Older adults have spent a lifetime working hard and building savings to retire. Because of that nest egg, seniors are vulnerable to one of the fastest-growing forms of elder abuse, financial exploitation. The cases vary, from swindlers posing as trusted financial advisers to adult children taking advantage of parents' vulnerability and assets. Elder financial fraud and abuse is estimated to cost victims over $3 billion annually. According to the National Center on Elder Abuse, a shocking 90% of perpetrators are people the victims know and trust.
This guide will help older adults, and their loved ones, understand the warning signs and schemes that pose a threat - and the moves to help protect their bottom line.
Learning to Detect Suspicious Activity
Family members managing relatives' finances or helping them pay bills might encounter suspicious activity, such as substantial bank account withdrawals or credit card statements that document expensive purchases. Perhaps quarterly investment account statements show uncharacteristic activity involving buying and selling stocks, racking up fees, and broker commissions.
Whether they involve money management misdeeds or outright theft, one thing is sure; there is no shortage of financial schemes perpetrated against older adults. If you're helping mom and dad manage their money and recognize any of these signs of suspected abuse, here's how to proceed:
You've noticed unusual or frequent bank account activity, including large withdrawals, transfers between accounts, notable purchases, or unique signatures on checks.
WHAT YOU CAN DO
Get the older adult's authorization to monitor their bank accounts, checkbooks, and spending activities. Consider going with them to their bank and opening a joint checking account. You can also have them sign a power of attorney to grant you access to their account.
You're surprised by changes to bank accounts, power of attorney, wills, trusts, insurances, or beneficiaries.
WHAT YOU CAN DO
Talk with them to determine whether those changes were authorized and why. Speak with their trusted attorney if necessary.
You suspect a caregiver or family member is using their credit or debit card for unauthorized or unnecessary purchases.
WHAT YOU CAN DO
Suggest that they give cash, rather than credit cards, to caregivers for purchases.
Most caregivers, whether relatives or hired helpers, are compassionate people dedicated to the safety and well-being of their charges. Unfortunately, in some cases, they use their position to take financial advantage of older adults. Sadly, seniors are less likely to report wrongdoing by relatives or caregivers because they depend on them for care. That's why other family members need to remain involved in the senior's life and keep tabs on how they are doing. When going outside the family to hire a trusted caregiver, consider using a well-known agency that will vet candidates' credentials and training. If hiring a caregiver yourself, find candidates by asking friends, neighbors, coworkers, or other caregivers you know for referrals.
Ask each applicant to bring a resume and contact information for at least two references. Make sure a family member takes part in the interview.
Describe the job's duties as well as your loved one's health concerns. Ask questions to help you decide whether the candidate is a good fit for the job and the older adult.
Ask for proof of identity such as a social security card, driver's license, or other photo ID.
Ask whether the person has ever been in trouble with the law. Consider hiring a reputable agency or service to run a background check.
Discuss the candidate's breadth and length of experience, training, and certifications and why they left the last position.
Discuss salary, work schedule, and paid time off. Encourage questions about the job and your expectations.
Guarding Against Dubious Financial Schemes
Seeking the services of a trusted financial adviser may be wise; however, requirements for credentials vary. Make sure the financial or investment advisers you do business with operate under the fiduciary standard, which requires them to put their client's best interests first. Ask if you need to find out whether your adviser is a fiduciary. Make sure they are licensed to sell products in your state. Always check that person's background for possible disciplinary action.
Financial exploitation of older adults at the hands of financial professionals is not all that uncommon. According to the Investor Protection Trust, some 7 million people over age 65 have been victims of financial scams. Watch out for these situations to protect your bottom line:
A financial adviser you don't know is seeking to do business with you.
You're invited to a free lunch or dinner by retirement planners offering free consultations.
A friend recommends a financial adviser who attends their gym, church, cooking class, etc.
An adviser wants to sell you an annuity or other financial product but insists it is too complex to explain in detail.
Know the Scams that Prey on Older Adults
Con artists look for victims they believe are vulnerable. Understanding how and what types of scams impact seniors can help you avoid common rip-offs. The more you know, the better you can protect yourself or a loved one. Here are some of the most common schemes perpetrated against seniors and advice for taking action so you don't become a victim.
A victim receives a call from a young adult pretending to be a grandchild in trouble, perhaps in jail in another city or country while on spring break. The imposter tells grandma not to tell his parents because he doesn't want them to know. He tells grandma to send money immediately.
WHAT TO DO
First, call the child's parents to determine whether the situation is actual. Never give financial or personal information over the telephone. Then notify the authorities of what transpired.
Those over age 60 are the number one targets of sweetheart scams, which can happen in person or online. Con artists convince the victims that they are in love and proceed to extract money from them over a period of time. The scam usually ends when the victim's retirement savings account has been drained.
WHAT TO DO
Know the risks of online dating. Be honest with yourself about whether the relationship can actually be real. Keep friends and family apprised of your new social interests. Never transfer money to someone you've never met. If you suspect fraud, consult a law enforcement official.
LOTTERY AND SWEEPSTAKES SCAMS
Callers trick victims into thinking they've won money or prizes, but to get it, they must first send money to cover taxes, insurances, or bank fees.
WHAT TO DO
Never send money to people or organizations you don't know.
Callers or mail solicitations ask for donations to fund humanitarian causes. This scam is particularly common after disasters and tragedies, pulling on victims’ heartstrings to support criminals’ greed.
WHAT TO DO
Check with your local or state consumer protection agency or the Better Business Bureau Wise Giving Alliance.
HOME IMPROVEMENT SCAMS
Unscrupulous contractors or traveling con men convince victims they are in dire need of various home repairs. Then they overcharge them or take money before the projects are completed and run. Older homeowners are at risk because they often live in older homes and often can't do repairs themselves.
WHAT TO DO
Choose a contractor through references. Don't do business with someone just because they've solicited you. Research vendors, ask for references, and never make a full payment upfront.
Financial abuse of elders isn’t going to go away any time soon. Still, people can better protect themselves and their loved ones by being vigilant and well-informed – and recognizing that it’s not uncommon for something–or someone–to go awry.