Elder Financial Abuse
Elder financial abuse is fast becoming the crime of the 21st century.
A recent Metlife study showed that an estimated 3.2 million Americans were victimized by elder financial abuse in 2014. Seniors in the United States lose an estimated $2.9 billion each year to financial abuse. The average victim loses $30,000 in scams or abuse, and 1 in every 10 victims loses more than $100,000.
Many more victims never even report their losses, due to embarrassment or fear of retribution. It is shocking that so many vulnerable seniors are falling victim to the growing scourge of elder financial abuse.
Can anything be done to stop this?
Perhaps the best way to protect ourselves, and our loved ones, is to better understand what elder financial abuse is, why seniors are targeted, who the perpetrators tend to be, what some of the warning signs and common scams are and, finally, what preventative steps may help protect against elder financial abuse. CNBC offers
What is elder financial abuse?
Elder financial abuse or exploitation is defined as the unauthorized, illegal or inappropriate use of an aging adult’s financial resources by a person in a position of trust. Financial abuse of a senior can be both a criminal and civil crime. It pervades across all social, racial and economic boundaries.
While not a new phenomenon, instances of elder financial abuse have soared as the United States experiences a large-scale demographic shift to an older population. An estimated 10,000 baby boomers turn 65 every day, a trend expected to continue for the next 10 to 15 years. In 2010 there were an estimated 40 million Americans age 65 and older. By 2040 it is estimated that as many as 80 million Americans, or approximately 20 percent of the overall population, will be part of the 65-and-older cohort. In other words, elder financial abuse is largely a crime of opportunity.
Why are seniors targeted?
Despite advances in modern health care and a greater awareness that diet and exercise can help stave off many forms of illness, the reality is that many of us will experience physical disabilities and/or cognitive decline in our later years. Our diminished overall health makes us vulnerable to others who prey on easy targets.
Vulnerability is worsened for seniors who live alone if there are no other caring adults around to provide basic checks and balances on financial management. Often, widows and widowers are more vulnerable than elderly married couples. Elderly women are targeted nearly twice as often as elderly men.
Who are the perpetrators?
Although financial abusers of the elderly come in all shapes and sizes, the most common perpetrators, sadly, come from the victim’s own family. Far too often, sons and daughters feel a sense of entitlement to their parents’ property and financial resources. “I’ll get it eventually, anyway” is their defensive retort. In families with alcoholism, substance abuse or mental illness, the problem is only worsened.
The web of other perpetrators spreads from family and may include friends and neighbors, caregivers and aides, attorneys and financial advisors and, finally, strangers and professional scam artists.
What are some common warning signs?
Any of the following could be an indication that something is amiss with the finances of an elderly parent or friend:
- Sudden or unexplained changes in spending habits.
- Surrendering control of finances to a new friend or partner.
- Suddenly changing a will, trust or beneficiary designations.
- Unexplained checks made out to cash, or unexplained loans.
- Unexplained disappearance of assets (cash, valuables, securities, etc.).
- Signs of anxiety or fear when asked about finances.
While there might be a rational explanation for any of these activities, the appearance of one or more of these possible warning signs at least warrants further review of the situation.
What are some common scams to watch out for?
There are an increasing number of scams perpetrated by professional thieves who often target vulnerable seniors. One of the most frequently reported scams is the “call from the Internal Revenue Service” informing the victim that he or she owes delinquent taxes, interest and penalties.
The IRS does not make introductory phone calls. Period. Nor do they send emails asking for tax payments. Ever. Official contact from the IRS always arrives by letter and will never include requests for immediate payment of any kind.
Other common professional scams include the following:
- Prizes or sweepstakes winners (requiring a deposit or tax payment).
- The “Nigerian Prince” scam (someone asking for a loan to recover his inheritance).
- Home-improvement contractors (claiming they’ve been hired, often by the victim’s recently departed spouse).
- Grandchild in distress (calling for financial help to get home or pay fines).
- Romance scams (initiated through online dating services or chatrooms).
How to protect yourself (or your loved ones)
The first line of defense against elder financial abuse may be to raise awareness in our communities about the warning signs, common scams and preventative measures that might protect us from these crimes. If you or someone you care about may be vulnerable to financial elder abuse, here are some protective action items to consider:
- Stay connected and involved with older family and friends.
- Encourage seniors to use automatic bill payment services.
- Shred financial statements instead of discarding in trash.
- Contact the National Do-Not-Call Registry at donotcall.gov.
- Never send money to someone you don’t know.
- Do not give personal information over the phone.
- Create a valid durable power of attorney.
- Organize and store important legal and financial records.
- Itemize and safeguard valuables and collectibles.
- Request and review a free credit report annually.
- Check references of caregivers and service providers.
- Be wary of all unsolicited offers of any kind.
- When in doubt, get a second opinion of a trusted friend or advisor.
- Assemble a trusted team that includes a financial advisor, an attorney, an accountant, etc.
Article based on March, 2017 CNBC commentary from Richard Behrendt.