ELDER FINANCIAL EXPLOITATION
July 20th, 2017 | Michael A. Lombardo, III
It’s been called the “Crime of the 21st Century”. The Older Americans Act of 2006 defines elder financial exploitation as “the fraudulent or otherwise illegal, unauthorized, or improper act or process of an individual, including a caregiver or fiduciary, that uses the resources of an older individual for monetary 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.”
A recent survey found that over one third of senior citizens have experienced financial abuse. Victims of elder financial abuse reportedly lose about $36,000 on average. But even smaller amounts can have a devastating impact on a senior’s financial security and even on their health. (Almost one in ten financial abuse victims will turn to Medicaid as a direct result of their own monies being stolen from them.)
WHY SENIOR CITIZENS ARE SO vulnerable
The elderly are more vulnerable to financial exploitation for a number of reasons. A significant number are suffering from cognitive impairment. (An estimated 5.4 million people in the U.S. have Alzheimer's disease, which can seriously compromise the ability to make sound financial decisions.) Physical frailty issues mean that seniors have to depend on others, often strangers, for things such as routine chores and maintenance around house. Some elderly people have substantial “nest eggs”, own their home, and have excellent credit, making them attractive marks for con artists. What’s more, senior citizens are often isolated, with no relatives living nearby, or friends visiting them regularly. Finally, seniors are increasingly becoming internet users, but because they’re often internet novices, they may not be aware of the potential risks.
According to “The MetLife Study of Elder Financial Abuse”, about half the perpetrators of elder financial exploitation were strangers, and one-third were family, friends, and trusted acquaintances. Businesses were the perpetrators 12% of the time, while Medicaid fraud accounted for the remainder.
Some Common Ways Family Members and Trusted Others Exploit seniors
- Using a power of attorney, granted by the victim to allow another person to handle his/her finances to steal the victim’s monies for the perpetrator’s own use.
- Taking money from joint bank accounts.
- Using ATM cards or stolen checks to withdraw money from the victim’s accounts.
- Convincing the victim to give the perpetrator money under the threat of physical harm or abandonment.
- Refusing to obtain needed care and medical services for the victim so as to keep the person’s assets available for the perpetrator.
Some ways senior citizens are scammed by strangers
Lottery & sweepstakes scams.
Scammers inform their target that they have won a lottery or sweepstakes and need to make some sort of payment to receive the money or “prize”.
A number of fraudulent investment schemes can exploit seniors looking for the best way to safeguard their cash for their later years.
Medicare/health insurance scams.
Perpetrators may pose as a Medicare representative in order to get older people to give them their personal information, which is then used to bill Medicare.
Home repair scams.
Scammers case neighborhoods looking for older residents, then appear on their doorsteps claiming to spot something in need of fixing such as a hole in the roof or clogged drainpipe.The scammers demand payment up front.
Some scammers read obituaries, then call or attend the funeral service of a complete stranger to take advantage of the grieving widow or widower
Bogus anti-aging products.
Many older Americans seek new treatments and medications to maintain a youthful appearance, putting themselves at risk of scammers peddling bogus products.
One in six American consumers -- about 80% of them are 50 or older — are bilked by bogus telemarketers. Phone scams are typically used to conduct investment and credit card fraud, and identity theft.
The internet can provide scammers with a number of ways to exploit people, of any age. For example, pop‐up browser windows simulating virus‐scanning software can fool victims into either downloading a fake anti‐virus program or an actual virus that will give the scammer access to the victim’s information.
A computer user receives email messages that appear to be from a legitimate company or asking them to “update” or “verify” their personal information.
The “grandparent scam”.
A con artist calls the victim posing as a relative (or someone claiming to represent the relative.) The "relative" of the grandparent explains that he or she is in trouble and needs their grandparent to wire them funds for bail money, lawyer’s fees, hospital bills, or another fictitious expense.
Tips to avoid elder financial abuse and exploitation:
- Deal only with reputable financial institutions and advisors.
- Get to know your banker and attorney and build a relationship with the employees who handle your finances. They can look out for any suspicious activity related to your account.
- Carefully screen and check references of anyone you hire, including caretakers and contractors.
- Do not open the door to strangers or invite anyone you don't know into your house.
- Lock up your checkbook, account statements and other sensitive information when others will be in your home.
- Order copies of your credit report once a year to ensure accuracy.
- Check your bank statements on a regular basis to look for suspicious activity.
- Shred receipts, bank statements and unused credit card offers before throwing them away.
- Never give personal information, including Social Security Number, account number or other
- financial information to anyone over the phone unless you initiated the call and the other party
- is trusted.
- Never pay a fee or taxes to collect sweepstakes or lottery “winnings.”
- Never rush into a financial decision. Ask for details in writing and get a second opinion.
- Consult with an attorney or financial advisor before signing any document you don’t understand.
- Assign powers of attorney only to very trustworthy people.
- Carefully choose a trustworthy attorney and person to act as your agent in all estate planning matters.
For assistance with powers of attorney and estate planning issues, call HKQ Law at (800) 760-1529.
If you suspect someone close to you is trying to take control of your finances, contact your local Area Agency on Aging or call the statewide abuse hotline at (800) 490-8505. If you think you’ve been the victim of financial exploitation, contact the police immediately.