Identifying and Preventing Elder Financial Abuse
If an elderly family member was experiencing financial abuse, would you know it? In 2016, Allianz Life Insurance Company of North America completed a Safeguarding Our Seniors Study and found that 40 percent of seniors experience financial abuse more than once. Victims of elder financial abuse lose on average $36,000. Consumer Reports estimates that Americans lose up to $30 billion a year to elder financial abuse. Many of these crimes go unreported, because victims are ashamed or unable to speak up for themselves.
In addition to losing their money, many seniors also experience emotional and mental trauma from the stress, sadness and shame of their experience. The worst part is the vast majority of reports to Adult Protective Services involve perpetrators who are related to or in a trusting relationship with the victims. Scam and fraud by strangers are also common.
In the case of deceased elderly relatives, information from obituaries may be used to steal the elder’s identity and obtain credit in their name after death.
What are some common financial abuse schemes used by relatives or trusted individuals?
- Power of attorney – Power of attorney is provided by the victim to the trusted perpetrator to act on their behalf in handling financial and business transactions. The perpetrator uses this authorization to steal the victim’s money for their own use.
- Financial access – Perpetrators take advantage of access to bank accounts, ATM cards and checks to withdraw money from the elder’s accounts.
- Elder manipulation – In this case, the scammer threatens abandonment or refuses needed help or medical care in order to maintain control of the victim's assets.
- Elder vulnerability – The perpetrator charges money for unnecessary services, keeps the change from errands/services, falsifies time sheets for hours worked, doesn’t perform tasks paid for, etc.
What are some common financial abuse schemes by professionals or criminals?
- Identity theft – Using elderly victims’ personal information, criminals can potentially drain bank accounts, run up credit cards charges, open new utility accounts or receive medical treatment using victims’ insurance.
- Predatory professionals – In these cases, scammers pressure the elderly into taking unsuitable reverse mortgages or loans or buying expensive annuities, which may not mature until the victim is over 100.
- Pyramid schemes – These schemes promise seniors unrealistic returns on investments or securities.
- Common scams – Lottery, sweepstakes, charity or grandparent scams all solicit money in order for the elder to receive something in return.
- Repair cons – Fraudsters promise to do yard work, housework or home repair work cheap for the victim, but instead run off with their money.
How do you spot elderly financial abuse?
The key to spotting elder financial abuse is noticing any changes in the victim’s established financial patterns.
- Unusual bank account activity, sudden unpaid bills, suspicious signatures, altered wills or trusts, and loss of property are all signs of financial abuse.
- Refusing to make eye contact, shame or reluctance to discuss finances are also signs that someone may be taking advantage of the elder.
What should you do to prevent elder financial abuse?
- Discuss their financial plan – Have a discussion regarding their overall financial plan including retirement and assets, estate planning and any health care directives or power of attorney.
- Educate on financial abuse – Educate seniors on various risks, solicitation and scams.
- Identify trusted professionals – Get to know your elder’s team of professionals that handles their legal, financial and medical information.
- Establish checks and balances – Vigilant monitoring across all accounts can help minimize the chance of fraudulent activity.
- Update agencies and organizations of status - Contact credit reporting agencies and flag the deceased person’s account as “deceased.”
What should you do to address elder financial abuse?
- Contact the Adult Protective Services (APS) program in your area. You do not have to prove that abuse is occurring. The APS professionals will investigate your report regardless.
- Contact the victim's bank to stop the financial abuse and prevent it from continuing.
- Report all instances of elder financial abuse to the local police.
Wood Smith Advisors, a woman-owned Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.
"Finance Made Simple" blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.