Older Australians are less likely than younger people to be victims of consumer fraud. However, of all the crimes perpetrated against older people, fraud is one of the most common. So although the prevalence of this crime is relatively low, consumer fraud is a greater issue for older people than are other types of personal crime.
This paper focuses on the prevalence, victim characteristics and types of fraud to which older people are at risk. This important information is taken from data collected for the Australian Crime Victims Survey conducted in 2000. The survey data is based on self-reported experiences of crime victimisation. For this analysis, respondents have been divided into two age categories: 16 to 64 years, and 65 years and over, and their responses compared.
It was found that older people are more at risk when they are more socially, commercially and financially active, as such activity exposes them to a greater number of potentially deceitful transactions. Specific types of transactions are also analysed. For example, older people are more likely to be victims of investment/insurance fraud than younger people, but less likely to be victims of Internet fraud or vehicle purchase fraud.
The paper concludes by considering possible prevention strategies, including public awareness programs and legislation directed at activities related to consumer fraud.
Consumer fraud practices generally fall into one of four categories (Verniero & Herr 1997):
* pretending to sell something you do not have, and taking money in advance;
* supplying goods or services which are of a lower quality than those paid for, or failing to supply the goods and services sought;
* persuading customers to buy something they do not really want through oppressive marketing techniques; and
* disguising one's identity in order to perpetrate a fraud.
Such fraudulent practices may be present in various business transactions carried out through telemarketing, Internet sales, to-door sales and mail orders. They may also arise in contracts relating to home repairs and home construction, buying and servicing motor vehicles, or purchasing health care products and services. Fraud can occur through financial transactions made by cheque, credit card or electronic funds transfer (such as ATM and EFTPOS). Other types of financial fraud, in particular against older people, can happen through mismanagement of financial affairs, and misuse of enduring power of attorney and guardianship arrangements (see Smith 2000).
It has been estimated that in the United States, US$40 billion is lost annually through the fraudulent sale of goods and services over the telephone. Further, up to 10 per cent of telemarketing firms operating in the United States may be fraudulent (Aziz et al. 2000). One US survey revealed that 56 per cent of telemarketing fraud victims were 50 years of age or older (Aziz et al. 2000). It was also found that most victims of fraud were well educated, had above-average incomes and were socially active. Less than five per cent of victims thought that a telemarketer could be a criminal and 40 per cent said that they could not distinguish legal from illegal telemarketing (Aziz et al. 2000).
A different survey, also conducted in the United States, identified the following types of fraud as being the most harmful to older people (Special Committee on Aging, United States Senate 1983):
* medical-related fraud;
* home repair and improvement fraud;
* swindling schemes or confidence games;
* insurance fraud;
* social fraud (that is, charity fraud, "dues" for social clubs);
* housing, land sale and rentrelated fraud;
* business opportunity fraud;
* nursing home fraud;
* automobile purchase and repair fraud; and
* funeral fraud.
In general, there is a lack of information on the nature and extent of consumer fraud in Australia. …