Keeping 
retirement 
savings safe 
from scams 
and fraud

Every year millions of Americans fall prey to financial scams and fraud, and the number of victims continues to grow. Middle-aged adults report the highest rates of victimization, but older adults report higher loss amounts. In 2023, nearly 400,000 complaints were filed with the FTC from those over age 60, comprising $1.9 billion in losses.⁴ Sadly, as the number of older victims rises, so does the risk to their hard-earned retirement savings.  And for the retirement plan sponsors who help workers — in many cases for decades — to gather, invest and save for retirement, they may feel a vested interest in helping protect retirees’ nest eggs. Fortunately, there are steps individuals can take to protect themselves, and plan sponsors can help.

A new TIAA Institute report Safeguarding Retirement in the Age due to Scams dives into common types of frauds and scams, and examines the steps that can be taken to protect workers and companies. The responsibility for being protected ultimately sits with the individual, but a plan sponsor can do a lot to help protect the most vulnerable workers.

The threat continues to rise

The magnitude of reported financial fraud cases spiked during the Covid-19 pandemic. As scammers become more organized, use better technology and create more sophisticated cons, the value of fraud losses increased 5x from 2019 to 2023. This growth is powered by the anonymity of cryptocurrency, increasing involvement of organized crime, pervasiveness of social media, and other driving factors. Unfortunately, older Americans are common targets, with about 1 in 20 falling victim to scams each year.5 Fraudsters may view this group as easy targets due to age-associated factors such as declining cognitive function or social isolation. The fact that older adults often have accumulated wealth, typically in the form of retirement savings, can also make them attractive targets. But with so many bad actors using advanced technology in an organized, focused way, the deck seems stacked against those nearing, or in, retirement. The good news is that there are ways they can protect themselves, and there is an important role plan sponsors play in raising awareness.

Even as the number of complaints remains relatively flat, losses continue to grow by over a billion dollars every year.

Common scams

Fraud and scams have come a long way since a foreign Prince offered to share his fortune in exchange for a (relatively) small payment. Today’s scams are focused, sophisticated, and designed to appeal to the target in many ways, often playing on core emotions like fear, hope and love. Some of the most common scams, particularly those directed at older adults, can be grouped into four categories, see right.

As the overall number of reported scams continues to rise, business and government imposter scams have increased dramatically. During the lockdown and subsequent move to remote work, scams involving online retailers, shipping companies and tech support groups surged and remain prevalent today.

• Family/friend imposter scams
  Make the target believe that a friend or relative is in trouble and needs money
• Business, government or tech support imposter scams
  Falsely use authority or expertise to demand or entice the victim to pay a fee or move money to a “secure” account
• Get-rich-quick scams
  As the name suggests, promise financial gain and can involve fake investment schemes, false claims of cryptocurrency profits, or non-existent lottery or sweepstakes winnings
• Online romance scams
  Offer the promise of deep, lasting relationships and can be the most damaging to older victims because of the emotional consequences on top of the financial loss

Staying safe from scams and fraud

A three-lines-of-defense approach is a comprehensive form of protection that starts with awareness of scams and techniques, and extends to engaging trusted contacts for support. The table below provides some actionable steps plan sponsors can take to help educate and protect employees.

1. Reduce the risk of exposure to and engagement with scams
   • Enhance scam awareness
   • Encourage activation of online and mobile accounts
   • Encourage opting-in to account security features
   • Engage in advanced financial care planning
   • Encourage naming a trusted contact for every retirement and investment account
2. Intervene by responding to immediate threats and protect funds
   • Investigate suspicious activity and behavior
   • Ask questions and educate plan participants on fraud risks
   • Secure accounts through temporary holds
   • Report fraud to law enforcement
   • Seek to recover funds where possible
   • Refer to victim support services
3. Reduce the longer-term risks and potential for harm
   • Encourage the use of trusted contact(s)
   • Involve agents under power of attorney to provide support and f inancial oversight
   • Monitor financial accounts
   • Address unmet needs (e.g., financial security, social interaction, sense of purpose)
   • Refer to legal, financial and mental health services

Identifying red flags

Common persuasion techniques

In hindsight, many scams appear easy to identify and avoid, but bad actors continue to refine their deceptive persuasion tactics, making scams more difficult to detect. Helping plan participants be aware of techniques that scammers use can help individuals detect scams before they are victimized. Below are a few common ploys that can be red flags.

• Authority
  Pretending to be someone in a position of power, authority or expertise
• Emotional arousal
  Provoking emotions like fear, excitement or surprise to distract the target from making calm, reasoned decisions
• Urgency or scarcity
  Creating urgency that is positive (“This opportunity won’t last”) or negative (“Transfer funds or else”), or implying scarcity (“This offer is only for a few”)
• Secrecy
  Making threats or telling lies to motivate the victim to keep their plans secret — because the scam will likely unravel if it is shared with a friend or family member
• Phantom fixation
  Identifying the target’s unmet needs like love, financial freedom or even a sense of purpose, and promising a future that fulfills their need

What plan sponsors can tell victims to do

Once a victim is identified, plan sponsors can help identify the next steps and guide the participant toward resolution. According to the Commodity Futures Trading Commission (CFTC), it’s important that victims act quickly and follow a few steps to help fix what’s damaged and avoid future scams.⁶

1. Don’t pay any more money – while it may seem obvious, victims must resist persistent requests for additional fees
2. Collect all the pertinent information and documents as soon as possible – this includes a timeline, websites, names, email addresses, phone numbers, and anything else related to the scam
3. Protect identity and accounts – this may include blocking access to bank accounts, freezing credit cards or changing passwords
4. Report the fraud to authorities – there are online resources (including this Department of Justice directory) in addition to local police or state regulators
5. Check insurance coverage and other financial recovery steps – homeowner policies may offer coverage or tax and/or financial professionals can provide guidance
6. Consider changing behaviors and building resistance to fraud – victims should not blame themselves but should think about the events leading up to the scam and what can be done differently next time

Keeping retirement secure

For older adults to safeguard their retirement savings from the pervasive threat of financial fraud, it is critical they are aware of common scams and tactics scammers use. They should also know how to respond to immediate threats, protect themselves in the long term, and what to do if they’ve been victimized.

While individuals have an important responsibility to avoid fraud, they are often outmatched by bad actors who are well-resourced, organized and relentless. It is up to the entire retirement ecosystem — plan sponsors, providers, participants, recordkeepers and other affiliates — to work together to help combat the global threat of financial scams and protect the retirement savings that so many people are relying on. Plan sponsors can take important steps to help safeguard their employee data, and conduct training exercises and phishing exercises to help protect both the company and workers.

Nuveen has long communicated best practices in preventing scams, and shared tips for what to do if you are caught. It is our hope that by sharing information we can help prevent fraud and keep participants safe. For more information on how Nuveen views security, cybersecurity and fraud prevention, visit: https://www.nuveen.com/global/security