What Seniors Need to Know About Recognizing Elder Financial Abuse
There are many things that can threaten someone’s financial security in their later years: inflation, medical expenses, a struggling stock market. One danger you may not expect: elder financial abuse and financial scams.
Elder financial exploitation happens when someone misappropriates or misuses the financial assets of an elderly person. According to a study published in the American Journal of Public Health, 1 in 18 cognitively intact older adults falls victim to financial scams, fraud or other forms of financial abuse. And the cost? Studies estimate that seniors lose between $3 billion and $36 billion each year to financial abuse.
If you are worried about your financial health being compromised later in life, or if you’re a caretaker or family member of an older person, it helps to have a solid line of defense. Here’s what to know about spotting elder financial abuse — and how to avoid it.
How Elder Financial Abuse Can Happen
Seniors can be targeted for financial exploitation in a number of ways. The perpetrators can be friends, relatives, or caregivers — or complete strangers.
A caregiver, family member, or close friend, for example, may be able to take money from bank accounts, forge signatures on legal or financial documents, or abuse credit cards.
Unknown fraudsters have sophisticated tricks for fooling elderly consumers. A report from the Stanford Center on Longevity found that seniors are more likely to fall victim to financial abuse when the abuser plays on emotions like excitement or fear. For example, a scammer may use high-pressure tactics designed to induce a fraudulent investment.
Another method is the “grandparent scam,” where tricksters impersonate a family member in a late-night phone call and pretend to be in trouble and in desperate need of money.
Recognizing the Signs of Elder Financial Abuse
Friends and family members should know the signs of potential financial abuse or exploitation. The Association of Certified Financial Crime Specialists recently highlighted some red flags to watch out for:
- An older person suddenly has a new companion (such as a “friend” or caregiver)who is overly interested in their finances.
- A new companion suddenly has access to an older person’s private financial information or claims to be conducting financial transactions on their behalf.
- The older person is prevented from speaking for him or herself or the companion is unwilling to leave the older person alone when discussing financial matters.
- The older person seems afraid, anxious, or overly submissive toward someone in control of their financial information.
- An older person is excited over a deal that seems “too good to be true.”
- An older person appears to have changed, for example, their demeanor, appearance, grooming, or hygiene.
- An older person is unable to remember or understand transactions they have made or documents they have signed.
Helping Prevent Elder Financial Abuse
Preventing financial abuse starts with knowing what factors put you at risk. According to the National Committee for the Prevention of Elder Abuse, seniors are more likely to be victims of financial abuse if they are isolated, have physical or mental disabilities, have family members with a history of substance or gambling addiction, or aren’t familiar with the particulars of their financial situation.
The next step is safeguarding financial accounts. Anyone who manages their bank or credit card accounts online should select secure passwords, monitor accounts regularly, and consider setting up alerts indicating when new purchases or account changes are made. For example, you can activate text and email alerts for your Discover card to keep an eye out for fraudulent activity.
Other tips include:
- Never give out personal information over the phone or via email, especially to someone you don’t know.
- Check your credit reports regularly and consider placing a freeze on your credit history if you don’t plan to take out any loans or lines of credit in the near future.
- Opt for electronic statements whenever possible and use a cross-cut shredder to destroy paper statements or other records you no longer need.
Anyone who may be a caregiver for an elderly family member should plan to have a family conversation about elder financial abuse so your loved ones know what to watch out for.
And, if you suspect that a family member or someone you care for has been or could be the victim of elder financial abuse, there are ways you can help. The National Center on Elder Abuse provides information on how to report suspected abuse to law enforcement, your local Adult Protective Services agency, or the state attorney general’s office. You should also encourage potential victims to get in touch with their bank or credit card company to assess the damage and determine their options.