Elderly financial abuse is a type of elderly abuse that is widespread and prevalent. It can affect anyone sometimes leading them to a helpless situation. In March 2020, US prosecutors filed accusation against more than 400 people across the world accused of defrauding senior Americans of more than USD 1 billion. This was one of the largest crackdowns on elderly financial abuse in history.
This article takes a closer look at issues surrounding elderly financial abuse and provides suitable ways to address such situations.
What is Elder Financial Abuse?
The Older Americans Act of 2006 defines the term elder monetary abuse in detail.
It identifies it as the “fraudulent or otherwise illicit, unauthorized, or inappropriate act or process of an individual, including a caregiver or fiduciary, that uses the assets of an older individual for financial or personal benefit, profit, or gain, or that results in depriving an older individual of rightful access to, or use of, benefits, resources, belongings, or assets.”
It is estimated that elderly financial abuse and fraud costs to older Americans in a range from $2.9 billion to $36.5 billion annually. This number might be under-reported, but it still gives an idea about how huge this issue is.
Who Are the Perpetrators Who Commit Elder Financial Abuse?
While the sheer number of financial abuse victims is scary, what is even worse is that in many cases, such abuse is carried out by someone who is known and quite close to the victim. The perpetrators of elder financial abuse can include-
- Close family members
- Friends and acquaintances
- Health care providers
- Banks and other financial institutions
How Is Elder Financial Abuse Generally Carried Out?
There are many ways in which the elderly are deceived and abused financially. We are outlining some of the most common ways in which such a form of abuse is perpetrated.
- Lotteries & sweepstakes: A lot of elderly people receive communication from scammers about a lottery or special prize that they have won. The scammer would claim that they are associated with a prize or lottery commission and would ask the elderly to send money to cover the taxes on their winnings.
- Home repair: This is another of the popular scams where a “paver” would inform a senior about a job that the scammer claims to have completed somewhere in the neighborhood and they would like to use or get rid of some leftover materials. They would offer to repair or repave the elderly’s driveway at a discounted price and insist on an advance payment towards the same. However, the scammer would typically vanish after taking the payment and not completing the promised work.
- Law enforcement: The scammers in this case pretend to be a law enforcement agent and claim that the senior owes a fine. They may also try to convince a victim of fraud that one of the family members is in prison and the victim needs to send the bail money.
- Charity: In the charity scams, the scammer impersonates themselves as representatives of a charity foundation aiming to collect donations. This sort of appeal generally comes up after tragic situations like natural disasters, etc.
- Utility Company: In these cases, the scammer impersonates someone from the electric, water, cable, or any other utility company and tries to collect unnecessary fees or payments.
- Grandchildren: In this form of impersonation, the scammer would communicate with an older person pretending that they are their grandchild and ask to borrow money to take care of unexpected situations or hardships that they are facing.
- Email phishing: This sort of scam involves the senior receiving an email that seems to be from a legitimate entity like the IRS where they are being requested to update or verify their personal information. Once the seniors reveal their social security number, credit card information, or other sensitive information, the scammer is able to use this disclosure towards identity theft.
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- Predatory lenders: In these sort of cases, lenders pressure the older clients to take out reverse mortgages or other forms of predatory loans with high interest rates. The client will be convinced to do so because of high pressure or fraudulent misinformation despite the fact that such step would not be in the client’s best interests.
- Investments: The elderly are very commonly targeted for being a part of Pyramid or Ponzi schemes and other forms of “Get Rich Quick” schemes.
- Identity Theft: The social security number of a senior is one of the most sought after details for the scammers. It can lead to identity theft and once a victim’s identity is stolen, it can be used ot open up fraudulent credit cards or other lines of credit in the name of the victim.
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Caretakers, friends, family or other close ones
- Power of Attorney: Financial abuse is sometimes carried by the person who has been granted the power of attorney and they can acquire money, assets, or possessions that belong to the elderly.
- Checks or Bank Cards: Sometimes the elderly provide access to their bank cards or checks to a known person who can then withdraw money or make fraudulent purchases without their knowledge.
- Violence Threats: The elderly are often in a vulnerable position and are sometimes threatened using violence in exchange of money or assets.
- Withholding care: Sometimes the friend, family member, or the caretaker may threaten to not help the elderly with their care-related tasks. They may not pick up their groceries, not mow their lawn, or withhold other services unless they are provided with money. In other cases, a paid caretaker might neglect certain responsibilities while still collecting their full remuneration.
What Are the Signs That Depict Elder Financial Abuse?
You can be wary of some telltale signs that indicate that there might be elder financial abuse happening around you.
The possessions belonging to the elderly begin to disappear without explanation and even if an explanation is provided, it just does not make any sense.
The seniors might see multiple instances of being asked to sign a document or take decisions right away, or they risk the chance of losing out on their possessions or needed services.
This creates a false sense of urgency to build panic for the elderly thereby pressuring them to take an instant decision.
An individual might come up as the authority or caretaker who is responsible for managing the senior’s finances or health, but they do not seem to have adequate documentation that proves their claim.
There is a significant reduction in communication with family members. There are repeated instances of unpaid utility bills.
There are new “best friends” who are accompanying the seniors to financial institutions like the bank and they might also be added as signatories on the bank account of the elderly.
The checkbook of the elderly or their check register displays frequent checks that are taken out to cash. It might also have check numbers that are not in the sequence.
There might also be sudden changes to the senior’s will or other financial documents or an unanticipated transfer of assets to a friend or a family member.
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What Are the Effects of This Kind of Financial Abuse?
For a senior, the effects of financial abuse can be extremely negative. Apart from the financial losses suffered by them, they may experience a loss of trust and increased amount of skepticism of everyone, including their trustworthy friends and close family members.
They may witness feelings of fear, shame, depression, anger, and other forms of negative emotions. In some cases, these negative emotions can also bring them closer to alcoholism.
This may also lead to depletion in physical health because of stress or not being able to afford better care and nutrition. They may become dependent on government assistance and in some case, may lose their residence, car, or utilities because of their inability to make payments.
Why Are Seniors More Vulnerable to These Sorts of Financial Abuse?
The first reason that comes to mind when you think about the reasons for the seniors to be vulnerable to financial abuse is the decline in their cognitive thinking that happens over time. However, there are few other reasons that make them soft targets.
Older baby boomers tend to have more accumulated wealth. The concentration of wealth makes them more desirable targets for thieves and scammers.
More trusting nature
The baby boomers have grown up in an era that was more trusting. This trait continues with them even during the current times making the seniors more likely to fall for scams. Baby boomers are more likely to say yes if asked on whether most people can be trusted.
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Declining financial capacity
Financial literacy tends to decline with age leading to a loss in capacity to make sound decisions. However, with the decline in financial capacity, the level of confidence is not affected much. This is why a lot of seniors are caught unaware of their financial vulnerability.
Need for companionship
Seniors often tend to feel secluded and isolated as their health starts to witness a decline. They are less able to participate in community activities making companionship a strong pull. This need for companionship is often used by scammers to take financial advantage of the elderly.
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In some cases, where the elderly are dependant on others, this can be used against them. Seniors may fear that they might lose their independence or might be pushed into staying at a nursing home if they do not go along with the abuser’s demands.
When combined, you find a demographic that on average has a lot of accumulated wealth, are more trusting of people, not adept at making financial decisions, and mostly dependant on others for their needs. All of these factors together can lead to an increased level of vulnerability to financial abuse amongst the elderly.
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How Can Seniors Avoid Instances of Financial Abuse?
While it is nearly impossible to foresee all forms of financial abuse and avoid them from happening, the elderly can still be cautious and take some preventive measures to save themselves from any form of financial abuse.
As mentioned before, isolation can sometimes contribute to fear and financial vulnerability in the elderly. Being cut off from the outside world can make things more difficult for others to detect any warning signs.
The seniors need to thus remain socially active so that they do not feel the absence of resources and relationships that tend to make them feel financially secure.
Staying financial savvy
This would include avoiding opening a joint bank account so that a family member can more easily make payments or withdrawals on their behalf. Joint accounts are an easy way to theft and abuse.
The risk of financial abuse is also increased once the elderly identifies a decreased capacity to make independent financial decisions. You may seek legal counsel and invoke a power of attorney as a proactive way for the future.
Do not make money decisions immediately. Always look for details in writing and take an alternative opinion, preferably from a professional.
Do not give up your home
A senior might consider signing over their home to a trusted family member especially when moving into an assisted living facility. However, it might not be a safe idea to signt he home over to another person as it can be one of the most valuable assets for the senior.
Do not share your financial information
Never give away your financial information, like social security number or your bank account details. Always shred the receipts, bank account statement, or unused credit card offers before disposing of them.
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What Should You Do if You or Your Loved One Is a Victim of Financial Abuse?
If you suspect that your loved one is being abused financially, do not hesitate to have a candid discussion with your loved one to try and clarify the whole situation. You may want to talk to their bank to monitor the account for any suspicious activities.
The victims may also track recovery through a civil lawsuit. Experienced elder mishandled attorneys have the capability to check the details of the case and explain to you your legal options.
Any form of financial theft, in this case, should be reported ot the law enforcement officials. Every state has local and state-level social services agencies that assist elderly victims of financial abuse.
You can also get in touch with the National Center on Elder Abuse in your state.
In addition to this, for investment-related decisions, you can get in touch with the Financial Industry Regulatory Authority Securities Helpline that is dedicated for seniors to cater to their queries and concerns about brokerage accounts and investments.
It is a good idea to verify the information before trusting a complete stranger who has turned up at your doorstep.
Elderly financial abuse is like a frightening epidemic that targets the vulnerable senior population around you. The elderly can try to stay on top of their finances and be wary of trusting strangers with issues related to money.
However, with declining cognitive abilities, it becomes essential to set things in place proactively so that they do not become victims of financial frauds and abuse. In case this happens, they should not shy away from seeking help from those close to them or even legally, if required.