DAVID GREENE, HOST:
The people most vulnerable to fraud and scams are the elderly, and there is typically a jump in cases of fraud during hard economic times. So as you can imagine, elderly people are being targeted often right now. NPR's Patti Neighmond reports on a study that looks at why older people are so susceptible to being swindled.
PATTI NEIGHMOND, BYLINE: Lots of scams come by phone or by mail, but when the scam artist is right there in front of you, researchers say the clues are in the face. UCLA psychologist Shelley Taylor describes how deception may present itself.
SHELLEY TAYLOR: A smile that is in the mouth, but doesn't go up to the eyes, an averted gaze, a backward lean.
NEIGHMOND: Taylor wanted to know if older people recognized these visual cues as readily as younger people. She brought 119 adults over 55 into the research lab, along with 24 younger adults in their 20s. Both groups were shown 30 photographs, each depicting either a trustworthy, a neutral or an untrustworthy face.
TAYLOR: The older adults rated the trustworthy faces and the neutral faces exactly the same as the younger adults did, but when it got to the cues of untrustworthiness, they didn't process those cues as well. They rated those people as much more trustworthy than the younger adults did.
NEIGHMOND: In a small follow-up study using brain imaging, Taylor's findings suggest older adults may have less activity in the very area of the brain that processes risk and subtle danger. Another possible reason older adults don't pick up on warning signs, she says: an increasing bias against negativity.
TAYLOR: It's part of this effort to make life more positive after a certain point in life, which is normally just a wonderful thing. Older adults are really great emotion regulators, but it leaves them with this particular vulnerability so that they don't recognize untrustworthy cues when they should be.
NEIGHMOND: A survey last year from the AARP analyzed the behavior of 723 victims of fraud and compared them to the general public. Doug Shadel - a former fraud investigator now with AARP in Washington state - headed the survey which found the average age of fraud victims was 69.
DOUG SHADEL: Fraud victims tend to be much more likely to do things like open junk mail, listen to unknown callers on the phone who are telemarketing. They're more open to putting themselves into sales situations, and this explains in part why they may be defrauded.
NEIGHMOND: That and being inclined to believe those too-good-to-be-true promises, like a guaranteed 50 percent return on investment with no risk. Ironically, it was older men with experience in investing who lost the most. Women were more vulnerable to petty fraud, things like sending in $50 to collect on that $50,000 sweepstakes they just won. The current biggest scam, says Shadel: gold coins often advertised in print and broadcast.
SHADEL: And they'll say, you know, during periods of economic instability, you can't trust the stock market. You can't trust the bond market. The thing you can trust is precious metals.
NEIGHMOND: The genius of the scam: you actually receive the coins. It's just that you've paid three, four, five times their market value, and scam artists today, says Shadel, are aided enormously by technology that enables them to simply press a button and send hundreds of thousands of emails. So the best defense, he says: don't go for any of it.
Throw out the junk mail. Don't answer unknown callers, and forget about those free lunches and dinners that promise great options for investment. Patti Neighmond, NPR News.