Keep Your Elders Safe: Financial Abuse Is On The Rise
Financial exploitation of elderly Americans is on the rise, according to a federal government agency. Knowing the common tactics employed by perpetrators of this abusive, often criminal, behavior could keep your loved ones from adding to the grim statistics. Here are some proactive ways you can help.
Every year, thousands of elderly Americans fall victim to elder abuse and financial exploitation scams, sometimes at the hand of their spouses or adult children. In fact, suspicious Activity Reports (SARs) related to elder financial exploitation have quadrupled the last four years, according to the Consumer Financial Protection Bureau (CFPB).
Acknowledging the scope of this problem, in 2018, Congress passed the Senior Safe Act. It defines elder financial exploitation as “the fraudulent or otherwise illegal, unauthorized, or improper actions by a caregiver, fiduciary, or other individual in which the resources of an older person are used by another for personal profit or gain.”
The Senior Safe Act gives financial advisors and institutions some protection against lawsuits if they sound the alarm on suspicious activity in their elder clients’ accounts. Previously, many financial advisors and institutions didn’t report suspicious activity, because they were afraid of being sued by implicated individuals.
While the law provides added measures of protection, friends and family members are often the first line of defense against elder abuse and financial exploitation. Here’s how you can help your loved ones.
Learn the Categories of Abuse
The first step in preventing fraud against elders is to familiarize yourself with the different types of financial abuse. The CFPB has compiled this list of common ploys:
- Exploitation by someone who can act on the victim’s behalf when armed with a power of attorney (POA) or in a fiduciary relationship,
- Theft of money or property,
- Investment fraud and scams, such as deceptive “free-lunch seminars” selling unnecessary or fraudulent financial services or products,
- Lottery and sweepstakes scams,
- Scams by telemarketers, mail offers or door-to-door salespersons,
- Computer and Internet scams, including identity theft, and
- Contractor fraud and home improvement scams.
Discuss this list with older friends and family members. And reassure them that if they’ve been exploited, there’s no shame in admitting it. Older people are often embarrassed about being victimized — especially when the abuser is a family member or trusted caregiver — so, they may be reluctant to bring it to the attention of another person who can help.
Get the Scoop
The more you know about your loved ones’ finances and intentions, the better. Having remote access to their bank and investment accounts allows you to monitor transactions for unusual patterns that warrant investigation. It’s also helpful to meet their advisors, including tax accountants, bankers and lawyers.
Be aware that financial and health care POA instruments can provide opportunities for dishonest caretakers to commit fraud. If you’re not the one with that legal authority, it’s important to stay connected to that person. And suggest options that offer safeguards for the elderly person. For example, a “springing” POA goes into effect only under circumstances described in the document, such as mental incompetence.
The CFPB cautions against appointing a hired caregiver or other paid helper as a POA agent. If there’s no other choice, consider requiring the POA agent to regularly report to you (or another trusted individual) about any major financial transactions taken on your loved one’s behalf.
Some POA instruments allow the agent to make routine purchases, using an account that’s funded with only enough money to cover monthly expenses. Or you might require two signatures for checks over a certain dollar threshold.
The CFPB and FDIC have created the “Money Smart for Older Adults Resource Guide” to help educate seniors about this issue. This free publication emphasizes that not all financial abuse of elderly people crosses the line to theft.
For example, a free-lunch seminar might not explicitly require participants to purchase products or services. Instead, it might entail listening to an aggressive, unrealistic sales pitch or imply that the participant owes the salesperson something in exchange for receiving a free lunch.
The resource guide also offers the following helpful tips:
- Take your time when making investment choices. The phrase “act now before it’s too late” should raise a red flag.
- Always request a written explanation of any investment opportunity; then get an educated second opinion.
- Make checks payable to a company or financial institution, never to an individual.
- Document all conversations with financial advisors and consider bringing another person to help recall the details and ask relevant questions.
When a problem occurs, it’s important to act quickly. Time is critical to resolve matters and, if possible, achieve financial restitution.
For More Information
You can’t always protect elderly loved ones from financial abuse and exploitation. But you can help minimize opportunities for them to become victims. Maloney + Novotny can answer any questions you may have about this issue and provide ideas to fortify your loved one’s defenses. Contact your Maloney + Novotny representative or use this online contact form today!