The financial exploitation of aging adults is an increasingly large problem in the United States. In fact, The National Adult Protective Services Association (NAPSA) reports that one in twenty seniors have indicated some form of perceived financial abuse in the last year.
According to some experts, the ongoing Covid-19 pandemic is going to make things even worse.
Why does this happen? Scammers view the elderly as easy prey–especially now that social distancing measures have cut them off from family, friends, community centers, and other interactions with people who care for them.
To help protect yourself or a loved one from becoming the victim of a financial crime, it’s important to recognize the warning signs and know what to do if you spot them.
What is elder financial abuse?
As defined by the Older Americans Act of 2006, elder financial abuse is:
The fraudulent or otherwise illegal, unauthorized, or improper act or process of an individual, including a caregiver or fiduciary, that uses the resources of an older individual for monetary or personal benefit, profit, or gain, or that results in depriving an older individual of rightful access to, or use of, benefits, resources, belongings, or assets.
In other words, it’s taking advantage of an elderly person for financial gain. Usually, it is in the context of a relationship where trust is expected, and it causes harm (both financial and emotional) to the older person involved.
Who is at risk?
According to 2017 study from the U.S. Consumer Financial Protection Bureau, the people hit hardest by financial scams (for an average loss of $45,300) were ages 70 to 79, while people aged 80 and over suffered the second highest losses. All older adults can fall victim to financial abuse, however.
Scott Rahm, managing partner at RMO, LLP, says that these days “the economic strain of quarantine leads people to take advantage of others. It’s a perfect storm, with economic pressure on one side and economic opportunity on the other. Right now, these storm clouds are colliding.”
Issues that may leave your loved ones vulnerable include:
- They may have mental disabilities or cognitive disorders
- They are socially isolated
- They may be unfamiliar with technology and not realize what they are granting access to or signing off on
- They often have predictable financial patterns (for instance, they receive their Social Security check at the same time every month)
- Perpetrators may assume that the elderly person will be too embarrassed to confront them or go to authorities
Who commits these crimes?
Typically, the perpetrator of financial crimes against the elderly is someone they know, such as a spouse or caretaker. They may feel as though what the elderly person has is “rightfully theirs” or that they are owed something.
Offenders can include:
- Family members
- Bankers or investment professionals
- Health care workers
- And more
How do you know if your loved one is being taken advantage of?
Just as physical abuse against elders has signs and clues, so does financial abuse. Just one indicator doesn’t mean that your older adult is being scammed, but if you notice several of the following, you might want to take a closer look:
- Unexplained bank withdraws or transfers
- Unpaid bills or utilities being disconnected due to nonpayment
- Eviction notices
- Lack of amenities the person could normally afford (food, clothing, outings, etc.)
- Cancelled checks made out to an unfamiliar name
- Forgeries on legal documents, including powers of attorney or last will and testaments
- Loans or credit cards being opened in the older adult’s name
- The elderly adult complains of missing belongings or cash
How is elder financial abuse carried out?
There are countless ways in which elder financial abuse is perpetrated. Here are some of the most common:
- An acquaintance coerces the older adult into signing over power of attorney and then uses that designation to acquire money and assets
- A caretaker who has access to a senior’s bank card or checks uses them to make purchases for themselves
- Loved ones or friends may threaten to withhold care until they receive money
- A scammer may tell the elderly adult that they won a lottery or sweepstakes, but they can’t claim the prize until they send in money to cover taxes
- Thieves may pretend to be law enforcement, utilities workers, or building maintenance people in order to gain access to the senior’s home and steal physical belongings or cash
- A perpetrator may claim to work for a charity foundation in order to collect donations
- Scammers may pretend to be the elderly adult’s grandchild or other loved one and ask to borrow money due to an unexpected hardship
It happened to us: My husband’s stepfather was temporarily taken in by a smooth-talking guy who promised a wonderful investment opportunity. Luckily, he wizened up and didn’t send the money–but that didn’t stop the scammer from calling back several times and threatening to come to the house to collect his cash.
What to do if you suspect the financial abuse of an elder
These days, more than ever, it’s vital to check in our elderly loved ones. The earlier you spot the signs of financial abuse, the better. The first thing to do is discuss your concerns with your loved one but be patient: they are likely to be embarrassed about the situation. If the perpetrator is someone you know, ask them questions in a non-confrontational way–often just knowing that someone is on to them is enough to deter further activity.
If matters seem out of hand, contact the authorities. Medicare Advantage has a wonderful list of both state and national resources that can help if someone you know has fallen victim.
Tell us: have any older adults in your life been the victim of a financial scam?
Originally published February 2019, updated December 2020