The weakest point in financial security may not be a brokerage account password but a far less obvious vulnerability.
Vanguard warned in a recent report that modern fraudsters exploit fear, urgency, and romantic trust to override rational thinking in investors.
The firm’s behavioral economics team identified the specific psychological traps that make even experienced investors vulnerable to targeted emotional manipulation.
U.S. consumers reported a record $15.9 billion in fraud losses in 2025, up from $12.5 billion in 2024, according to Federal Trade Commission data disclosed in March 2026 congressional testimony.
Adults aged 60 and older filed more than 201,000 complaints and reported $7.7 billion in losses in 2025, a 37% jump in complaints and about 59% higher losses than in 2024, the Federal Bureau of Investigation’s 2025 Internet Crime Complaint Center Annual Report showed.
How scammers hijack the brain’s natural defenses
Human brains are wired to process emotions before logic, and scammers exploit this biological sequence to manipulate financial decisions, Andy Reed, Vanguard Head of Behavioral Economics Research, explained in the Vanguard report.
Two competing systems shape financial decisions: a fast emotional process and a slower rational one that evaluates risk.
Because the emotional response activates first, criminals can exploit the brief window before rational thinking overrides the initial impulse, the report indicated.
A threatening email he received included a photograph of his home and demanded money, triggering an immediate visceral panic response, Reed said.
He eventually recognized it as a mass-market scam built from publicly available data, but the initial panic was the exact response criminals engineered.
Crossover fraud schemes combine tactics over months to steal billions
A Vanguard analysis, “Spotting and stopping more sophisticated scams,” describes how criminals blend multiple fraud techniques into elaborate schemes that unfold across weeks, months, or years.
In a typical scheme, the fraudster initiates contact through an unsolicited pop-up window, phishing email, or social media message before escalating the attack.
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The victim is then transferred to accomplices impersonating fraud investigators from banks, the Federal Bureau of Investigation, or the U.S. Treasury, the firm explained.
Investment scams continued to top all fraud categories by total dollar losses, with consumers reporting over $7.9 billion lost to such schemes in 2025, according to the FTC testimony before the Joint Economic Committee.
The criminals behind crossover schemes are calculated and relentless, Vanessa Richards, global head of Vanguard Fraud Prevention and Physical Security, warned.
“The reality is that these scammers are con artists who prey on the victims’ fears and needs in persuading them to act,” Richards said.
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Older investors face the steepest financial toll from scam artists
Baby boomers hold more than $85 trillion in combined wealth, making them a prime target for scammers, Reed explained.
Seniors often face heightened vulnerability because loneliness, particularly after losing a loved one, creates a powerful emotional need for social connection, John Ginelli, Vanguard Head of Investor Protection, noted in the report.
Older Americans frequently treat money as deeply private, making them less likely to alert family members when suspicious strangers initiate contact, Reed noted.
“Criminals know that when we’re faced with a situation that puts us into a heightened emotional state, our brains are wired to act and not to stop and think logically,” said Kathy Stokes, director of fraud prevention programs with the AARP Fraud Watch Network.
Guilt and shame after victimization create a second crisis because the emotional toll can be more devastating than the financial damage itself, Ginelli warned.
Unreported cases also prevent law enforcement from identifying trends that could help stop future fraud schemes targeting older investors, Ginelli added.
Secrecy gives criminals time to drain every available resource
Scammers deliberately isolate victims from their families and financial institutions, using enforced secrecy to prevent outside intervention before funds are transferred, the report indicated.
Reed shared a personal story about his 102-year-old grandfather, who was targeted by multiple scammers a few years ago. Reed’s family still does not know how many scams the grandfather fell for or how much money he lost, Reed said.
The criminals coached his grandfather to purchase a burner phone and make cash drops, all while demanding he keep every detail hidden from family.
Reed’s family attempted to intervene, but his grandfather trusted the scammers over his own wife, son, and grandson because of the depth of manipulation.
FBI Special Agent Ron Miller, assigned to the Washington Field Office, worked a case in which the victim was a criminology professor with extensive knowledge of victimology, according to a May 2026 FBI News report.
Almost anyone can be a victim. These guys are just that good
Criminals are patient and will use every available resource to convince victims to take out loans, max out credit cards, and accumulate debt, Ginelli stressed.
Red flags Vanguard says investors should watch for
Vanguard says the clearest red flags are pressure to act quickly, requests to keep a transaction secret, and instructions to move money into cash or cryptocurrency. The firm adds that Vanguard will never ask clients to keep a transaction secret from family or be dishonest about it.
That advice is not unique to Vanguard. The AARP Fraud Watch Network also urges investors to pause before responding and independently verify suspicious contacts.
Rather than using the phone number, email, or link provided in a message, investors should contact the financial institution directly.
Related: FTC survey: Older Americans getting hammered by scams