If you think no one could be so cruel as to pick the pocket of a little old lady or man, think again. In 2011, elders lost nearly $3 billion due to financial exploitation, up from 2.6 billion in 2008. Some 7.3 million older Americans have been victims of elder financial abuse, according to the Investor Protection Trust.
A recent online poll of a diverse group of state securities regulators, financial planners, health care professionals, social workers, adult protective services, law enforcement officials, elder law attorneys, academics and others found that about two-thirds of those surveyed deal with elderly victims of investment fraud/financial exploitation. Three out of four experts surveyed by the Investor Protection Trust and Investor Protection Institute said that such swindles are a “very serious” problem in America today and an even greater number – 78 percent said older Americans are “very vulnerable” to investment fraud/financial exploitation. (source)
What are the most common abuses? The top three financial exploitation problems identified by the experts polled are, theft or diversion of funds or property by family members (79 percent); theft or diversion of funds or property by caregivers (49 percent); and financial scams perpetrated by strangers (47 percent).
Your parents did their part in raising you, if it's your turn to look out for them, an aging relative, neighbor or friend, here's how to keep them from being a victim of losing their hard earned money, which at this stage in their life they won't be able to easily replace.
Begin the conversation
“It can be difficult to begin a conversation about suspicions of possible financial abuse. Reassure them that you are raising these issues because you want to be certain that their wishes regarding financial matters and health care decisions are respected and carried out, especially if there comes a time when they are unable to make these wishes know and that you are protecting them from those who could take away their security and peace of mind,” says Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute. “Encourage your parent to speak with you about any concerns. If they seem unduly worried, ask about it. Victims of elder financial abuse and other forms of abuse are often reluctant to discuss it because of embarrassment or sometimes fear, especially if it is a family member or someone close to them that is the perpetrator.”
Monitor financial affairs
Stress the importance of checking monthly credit card and bank statements, and offer to assist them if that would help. Encourage direct deposit of any payments they regularly receive, such as social security. “If parents have cognitive impairments, they can be especially vulnerable to financial abuse. In these situations, adult children should closely monitor their parents' financial affairs,” says Karen Roberto, Ph.D., director of the Center for Gerontology at Virginia Tech. Do pay attention to protecting passwords for the Internet, ATMs and telephone transactions.
Keep it simple. “Simplify finances. Get everything in one place,” says Steve Starnes, a financial advisor with Savant Capital Management. Important documents, records, a list of advisors and other crucial information should be organized and readily available.
Be selective about personal information
Advise your loved ones to never send money or provide credit card information and expiration dates, bank account numbers, dates of birth or social security numbers to unfamiliar companies or unknown persons. “These items are part of the most valuable possessions and should be treated as such,” says Wade Mayo, president and CEO of Life Insurance Company of the Southwest, where he oversees the retirement division.
The phone can be a primary vehicle of scammers. Remind your parents that it's okay to hang up when a solicitor or unknown person calls. Suggest caller ID to screen calls. They can also add their names and phone numbers to the National Do Not Call Registry by calling 1-888-382-1222 to greatly reduce the number of telemarketing and other unwanted calls, says Timmermann.
Know the signs of impairment
People are most susceptible to fraud in the early stages of cognitive decline. Unfortunately, at this stage, impairment and fraud often go unnoticed because decline is difficult to detect. The ability to manage finances is one of the first areas people have trouble with, explains Starnes.
There are some key clues though, bills going unpaid, difficulty writing, remembering names, places and dates, mood changes, among others.
Don't ignore changes
There are also signs that your loved one may have been a victim of elder financial abuse. “Changes in mood or behavior, hesitation in speaking openly with others, anxiety or agitation,” says Roberto.
Look for changes in usual banking habits, like excessive use of ATM cards and credit cards, abrupt changes in their will or other financial documents, unexplained disappearance of valuables, unexplained transfer of assets or money to a family member of someone outside of the family, discovery of your family members' signature on forged or blank checks, financial documents, or titles in their possession. You especially should be cautious about a “new friend” – someone not part of your parents' past who takes an interest in them – runs errands for them, shares meals, visits frequently. “They may be setting them up to be taken advantage of,” says Roberto.
If trouble has occurred, or you are suspicious, you can turn to your local police department, the bank (if money is being taken from accounts), and your state or local Adult Protective Services agency. To find Adult Protective Services in your family members' local area, call the Eldercare Locator, a government-sponsored national resource line at 1-800-677-1116 or www.eldercare.gov, or contact the local Area Agency on Aging.