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Older Adults and Financial Abuse
How can you know if unscrupulous people are victimizing your loved one or friend? There are several indicators that an older adults has become the victim of elder abuse, some of the most common ones are:
- Unusual banking activity such as large or unexplained withdrawals or payments outside of a normal bill pay.
- Abnormal signatures that look different than usual, are on checks written by someone else, or are created at a time when an older adult cannot physically write.
- Excessive gifts or donations to caregivers, new friends, or newly formed charities.
- Large investments or loans that may have been used to finance investments in time shares, properties or annuities.
- Changes to power of attorney, property titles and wills that remove the older adult or add a caretaker, often made when older adult is unwell or not mentally competent.
- Memory related mistakes, such as unpaid bills, lack of proper nutrition or hygiene, or increased instances of misplacing or losing personal belongings.
- Lack or reduction of care provided by relatives or caregivers in order to “conserve” money.
- Sudden interest or affection by long-lost relatives, caregivers or new friends.
- Loss of control over finances, for example bank statements no longer coming to the older adult, or older individual is not aware of or does not understand their current financial arrangements.
Any person can become a victim of a financial scam. However, many older adults are at a higher risk for falling prey to a fraud or scam for various reasons. Older people who are lonely or have experienced a recent loss are often more vulnerable to scams and frauds as they are emotionally more open to engaging with people claiming to offer help or advice. Most older adults grew up in a different time, when etiquette required responding to a polite inquiry or plea from a stranger. These older adults have not developed the guarded nature towards interactions with strangers that younger generations have done. Older individuals who have physical or mental disabilities or low amounts of financial literacy are also more susceptible to financial fraud and abuse. Plus, studies have shown that the ability to discern between trustworthy and untrustworthy situations diminishes with age.
Family members with substance abuse, gambling, or financial problems might be tempted to take advantage of an older family member. Some relatives feel as though their actions are justified because the older person’s savings will eventually become theirs. This justification can be exacerbated by fears that the older relative will use up the savings when they get sick, or that they will lose out on inheritance because of a bad relationship with the older family member or the existence of other family members who can claim the same inheritance. Many older adults fail to report this type of financial exploitation because they do not wish to harm the family members who committed the crime.
Older adults might receive phone calls or emails from strangers posing as someone else, asking older adults to send funds. People who an older adult has had little or no previous contact with may also attempt to get closer with the intention of exploiting the older adult. A scam artist might state that they love the older person as a part of a sweetheart scam or seek employment as a personal care attendant to get closer to the older victim. These individuals can identify vulnerable older adults through a variety of means, for example, by looking through newspaper obituaries for recently widowed older adults.
Trusted professionals can also use their positions to take advantage of older adults. They might overcharge for services and products or recommend harmful and expensive products. Professionals might also partake in deceptive business practices and use their positions of trust or respect to gain business from susceptible older adults.
Types of Abusive Scams and Fraudulent Practices
There are varieties of ways in which older adults are tricked out of their money by strangers. Some of the more common ways are:
- Lottery and sweepstakes scams where an older adult is informed that they have won the lottery and must send in money to cover mailing and other related expenses before receiving winnings.
- Grandparent scam in which someone calls an older adult claiming to be their grandchild and asks for money to get out of an emergency situation.
- Internet phishing for account information, often done by emailing an older person with a false claim from a bank and then asking for personal account information.
Trusted professionals can also drain an older adult’s account through methods such as:
- Predatory Lending where older adults are convinced to take out harmful or unnecessary loans.
- Annuities that will not mature until much later in their lifetime when an older adult would be in their 90s or over 100.
- Investment schemes that promise unrealistic returns on investments.
- Identity theft where individuals who receive an older adult’s information might use it to fraudulently open credit cards or steal from the older person.
- Roof repair, yard work, home repair scams where work is not done or badly done, yet the homeowners might be charged excessive amounts for the work.
- “Financial Certifications” that have no real meaning, but are used to engage older adults into allowing these so-called financial planners and advisors to handle their finances.
Friends and family members are often trusted to help manage an older adult’s finances and may abuse that role by using methods such as:
- Power of Attorney and joint/custodial bank accounts in which family members, after obtaining power of attorney or opening a joint/custodial bank account with the victim, might use them to steal money for their own use. In addition, family members might use ATM cards and checks to withdraw money from an older adult’s account.
- Threats of abandonment or physical harm unless the older adult gives the family member money.
- Neglect to care for the older adult, potentially using the victim’s money for personal needs.
Some general guidelines to help older adults avoid financial exploitation include:
- Use only trustworthy people and organizations when making financial arrangements and decisions.
- Get everything in writing; do not take verbal assurances.
- Take time before making decisions, do not sign a document or make purchases or donations over the phone or online without careful consideration.
- Do not send money by cash or make wire transfers.
- Lock financial documents and information in safe places at home and at work.
- Ask why someone needs your personal or financial information before you share it.
- Become familiar with up to date information on scams and frauds available through the Consumer Financial Protection Bureau Office of Older Americans.