[Senior Trend] Money Talk ⑤ How to Deal with Financial Scams like Voice Phishing

As we approach a super-aged society, the financial assets of the senior generation are increasingly highlighted. This is because seniors hold one-third of the total assets in Korea. According to Professor Mauro Guillen, author of "The 2030 Axis Shift," seniors aged 60 and over hold 50% of the world's assets, predicting the rise of a powerful silver generation. Consequently, financial companies are actively developing products specialized for seniors. According to a survey by the Ministry of Employment and Labor, income begins to decline from the 50s, but since seniors have worked for a long period, their assets are the largest in scale. Meanwhile, because no one knows how much longer they will live, seniors have anxiety about whether their saved money will be sufficient. In fact, the OECD’s December 2023 report, "Pension at a Glance 2023," showed that the income poverty rate among Korean elderly is 40.4%, nearly three times the member countries’ average of 14.2%. This is due to a socially unprepared aging structure. There is no disagreement about the massive wave that wealth and power will shift to the senior generation. However, today, I want to talk about the money seniors lose and financial fraud targeting them.

Last summer, retired middle-aged and older adults conducted a mentoring research project supporting young people based on their professional experience. At that time, I interviewed a senior who had worked as a police officer for over 30 years, and he said that drug and financial fraud crimes are significantly increasing in Korea. While I had occasionally encountered cases from the U.S. and Japan through data, Korea’s situation was serious as well. "Financial fraud" refers to all acts where unknown persons commit voice phishing or others, including family or acquaintances, improperly use the assets of elderly people. Scammers gain seniors’ trust to steal money or personal information, exploiting their vulnerabilities to seize financial assets. They especially target lonely elderly living alone or those suffering from cognitive decline. In cases like voice phishing, the main victims were relatively socially inexperienced young people under 20 and seniors over 60. Although seniors over 60 experienced fewer fraud cases than those in their 20s, the average amount lost was more than twice as high. The World Health Organization (WHO) defines acts of misusing or seizing elderly people’s financial assets as "financial abuse." We still lack awareness about economic abuse or financial exploitation of the elderly.

Types of financial fraud targeting seniors include loan scams, multi-level marketing, fraudulent investment schemes, identity lending, ghost accounts, voice phishing, pharming, and smishing. Scammers create investment chat rooms on KakaoTalk or Band, promising seniors high returns or stability, then embezzle the investment funds. They also pretend to enroll seniors in insurance products to extract personal information and steal social security benefits. By sending obituaries or year-end tax refund notices via text messages, they obtain personal information, open new mobile phone lines, create accounts under the victim’s name, and take out loans. Sometimes, they cunningly pretend a family member is injured to induce money transfers. Since early 2024, phishing and financial fraud have surged. The Financial Supervisory Service issued consumer alerts in January, and the National Police Agency has already issued multiple warnings even though it is only February. Annual losses from voice phishing amount to about 700 billion KRW, and as digital technology evolves, cutting-edge artificial intelligence (AI) is also being used in scams, making them highly sophisticated. Although seniors are victims, they often feel shame or embarrassment and hesitate to report, which can lead to linked damages.

One company aiming to prevent this is the U.S.-based "Eversafe," established in 2016. It is a fintech (finance + technology) company that monitors seniors’ financial transactions and alerts caregivers when abnormal transactions are detected. For example, it discovered monthly charges for car inspection services for a visually impaired mother with early dementia who had never driven. The average user age is 55, with some customers as old as 102. The service fee is about 10,000 KRW per month. "Silverbills" manages whether bills arriving at home are paid on time, and "True Link Financial" manages card spending types and amounts to prevent elderly crime victims. "Carefull" focuses on the correlation between cognitive decline and financial vulnerability, developing solutions and partnering with over 40 banks and insurance companies. Through monthly fees, it provides appropriate information to prevent children from misusing their parents’ funds. In Korea, except for Shinhan Bank’s partial transaction restrictions to prevent voice phishing for customers aged 50 and over, the only recent efforts include ATMs offering large fonts and easy screen layouts. The Korea Fintech Industry Association also reports that no special fintech technologies or companies for seniors are registered yet. However, digital financial education and financial fraud prevention events are steadily conducted as part of ESG (environmental, social, and governance) projects led by the government and associations.

The senior population will continue to grow steadily. Financial exclusion should not be seen merely as a result of age-related technological sensitivity or individual fault, but rather addressed through systematic financial education and comprehensive financial technology. I hope financial services that solve these problems will emerge. It is time for financial consumers to raise their voices so that financial services for seniors can appear.

Lee Boram, CEO of Third Age