.
For one, using crypto is an easy way to move large sums of money across borders very quickly without having to engage with the financial system, Wyman said.
A Bitcoin automated teller machine (ATM) at a gas station in Washington, DC, on Jan. 19, 2023.
Al Drago/Bloomberg via Getty Images
Another benefit for scammers: Crypto offers them a level of anonymity. Criminals use the digital assets to obfuscate their real identity — which, by the nature of crypto transactions, is difficult if not impossible to ascertain.
However, unlike with traditional financial transactions, which are private, all crypto transactions are recorded on a public ledger, or blockchain. In April, the U.S. Department of Justice confiscated more than $112,000,000 worth of virtual currency that was linked to crypto investment schemes. The DOJ stated that the assets were taken from six accounts. One of them held $66.4m and was likely linked to wire fraud schemes. He said that the longer people wait to report fraud, the harder it is to recover money. She is not optimistic that she will be able to recover money through law enforcement. She said that she oscillates between being upset and wondering,
“What was I thinking?” She said that she oscillates between being deeply upset and
‘What in the world was I thinking?’ What’s been done is done. ‘”