Scammers view the elderly as easy prey. To guard yourself or a loved one against financial exploitation, it’s important to know the warning signs — and what to do if you spot them.
Financial abuse can take many forms, ranging from investment scams, bogus lottery schemes and stolen jewelry to identity theft, credit card misuse and forged checks. Sadly, most perpetrators of financial abuse aren’t strangers.
The National Center on Elder Abuse reports that 90 percent of the perpetrators are family members or people the victims know well, such as neighbors, friends or caregivers. Here’s what to watch for:
Lack of knowledge about major financial issues
One immediate red flag is when an older person who was previously engaged and sharp begins to demonstrate a significant lack of recall about important matters.
This isn't the garden-variety type of lapse — like "I don't know where I put my keys" — that nearly all of us experience from time to time. It's more like when a retiree whose signature is on a bank withdrawal slip for a large amount later says, "That doesn't ring a bell," or "I don't recall taking that money out of the bank."
According to Marcy Keckler, vice president of financial advice strategy at Ameriprise Financial, such scenarios should raise suspicion among the retiree's family or caretakers.
"It may be that diminished mental capacity is becoming an issue, or perhaps someone has gotten involved in a way that's not authorized — or something was authorized, but it's not in the client's best interest," says Keckler.
Whatever the case, the finances of the retiree should be immediately examined and more closely monitored on an ongoing basis to safeguard the person's assets.
Physical frailty issues
Mental decline isn't the only thing that makes an aging person more vulnerable to financial abuse.
Often, older individuals don't have the physical strength or mobility to handle as many chores around the house or keep up with maintenance issues the way they used to. "It can be a time when the elderly have to invite more service providers into their lives," Keckler says, explaining that predators can take advantage of this situation.
David Geibel, senior vice president and wealth adviser at Girard Partners Ltd. in King of Prussia, Pa., agrees. Most contractors are doing legitimate work, Geibel notes. "But unscrupulous home repair contractors will knock on the door and tell a retiree: 'We're in the area working on your neighbor's property, and I see that you need water remediation,'" Geibel says. "Basically, they scare an older person by saying there's serious damage to the home."
The result is a massive home repair bill or even a series of monthly charges for nonexistent repairs.
Whenever possible, close friends or relatives of an older person should be present during a contract signing or when home repairs are done, to decrease the risk of contractor fraud.
If no relatives live nearby and no friends regularly check in, it's easy for strangers to step in and befriend an elderly person for financial gain.
"People who have ill intentions may exploit the isolation and loneliness of many seniors who are open to making a connection with anyone," Keckler says.
"So pay attention to new friendships or relationships a parent makes," Keckler suggests, adding: "That can be a door in that can lead to exploitation."
Questionable behavior of relatives
Even when family members live with an older person, you have to watch out for certain questionable behaviors that may be telltale signs of financial abuse.
People who financially exploit the elderly come from all backgrounds and walks of life, yet many financial abusers fit a profile, some researchers say.
"Perpetrators are most likely to be adult children or spouses, and they are more likely to be male, to have a history of past or current substance abuse, to have mental or physical health problems, to have a history of trouble with the police, to be socially isolated, to be unemployed or have financial problems, and to be experiencing major stress," according to a report in the New England Journal of Medicine.
Furthermore, relatives who live in the home have greater access to the older person's accounts, financial statements and personal documents.
Self-serving family members might even convince an elderly person to transfer funds from the accounts, make excessive withdrawals or make other transactions that sap the person's finances.
So if a relative who's looking after an elderly person makes a sudden change in lifestyle — perhaps he suddenly quits his job or she starts driving a new car that seems out of her price range — make sure that change of lifestyle isn't being subsidized by the elderly person in the home.
"Americans generally are nonconfrontational and tend not to question those things," Geibel says. "But if something doesn't appear right, you have to speak up."
Most cases go unreported
Just 1 in 44 financial elder abuse cases are ever reported, according to the National Adult Protective Services Association.
Nonetheless, when Allianz Life Insurance Co. recently polled people age 65 and older asking if they would tell someone if they became a victim of elder financial abuse, the overwhelming majority (94 percent) said they would.
But in the same poll, Allianz also surveyed relatives and friends (ages 40 to 64) of those same people. And of the relatives and friends, about half said they either don't think the elder would tell someone or are unsure. The majority of family and friends (72 percent) cited embarrassment as the main obstacle they believe keeps elders from reporting financial abuse.
And, naturally, older people often don't want to get relatives in trouble — especially if those relatives are their caretakers.
What to do
If you suspect elder financial abuse, don't hesitate to confront the perpetrator and get the proper authorities involved, Geibel and Keckler say.
Theft should be reported to law enforcement officials, and there are local and state social services agencies in every state to help elderly victims of financial abuse. The National Center on Elder Abuse (ncea.aoa.gov) can point residents in every state to an elder abuse hotline.
Additionally, to help with investment issues, the Financial Industry Regulatory Authority has a newly established toll-free help line (844-57-HELPS, or 844-574-3577) that older people can call if they have questions about their brokerage accounts, including statements and individual investments. The hotline is open weekdays from 9 a.m. to 5 p.m. ET.
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