Once you retire, you should be able to enjoy your new life in peace and safety. And for most seniors, that’s the case: a carefree lifestyle full of friends, hobbies, and relaxation.
Unfortunately, for some individuals, that’s not how retirement plays out. There are bad actors out there who are more than willing to cheat innocent, hardworking people out of their life savings.
The good news is that with a bit of education and awareness, you can take the proper precautions to prevent yourself or your elderly loved one from becoming a victim. Learn what to look for and how to keep yourself (and your money) safe.
What is Elder Financial Abuse?
Elder financial abuse, also known as elder fraud or exploitation, occurs when someone takes advantage of a senior citizen for monetary gain. This abuse is illegal and involves stealing someone’s rightful possessions for personal profit. It’s estimated that one in ten adults over age 65 are victims of fraud each year, with a significant portion of these cases being elder financial abuse. What’s particularly concerning is that most financial abuse is carried out by someone close to the victim, such as immediate family members, friends, or other trusted individuals. Other common perpetrators of elder financial exploitation include:
- Banks
- Lawyers
- Financial planners
- Strangers and scammers
Essentially, elder financial abuse is a form of scamming older adults out of their money.
Prevalence of Financial Abuse Among the Elderly
The FBI estimates that in 2022, there were more than 88,000 victims of elder fraud over the age of 60. On average, each victim lost about $35,000. The total amount of money lost to perpetrators of elder financial abuse is estimated at over $3.1 billion.
The 60+ age group represents only the second largest number of scam and fraud victims after the 30-39 age group (over 94,000). However, elder financial abuse accounts for three times the amount of money lost: $3.1 billion for the over-60 group versus $1.2 billion for the 30-39 group. This means that when an older adult is scammed, they tend to lose more money than their younger counterparts.
How is Elder Financial Abuse Committed?
Elder financial abuse can take various forms, ranging from subtle to outright exploitation. Caretakers with access to an older person’s finances sometimes misuse funds for personal gain or make fraudulent purchases. Additionally, friends or family members may resort to threats of withholding care unless they receive significant monetary compensation.
A particularly concerning aspect is that vulnerable individuals with dementia are often targets of financial abuse. Memory loss, declining mental capacity, and trusting natures make these adults more susceptible to manipulation and exploitation. This is why it’s so crucial for loving families and caregivers to stay vigilant and proactive when safeguarding their loved ones from financial exploitation.
Common Elder Scams and Senior Citizen Frauds
Most older Americans have spent their lives saving and investing for retirement. Once they reach a certain age, they (rightfully) expect to enjoy their golden years in peace and comfort. However, older citizens face various scams and frauds that specifically target them for their hard-earned savings and investments. These scams can happen no matter where they live or how physically or mentally capable they are.
As technology advances, scammers are finding new ways to trick people into giving them money or personal information. One of these new ways involves using artificial intelligence (AI) to manipulate phone calls and text messages. The scammers can make it look like the call or text is coming from a friend or family member, using information they found online like phone numbers, addresses, and names of family members. They might even use social media photos to make it seem like the call is from a specific person. These scams are becoming even more advanced, with applications that can trick even tech-savvy adults.
Some of the most common types of scams and frauds that seniors and their loved ones should be aware of include:
Medicare/Health Insurance Scams
Scammers often pose as Medicare representatives or set up makeshift mobile clinics to obtain personal information from victims or to bill Medicare for bogus services. Victims suffer financial losses and potential identity theft.
Counterfeit Prescription Drugs
Counterfeit drug scams prey on seniors looking for affordable medications, causing them not only financial loss but also health complications from dangerous substances.
Funeral & Cemetery Scams
Fraudsters exploit grieving families by falsifying debts and adding unnecessary charges to funeral services. This is why it’s so important to plan funeral arrangements in advance and verify all funeral expenses.
Fraudulent Anti-Aging Products
Fraudsters take advantage of seniors’ desire for a youthful appearance by selling fake anti-aging products like counterfeit Botox that can lead to serious health problems.
Telemarketing/Phone/Grandparent Scams
The Pigeon Drop or fake accidents are popular phone scams that target older adults.
The Pigeon Drop is a scam based on the idea of finding unclaimed money. Scammers explain they just found cash and want to share it with their intended victims. However, the scammer must first receive some of the victim’s funds in order to share the money. The victim just lost a significant amount of money that they’ll never see again.
In a fake accident scam, the con artist gets the victim to wire or send money on the pretext that the person’s child or another relative is in the hospital and needs the money. This can also take the form of a “grandchild” or other immediate relative needing bail money. Beware of strangers who claim to be a relative in need.
Internet Fraud
Automated Internet scams, such as phishing emails or fake virus-scanning software, exploit seniors’ limited knowledge of online security, emphasizing the need for education and awareness to avoid falling victim to online scams. They count on less tech-savvy adults clicking on random pop-ups or opening unsolicited email attachments.
In phishing attacks, hackers create fake emails or text messages that look legitimate and appear to be from a trusted source, like a government agency, online shopping page, or bank. Users are tricked into downloading malware, visiting a malicious website, or divulging login credentials so the scammers can access their online accounts.
Investment Schemes
Scammers target seniors with various investment schemes, from pyramid schemes to complex financial products. Investment schemes have long been successful ways to take advantage of older people who want to safeguard their cash for their later years. The reality is that these schemes are used to part people with money they might never recover.
Homeowner/Reverse Mortgage Scams
Scammers take advantage of seniors’ homeownership by offering fake property tax reassessments or pressuring them into reverse mortgages.
In a fake property reassessment scam, bad actors use mailers resembling a government agency’s property tax bill. They claim that the homeowner is paying too much in property taxes due to declining home values and offer to assist with reducing the home’s assessed value for a fee. The goal is to trick the homeowner into paying hundreds or thousands of dollars to get the home reassessed and reduce property taxes. Scammers may even threaten homeowners with a late fee if the victim doesn’t respond by a specific date.
Reverse mortgage scams include foreclosure scams, equity theft scams, house flipping scams, fraud by relatives or financial planners, veteran reverse mortgage scams, and fraud by contractors. Scammers use various tactics, such as promising relief from foreclosure, inflating home appraisals, convincing seniors to invest in property flipping schemes, coercing them into unnecessary reverse mortgages, and falsely claiming to offer VA-related reverse mortgages.
Sweepstakes & Lottery Scams
Fraudsters lure seniors with false promises of lottery winnings, tricking them into paying fees or taxes for non-existent prizes. They may even offer the chance to play lotteries in foreign countries, which is illegal.
Romance Scams
Scammers target lonely and easily flattered older adults. They create fake online identities and engage and manipulate seniors emotionally, promising love and affection. Once the scammers have gained their trust, they eventually request money under false pretenses, such as needing money to visit them and finally meet in person.
How to Detect Elder Financial Abuse
Thankfully, there are many red flags to watch out for when it comes to elder financial abuse. Number one is being wary of strangers who offer money for nothing or opportunities that seem “too good to be true.”
Other signs that indicate someone is trying to scam you:
- They emphasize a sense of urgency or make you feel afraid of not listening to them
- They insist on keeping you on the phone or otherwise in contact with them
- Someone contacts you by phone, email, regular mail, or at your door with a random offer
- They ask for personal information, such as your social security number, or identifiable information like a check
- They request remote access to your accounts or your device
You get an email attachment from someone you don’t know or aren’t sure of - You’re requested to send money in order to claim a prize or play a foreign lottery
- A stranger presents you with information you’ve posted on social media as a way of seeming legitimate
- Someone you’re doing “business” with demands payment only by cryptocurrency, prepaid cards, wire transfers, or overnight mailed cash
Scammers are pros and know what they’re doing, so they’ll say whatever they have to to part you from your money. Remember, banks and government services will never cold-call you asking for personal information. When in doubt, don’t click on links. If you’re unsure about legitimacy, ask someone you trust for a second opinion.
If you oversee finances for your older loved one, look out for these signs:
- Extreme spending habit fluctuation
- Bounced checks
- Late payment charges
- Missing deposits
How to Prevent Elder Financial Abuse
One of the best ways to stop scammers in their tracks is by making it difficult for them to scam you or your loved one. Use these methods to prevent elder financial abuse before it starts.
Establish Trustworthy Support Networks
This can involve giving financial access to a trusted family member who can monitor transactions and ensure no fraudulent activity occurs. Regular family meetings focused on financial transparency and management can also build trust and reduce the risk of exploitation by family members or caregivers.
Regularly check financial accounts and set up alerts for any suspicious activity to help detect and prevent fraud before it escalates. Also, consider limiting the number of credit cards you have and setting up automatic bill payments to reduce the risk of credit card fraud or misuse.
Educating Seniors and Caregivers
Education is one of your strongest weapons in preventing elder financial abuse. Seniors and their caregivers need to be educated about the scams and frauds targeting older adults that we listed above. The FBI has a page dedicated to the latest scams and alerts.
A sense of community and belonging can also help older adults stay safe from scams. Fraudsters prey on the lonely and vulnerable. Staying active and surrounding yourself with friends and loved ones can go a long way toward keeping you from falling victim to scammers.
Find a Community You Can Trust With New Perspective
All New Perspective senior living centers are centered around the idea that older adults should be able to enjoy their golden years safely and comfortably. From events and amenities designed to encourage social interaction to highly trained, reliable staff, you can count on us to take good care of you or your loved one.
Check out our many communities around the Midwest, or contact us to schedule an in-person tour of a clean and safe New Perspective community near you!