More than 369,000 incidents of financial abuse targeting older adults are reported to authorities in the U.S. each year, causing an estimated $4.8 billion in losses, according to a January 2022 analysis of federal and state data by Comparitech, a cybersecurity research company.
And those numbers probably understate the problem by a considerable amount. Experts agree that elder financial exploitation, broadly defined as the theft or misuse of an older person’s money by someone they know, is vastly under-reported.
But experts also say that in most cases, the abuse can be prevented before it starts. Take these steps to help protect yourself or a vulnerable loved one from financial exploitation.
1. Designate someone you trust as your financial power of attorney.
While you’re still able to make financial decisions, choose the right person to do so if you become incapacitated. Or persons: If you invest two people with this responsibility, they can share the workload and hold one another accountable.
"We don't like to talk about finances. It's private. But we need to change that dynamic," says Julie Schoen, deputy director of the National Center on Elder Abuse (NCEA) at the University of Southern California’s Keck School of Medicine.
Skip the standard power-of-attorney form and customize the role to meet your needs, preferably with the help of a lawyer. (The federal government’s Eldercare Locator can help you find free or low-cost legal assistance.) Maybe you want your agents to handle all your financial matters, or maybe you just want them to, say, file taxes or manage property. Spell it out.
2. Appoint a trusted contact for accounts and investments.
A trusted contact is someone you authorize a bank or financial institution to get in touch with about questionable activity on your account, or if they are unable to reach you. The company can disclose some account information to your trusted contact, but he or she is not able to make transactions.
A similar option is to give someone you trust view-only access to your account. View-only users can monitor your transactions but not conduct business or access the funds. This is a safer option than establishing a joint account, where the other person can make withdrawals and your money automatically becomes theirs upon your death.
"Never add someone to your bank account or the title to your property," advises Joanne Savage, an attorney with AARP’s Legal Counsel for the Elderly, which provides free legal services for older adults in Washington, D.C.
Contact your bank or brokerage or visit its website for information on adding a trusted contract or view-only user to your account. The Financial Industry Regulatory Authority (FINRA), a nongovernmental body that oversees brokerage firms, requires its members to ask customers to identify a trusted contact when they open or update an account.
3. Sign up for a service that tracks your bank accounts, investments and credit cards.
These services do more than provide front-line protection in detecting scams, fraud and identity theft — they can also offer support in recouping any losses. If you do fall victim to fraud, for instance, they can walk you through the steps to take in reporting it and mitigating your losses. In the case of identity theft, EverSafe will reimburse lawyer fees.
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4. Stay in touch with older loved ones.
A natural consequence of aging can be losing connections through retirement, moves, and the deaths of spouses, family members and friends. Social isolation, whether brought on by life's circumstances or physical distancing required by the COVID-19 pandemic, is one of the greatest risk factors for elder financial exploitation, according to the NCEA.
Maintain close contact with older loved ones through regular visits, phone and video calls, emails and texts. Encourage them to stay involved with others through a faith community, volunteer activities or other social groups.
And watch out for someone — even someone you thought you or your loved one could trust — who discourages contact with family and friends, exerts pressure on financial decisions or asks for large sums of money.
"There's a phenomenon where someone befriends an older person, becomes part of their life and is grooming them, so when they ask for money the older person will give it to them, " says Kristin Burki, director of the National Clearinghouse on Abuse in Later Life (NCALL). "They're looking for vulnerabilities in an older person. Pay attention to the relationships in an older person's life."
5. Get to know your loved one’s caregivers.
If you need to hire in-home help for a loved one, strongly consider going through a bonded agency that does rigorous screening and will take action in case of theft, such as contacting authorities and reimbursing you.
Once hired, observe how the caregiver is taking care of your loved one. Are they keeping them clean? Stocking the refrigerator with healthy food? Giving medications regularly?
"They're less likely to financially exploit Mother because they know you're paying attention," says Bonnie Brandl, the founder and former director of NCALL. If you have suspicions or an uneasy feeling about a caregiver, find another.
John Rosengren is a Pulitzer nominee whose articles have appeared in The Atlantic, The Atavist, The New Yorker, Sports Illustrated and The Washington Post Magazine. His novel A Clean Heart was published in the spring of 2020.
Editor's note: This article, originally published Nov. 1, 2021, has been updated with more recent information from Comparitech's review data on U.S. elder fraud. It has also been corrected to reflect that FINRA, not the U.S. Securities and Exchange Commission, requires brokerages to ask new account holders to name a trusted contact.