BY ANDREW TARPEY
There is a changing demographic trend that is common to many Western countries: as people today have smaller families compared to past generations, the percentage of the population that is older keeps growing. In the United States, the number of people aged 65 or older is expected to double by the year 2060, from approximately 46 million today to more than 98 million, with their share of the population rising from 15 percent to 24 percent during this time. Along with a steadily aging population come increasing reports of a dark and troubling trend: financial abuse and exploitation of the elderly.
Although it’s difficult to determine exact numbers on the matter, it’s believed that, in the United States, older adults lose approximately $3 billion per year to financial exploitation. Although people of any age can become the victims of financial fraud or scams, seniors are a more likely target for several reasons. First of all, as a person ages, mental and cognitive decline can set in which makes them more vulnerable to exploitation. In addition, many elderly people have accumulated a large amount of savings or retirement funds from a lifetime of working, and many seniors manage these assets themselves, which is a welcome sign to scammers looking to make a big score. Also, the elderly often live alone, which raises their vulnerability. Lastly, older people came from a different generation where it was more common to trust others, and these feelings of trust can be exploited by scammers as a way of swindling them out of their money.
There are many different ways in which elder financial abuse can be carried out. A common form is for a stranger to pretend to be someone they’re not, and then use a story to try to extract money from the elderly. Such a scam can involve impersonating:
- A family member of the elderly. The elderly person will receive a phone call from someone claiming to be the older person’s grandchild or other relative, and the scammer will state that they are in some sort of financial trouble, in jail, or another difficult situation, and ask for financial assistance to help them out.
- A charity worker. Someone purporting to be from either a legitimate or bogus charity will call the senior and solicit funds, supposedly for a good cause. This is more likely to occur after a natural disaster or other unforeseen event.
- An IRS worker. A scammer claiming to be an IRS agent will contact the elderly person and inform them that they have unpaid back taxes and threaten them with arrest or another severe penalty. Once intimidated, the elderly person will be given the option to settle the matter by paying over the phone via a debit or credit card.
- Someone in home repair. The con man will tell the elderly person that they noticed some structural problem with their roof/stairs/driveway, etc., and will offer to fix it for a discounted price. After asking for upfront payment, the scammer will disappear without returning to fix the problem.
Disturbingly, instances of elder financial abuse are most often committed by those closest to the victim, such as family members or friends. There are several ways an older person can be taken advantage of by someone they trust.
- Power of attorney. A family member of the senior who has power of attorney over their finances can use that role to transfer the money to their own bank account or use the senior’s checks or credit cards to make purchases for their own benefit.
- The caregiver for the elderly person can manipulate the victim into giving them money or buying them possessions using false stories of hardship, such as claiming to have lost a job or suffering some other financial setback.
- Opening new accounts. A family member or friend who has access to the senior’s financial documents is able to open bank accounts and credit cards in their name which can be used for the person’s own benefit, not the senior’s.
Now that we’ve identified the manner in which the elderly can be manipulated by both strangers and those close to them, the issue of how it can be prevented should be addressed. One problem is that victims of financial elder abuse are usually unable to identify the problem, and in cases when they do, many are reluctant to do anything about it. There are several reasons for this: the perpetrator can be someone close to them who they love, they may be fearful of confronting the situation, or they may feel a sense of shame about what has happened to them. It’s important to address the issue before the problem exacerbates, however, and the first thing that should be done is to contact law enforcement, as most instances of elder financial abuse are criminal acts. In addition, there are several ways for a senior to be proactive and protect themselves before financial elder abuse occurs:
- Handle their own finances. This may not be for everyone, as some seniors don’t have the financial acumen to handle their own finances when mental or cognitive decline sets in, but when it is possible, the senior should continue to pay their own bills and monitor their bank account activity. A joint bank account or power of attorney that allows someone else to manage their finances can open the door to financial abuse.
- Set up a trust. Appointing an independent trustee and putting terms in the trust as to how assets are to be distributed and the purposes of such distributions can reduce the chances of the senior being financially exploited by a potential abuser.
- Invest in an elder protection monitoring service. There are several products which send out alerts when suspicious or unusual activity occurs in a senior’s bank accounts, such as excessive withdrawals, missing deposits, and other changes in spending patterns or account activity. Some services even note changes to data on a person’s credit report. Such a service could be greatly beneficial at identifying whether a senior is being taken advantage of.
As stated previously, if a senior or their family member or caretaker is suspicious that financial abuse is occurring, it’s best to immediately contact law enforcement or the local government agency that handles services for the elderly. Even if there is no definitive hard evidence, it’s best to have someone investigate the matter to determine if there is abuse occurring.