Older Americans are frequent targets for financial abuse and fraud, resulting in thousands of victims and billions of dollars in losses annually, according to the FBI. If you have an aging relative, here is how you can help him or her avoid scams and being a victim of elder financial abuse.
What is Elder Financial Abuse?
Also known as:
- Elder financial exploitation
- Elder fraud
- Elder financial fraud
- Financial elder abuse
According to the U.S. Department of Justice (DOJ), elder financial abuse is a specific type of elder abuse that involves family members or someone else the elder knows taking financial advantage of said older adult. Elder financial fraud is a type of abuse that occurs when strangers take financial advantage of older adults they do not know.
Examples of Elder Fraud and Financial Abuse
Examples of elder financial abuse and fraud include the following:
Sweepstakes Scams
These schemes claim someone has won a prize. In order to claim the prize, the victim must hand over sensitive information, like bank account numbers.
Sweetheart Scams
These cons occur when a bad actor pretends to be a confidante—either romantic or platonic in nature—to a lonely older person. Establishing trust over a period of time, the con artist eventually asks the victim for financial aid, such as direct wire transfers, checks, and more.
Identity Theft
Identity theft comes in many forms. It can include forgery, using stolen credit cards, stealing Social Security numbers, and cashing someone else’s checks.
Intimidation and Undue Influence
Intimidation fraud can include family members speaking for older people and getting them to do things they don’t want to do, like taking out a loan in their name. This type of fraud can include threats of physical harm or putting the seniors in nursing homes if they don’t comply with their abusers’ demands.
Tech Support Scams
In these schemes, con artists pose as members of a trusted tech support team, encouraging victims to send over sensitive information, like information about their financial institutions and account numbers.
Why Are Seniors Targets of Financial Exploitation?
Seniors are common targets of financial abuse and fraud for reasons like the following:
Perceived Nest Eggs
Many bad actors believe, whether or not it is true, that older adults have nest eggs of money ripe for exploitation. This belief is based on the fact that many seniors save for retirement and receive government checks from Social Security, Medicare, Medicaid, and other social services.
Declining Mental Acuity
Mental alertness can drop with age. If the older person also has Alzheimer’s disease or another form of dementia, he or she could be especially vulnerable to financial exploitation as these conditions often lead to impaired judgment and inability to handle money in a rational manner.
Declining Physical Strength
Physical strength declines and the odds of physical disability increase with age, so some bad actors may believe they can physically intimidate their older targets with little fear of retaliation.
Loneliness
Older people often report feelings of loneliness; scammers are only all too happy to exploit that need for social connections. Many sweetheart scams involve a stranger posing as a potential romantic partner or friend to gain the elder’s trust with the end goal of having the senior send money to the scammer.
11 Tips for Financial Caregivers Looking to Protect a Loved One from Financial Abuse
If you believe your aging loved one is at risk of falling prey to elder financial abuse scams, here are some ways you can help protect him or her:
- Know the warning signs of age-related cognitive decline and early signs of dementia, as they can put someone at risk for poor financial decisions. Early signs of dementia can include erratic financial decisions, difficulty reading, loss of executive processing skills like inhibition control, and social withdrawal.
- Know the warning signs of exploitation, such as unusual withdrawals of money, missing personal items, suddenly changing designated beneficiaries on important accounts or policies, or mentions of an online girlfriend or boyfriend.
There are plenty of ways to be proactive about preventing exploitation. For starters, you can help your relative keep better track of potential fraud as well by signing him or her up for suspicious activity alerts from his or her bank, credit union, and credit card company. You can also sign up your family for online fraud prevention tools like EverSafe® to help manage expenses and income as well as keep a pulse on potential fraud.
- Submit a complaint to the Consumer Financial Protection Bureau and FBI Internet Crime Complaint Center (www.ic3.gov or 1-800-CALL-FBI ) if you suspect a financial scheme. This action can get your family in contact with professionals and financial services who can help and can make others aware of potential schemes.
- Establish financial durable power of attorney (DPOA). This document establishes a trusted family member as an attorney-in-fact who can handle your relative’s financial affairs should he or she be unable to do so. Actions an attorney-in-fact can oversee include filing taxes, managing bank accounts, overseeing real estate and investments, paying utilities, and more.
It’s always better to establish DPOA sooner rather than later, so get with your relatives to discuss having a family financial meeting to establish a financial management plan that everyone can agree on.
- Set up a divide-and-conquer strategy. Let your relative exercise independence if he or she is well enough to do so. This strategy makes financial planning—including managing income and expenses and making investments—easier to manage by splitting everything into smaller, more manageable tasks and goals.
There are plenty of ways to easily implement these strategies. Creating and tracking a personal balance sheet or budget, for example, can make executing such strategies easier. If one person managing all tasks seems overwhelming, have your relative assign other family members to specific money management jobs, such as keeping track of specific utilities.
- Sign your loved one up for the National Do Not Call Registry from the Federal Trade Commission (FTC) to block telemarketers from reaching your relative by phone.
- Block unknown callers from your loved one‘s phone, which reduces the odds that he or she will pick up calls from con artists who bypass the National Do Not Call Registry.
- Familiarize yourself with the right resources, such as the Adult Protective Services (APS) hotline (services vary by state), the National Elder Fraud Hotline [833-FRAUD-11 (833-372-8311)], Area Agencies on Aging (services vary by location), and the National Council on Aging (NCOA).
You can find resources in your area using Eldercare Locator.
- Enroll your relative in a financial literacy course at a local library or community college, as these institutions often offer financial education courses for free to older persons. The Money Smart for Older Adults Program, offered for free by the U.S. federal government, may also be worth exploring. These programs teach older people and their caregivers about ways to avoid fraud and abuse, report suspected fraud, budget smartly, gain investment insights, learn debt reduction strategies, and more.
- Install antivirus and malware protection software on your relative’s devices to help protect him or her from cybersecurity vulnerabilities. Options include Bitdefender Antivirus, Kaspersky, and Malwarebytes.
- Seek the help of qualified professionals at long-term care facilities. They can help you determine if the safest place for your loved one is at home, an adult day care center, or senior living community.
The best time to have financial conversations with your loved one is now, so you and your entire family can spot the signs of elder financial abuse—and prevent your family from falling victim to common schemes.
Disclaimers: This article does not constitute professional financial, legal, or healthcare advice, real or implied.