by Barry Goldman
Meijer
I was in line to buy dog food at the local big box store. Ahead of me was an old woman, nearly bent double, fumbling around in her purse. I didn’t pay any attention. It was none of my business and I don’t want to be rude. After a while I looked over to see what was taking so long. The old woman was counting out money from a stack $100 bills. My first thought was she shouldn’t be flashing all that cash. Then I saw she was buying gift cards. “Put $500 on this one,” I heard her say.
Slowly it dawned on me I was witnessing a crime. Someone had convinced this poor woman to go to the ATM, withdraw a pile of cash, and buy gift cards with it. Scammers like gift cards. They are virtually untraceable. And there is no need to meet the victim in real life to take delivery. As soon as they read the card number over the phone the money is gone. The old woman said, “Put $300 on this one,” and I spoke up. I said, “Something is very wrong here. Don’t do this.” The cashier agreed with me. It turned out she was trying to talk the woman out of the transaction too. The cashier asked the woman what she was buying the gift cards for. She said they were a gift. She said her neighbors fed her cat when she was in the hospital and she wanted to do something nice for them. I said, “This smells very bad. We need to get a supervisor.” The cashier said she was a supervisor. I said we need to call the cops. She said they weren’t allowed to call the cops, but I could if I wanted to.
I called 911. I described where I was and what was happening. The dispatcher said she’d send a cruiser. In the meantime, the old woman was getting more and more irritated. She wanted to leave. We were trying to get her to stay. She said she knew what she was doing and everything was fine.
When we couldn’t stall her anymore, I followed her out to the parking lot. She yelled at me to stop following her and leave her alone. I still had police dispatch on the phone. I gave them a description of her car and the license plate number. Then she drove away.
I went back in the store to get my dog food. When I got out I saw the cruiser and flagged him down. He asked if I saw which way she went. I didn’t. I said, you have her plate number, right? You can go to her house. The cop said they probably didn’t have her going home. They most likely told her to go someplace else.
FINRA
I’ve mentioned in previous columns that I am an arbitrator for FINRA, the Financial Industry Regulatory Authority. From time to time, I get a case that raises the same issue. A customer calls his stockbroker and says I need $50,000. Cut me a check and I’ll come pick it up this afternoon. Broker says, in a friendly way, What’s it for? Customer says, in a friendly way, None of your business. Broker cuts the check.
A few days later the guy calls back. This time he wants $75,000. Broker says that’s a lot of money. This isn’t like you. Is something the matter? The guy says mind your own business. I’m a grown man. It’s my money. Give me my check.
This goes on until it stops. Either the guy runs out of money or he dies or someone in his family sees a brokerage statement. By then the scammer has disappeared. Then there is an arbitration claim filed against the brokerage firm. The claim says the firm should have detected the unusual account activity and put a stop to it. The defense is the same as what the customer said in the first place. It’s his money. Unless we have reason to believe he’s mentally incompetent, our job is to follow the customer’s instructions.
What to think
I don’t know what I think. Or, more accurately, I do know what I think and it’s incoherent. I think what you do with your money is your business. And I think we have an obligation as individuals and as a society to keep people from getting scammed out of their money. On one hand, I would like someone to stop me if I was about to send my life savings to a voice on the phone. On the other hand, I don’t like it when people who think they know better try to tell me what to do.
As is so often the case, where you stand depends on where you sit. I have heard the story of the floozie who swans in and takes advantage of the old guy, gets his will changed, and squeezes out the kids. And I’ve heard the same story from the second wife’s point of view. “Those rotten kids were nowhere to be seen while he was dying of cancer and I was wiping his ass for the last two years. Now suddenly they’re inconsolable because he left me the house.”
There should be respect for elders. We should honor their autonomy. We should avoid infantilizing them. At the same time, we should protect them from scammers. Can we comply with the first principle without violating the second? When does the Good Samaritan shade into the Officious Intermeddler?
Law
As usual, the law is not much help. As far as the law is concerned, there are legally competent people and there are legally incompetent people. You are either one or the other. If you’re competent, you can make your own financial decisions. If you have been adjudicated incompetent, you can’t. In the FINRA case, a broker who suspects elder abuse can put a temporary hold on a transaction under certain, limited circumstances. But assuming the customer is not legally incapacitated and he insists he wants his money, he’s entitled to get it. Same thing in the Meijer case. Unless I am her legal guardian, I had better be careful not to restrict that old lady’s movement.
That’s fine, those are good principles. But the question the law is answering here is not the one we’re asking. Otherwise perfectly competent and financially sophisticated people get defrauded by clever scammers all the time. In fact, it may be that people who think they’re too smart to be defrauded are especially vulnerable.
Scammers are evil, but they are not stupid. They work at it. Their livelihood depends on it. They have clear incentive, an unlimited number of experimental subjects, and clear, unambiguous feedback in real time. If they say the wrong thing, the victim hangs up. With internet communication bringing their transaction costs to near zero, their learning environment couldn’t be much better. So they get very good.
What is our defense? Bright lines are elusive. Slippery slopes are everywhere. My sense is that I am justified in intervening when I see the woman in front of me buying multiple gift cards in large denominations. And I’m pretty sure I have no moral authority to intervene if I see her buying high-fructose corn syrup soda and ultra-processed cheese dip. But that leaves a lot of ground.
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