Protecting Against Elder Financial Abuse
What is elder financial abuse?
Elder financial abuse involves taking advantage of an older person for financial gain. It’s estimated that older adults lose more than $36 billion every year to scams, fraud and exploitation. It’s even more alarming that almost half of that money is lost due to tactics that – while deceptive in nature – are technically legal.
Who commits elder financial abuse?
One survey found that two-thirds of financial crimes against the elderly are carried out by family, friends or other trusted individuals. The perpetrators of elder financial abuse can include:
- Family members
- Friends and acquaintances
- Banks and other financial institutions
- Health care providers
How is elder financial abuse carried out?
There are dozens of ways in which elder financial abuse is carried out. Here are some of the more common ways this type of abuse is perpetrated.
- Lotteries and sweepstakes A scammer may claim to be associated with a prize or lottery commission. They may tell the victim that they won the lottery or a special prize and that they need to send money to cover the taxes on their winnings.
- Home repair One popular scam involves a “paver” telling a senior about a job the scammer claims to have completed in the neighborhood and that they have some leftover materials to either use today or get rid of. They may then claim that they can repair or repave the senior’s driveway at a deeply discounted price and insist on receiving payment in advance. The scammer will typically leave without completing the promised work.
- Law enforcement Thieves will sometimes call a senior citizen and pretend to be a law enforcement agent claiming that the senior owes a fine. They may also try to convince a fraud victim that one of their family members is in jail and that the victim should send bail money.
- Charity One common scam involves someone impersonating a charity foundation in an effort to collect donations. This fraudulent appeal is especially common following a natural disaster.
- Utility company In some cases, an abuser may impersonate someone from a cable, electric, water or other utility company and attempt to collect an unnecessary payment.
- Grandchildren In one of the more heartbreaking types of financial abuse, a thief will call an older person pretending to be their grandchild and ask to borrow money to take care of an unexpected hardship.
- Email phishing An email phishing scam can happen when a senior receives an email appearing to be from a legitimate entity such as the IRS requesting them to update or verify their personal information. When the senior reveals their social security number, credit card information or other sensitive information, the scammer may then use it for identity theft.
- Predatory lenders Older clients are sometimes pressured into taking out reverse mortgages or other predatory loans with high interest rates. It may be against the client’s best interest to take out the loan, but they may be convinced to do so due to high pressure or fraudulent misinformation.
- Investments Senior citizens are popular targets for pyramid schemes and other “get rich quick” schemes.
- Identity theft When a victim’s identity is stolen, it can be used to open up fraudulent credit cards or other lines of credit in their name. A senior’s social security number is a popular target for scammers.
Caretakers, friends and family members
- Power of attorney Someone who has been granted power of attorney can sometimes abuse that designation in order to acquire money, assets and possessions.
- Bank cards or checks A caretaker who has access to a senior’s bank cards or checks can use them to withdraw money or make fraudulent purchases.
- Threats of violence An older person who cannot defend themselves can be an easy target for a threat of violence in exchange for money or assets.
- Withholding of care A friend or family member might threaten to not pick up the person’s groceries, not mow their lawn or withhold any other service unless they receive an exchange of money or a paid caretaker might neglect certain responsibilities while still collecting their full payment.
How seniors can protect themselves
There are a number of ways in which seniors can better protect themselves from financial abuse.
- Remain socially active Isolation is one thing that can contribute to a senior’s financial vulnerability, as being cut off from the outside world can make it more difficult for others to detect warning signs. An isolated individual may also feel that they lack the resources and relationships they need to feel financially secure.
- Avoid joint bank accounts Some seniors might open a joint bank account so that a family member can more easily make payments or withdrawals on their behalf and help manage their finances. But a joint bank account can also serve as an easy way for theft and abuse to occur.
- Don't give up your home Particularly when moving into an assisted living facility, an older adult might consider signing over their home to a trusted family member in order to let that person handle the selling of the home. A home can be among a senior’s most valuable assets, however, and it may not be a safe idea to sign the home over to another person, no matter how trustworthy they might be.
- Invoke a power of attorney The risk of financial abuse heightens after a person develops a decreased capacity to make independent financial decisions. Invoking a power of attorney can be one proactive way to prepare for the future of one’s wealth and assets. Seniors can consider getting legal advice to help in this process.
- Set up a revocable trust Placing a senior’s assets in a revocable living trust and naming a fiduciary can be one way to protect against outsiders getting access to any of the senior’s assets that are of significant value.
If you think you or someone you know could be a victim of elder abuse click here for additional information and resources.