Chapter 27/Why the elderly are conned so often

Cross-border scammers often target the elderly. And new research is telling us why. A doctor at the University of Iowa's Neurology Department says that some people with only slight damage to their brain may be especially vulnerable to financial scams.

Antoine Bechara, M.D., says these people fail to understand the future consequences of financial decisions. They are oblivious to any consequence that the short-term action may have in the future.

"Scams offer the prospect of immediate rewards," says Dr. Bechara. "You can only resist that temptation if you can keep the long-term consequences of losing that money in mind."

The problem occurs in the brain's prefrontal cortex, a region behind the forehead which allows us to store memories, draw general conclusions, forecast the consequences of our actions and compare current and past experiences, thus helping us reach more balanced judgment.

Dr. Bechara says that because even slight damage to this area of the brain can block ability to determine long-term financial consequences, the friends and families of these people may not know about this vulnerability until it is too late.

Dr. Bechara points out that various forms of dementia (age-related declines in mental sharpness) can begin in the prefrontal cortex. That may explain why the elderly disproportionately fall prey to investing scams.

To avoid rip-offs, be on guard. Advancing age may impair that part of your brain responsible for evaluating the consequences of your financial actions.

If you or members of your family are elderly, simple reminders can help, like a note next to the phone that says, "Hang up on telemarketers," or a Post-It note on your PC that reads, "never open unsolicited email."

(Adapted from a Money Magazine article, "Are you wired for wealth," by financial writer Jason Sweig and research papers of Dr. Antoine Bechara.)