How loneliness can contribute to financial scams

Loneliness has many negative effects on those who have the misfortune to experience it, most notably poor mental and physical health. But one further consequence that’s often overlooked is the increased likelihood of becoming the victim of a financial scam.

Which types of people are lonely?

According to a recent survey by the Nationwide Building Society, 25% of people in the UK who have experienced loneliness or social isolation at least once a week have been scammed. This compares to the national average of 21%.¹

When we also take into account the fact that around one in four adults over 60 feel lonely at least some of the time,² it’s clear that a large number of socially isolated older people are vulnerable to fraud.

“Anyone who is elderly may be more susceptible to financial harm,” says Hannah Coffey, Vulnerability and Client Assistance Manager at St. James’s Place. “That’s not just necessarily because of their age, but also that they are often on their own.”

"A primary factor in their vulnerability is not having someone with whom they can discuss anything they might feel unsure of, says Professor Keith Brown, a leading expert in financial fraud among the elderly. “It’s the lack of having somebody with you to double-check something or to sense-check: does this look right? Does it feel right? If you haven’t got that, you’re much more likely to be influenced or guided down a pathway to ultimately being defrauded.”

What are the most common scams that affect lonely people?

Professor Brown is keen to point out that not all fraud or financial abuse is committed by professional criminals and organised gangs. “At one end of the spectrum, you have that,” he says. This could include unsolicited emails, mail or phone calls from people pretending to be from financial institutions.

“But there are also legitimate companies and organisations acting in an inappropriate way – for example, repeat selling items week after week to people who don’t want or need them,” he adds.

He gives a heart-breaking example: an older man who had three garden sheds full of items he’d bought from mail-order companies. “As part of my research about loneliness, I visited the man’s house,” says Professor Brown. “His sheds were full of mail and useless goods, and yet inside his desk was very tidy. I challenged him as to why this was and asked if he realised it was mail fraud.

“He told me he knew this, but the only reason he had to wake up in the morning was to wait for the postman to deliver his mail. This was his only contact with the outside world. He lived for the transaction of mail fraud and writing letters to mail-order companies.”

One other type of fraud, says Professor Brown, comes from within families. This could be, for example, where younger members take advantage of an elderly relative by convincing them to give them money unnecessarily. Again, if the older person is alone, they’re more likely to become a victim of this.

“It sometimes starts off with them offering to do the shopping, and they’ll perhaps take £5 of their money to pay for the petrol. And then it might become £10. And then it might be £50 to have a car tyre replaced or £500 for a car service and MOT. And before you know it, they’re onto a slippery slope, with more and more effective manipulation of that money.”

Unsurprisingly, romance fraud is also common among lonely people, as the perpetrator preys on the victim’s desire for human contact, which affects their ability to make rational decisions. According to Nationwide’s research, of those who have experienced social isolation and loneliness, nearly a third (29%) believe those feelings make them more susceptible to being a victim of a romance scam.³

How to protect yourself from fraud

So, how can lonely people protect themselves from fraudsters? One effective way is to contact your financial adviser to double-check anything you might not be sure of, says Hannah. This is especially important if you’re not very experienced at handling financial matters – as is often the case with older people who have lost a spouse who dealt with the money side of things.

“If you’ve had no real experience with financial services previously and you receive a call from someone pretending to be your financial adviser or your bank, you’re going to be more likely to believe them because you have nothing to refer back to,” she says. “So please always make sure you contact your adviser to talk to them and check it’s legitimate.”

Another helpful measure is to have a power of attorney in place, which allows someone you trust to make decisions on your behalf. In England and Wales, there are two types: health and welfare (covering decisions on things like medical care) and property and financial affairs (covering decisions on things like managing a bank account or paying bills). The second can be particularly effective in combatting financial abuse within families as the attorney has a legal responsibility to act according to your best interests.

If a relative is taking money from you illegally, it’s hard to prove – but if there’s a power of attorney, that person can step in on your behalf to put a halt to it. Or if they themselves are the one conducting the financial abuse, the Office of the Public Guardian has a statutory duty to investigate, as an attorney must not use your money for their own personal gain.

>Your financial adviser can help and support you if you think you’re the victim of a scam.

*Powers of Attorney involves the referral to a service that is separate and distinct to those offered by St. James's Place and are not regulated by the Financial Conduct Authority.

Sources:

¹Love is Blind: Feelings of Loneliness and Isolation Go Hand in Hand with Romance Scams, Nationwide Building Society, February 2022

²Prevalence of Loneliness Amongst Older People in High-income Countries: a Systematic Review and Meta-analysis, K Chawla, TP Kunonga, D Stow, R Barker, D Craig, B Hanratty, PLOS One, July 2021

³Love is Blind: Feelings of Loneliness and Isolation Go Hand in Hand with Romance Scams, Nationwide Building Society, February 2022