Losing money to scams and fraud is disheartening for anyone. Unfortunately, millions of aging adults experience financial abuse each year. This exploitation strips aging adults of their dignity, trust, and independence, so it’s important for family members to help when they can.
Often, elder financial abuse can slip under the radar. People often focus on managing finances before retirement, but managing money after retirement is just as, if not more, important. The good news is that it is possible to prevent elder financial abuse and keep your loved one safe.
Creating a solid preparation plan with your aging loved one will help you block fraudulent attempts from occurring. Let’s take a look at what elder financial abuse is and how you can help protect your loved one.
What is Elder Financial Abuse?
Simply, elder financial abuse occurs when someone takes advantage of an aging person for financial gain. Elder financial abuse is also referred to as elder fraud or exploitation. Elder fraud is illegal, as it involves stealing someone’s rightful possessions and using them for personal profit.
It is estimated that one in ten adults over age 65 are victims of fraud each year. This statistic is alarming, but what is even more concerning is that most financial abuse is carried out by someone close to the victim. In 61 percent of cases, financial abuse was committed by immediate family members, friends, or other trusted individuals. Common perpetrators of elder financial exploitation are:
- Family members
- Friends
- Banks
- Lawyers
- Financial planners
- Strangers and scammers
How is Elder Financial Abuse Committed?
There are many ways in which people carry out elder fraud. Some instances are subtle, while others are more outright. Often, a caretaker with access to an aging person’s credit cards or bank accounts will take money for themselves or make fraudulent purchases. In other cases, friends or family members may threaten to withhold care unless they receive significant monetary compensation.
Unfortunately, aging adults with different types of dementia are frequently the victim of financial abuse. Memory loss, declining mental capacity, and even kind, trusting natures make people susceptible to financial exploitation.
Ways to Prevent Elder Fraud
No one wants to watch their loved one be affected by elder financial abuse. Thankfully, there are ways to help and support your loved one while staying aware of fraudulent attempts. Some of the best ways to prevent elder fraud include bonding as a family and increasing communication.
It is essential to create a thorough plan that covers your loved one’s bank accounts, credit cards, and social interactions. Awareness is the best first step in keeping your loved one protected from fraud. Remain calm and supportive as you work through the following steps with your loved one:
1. Work Together as a Family
Start by beginning a family conversation. Work together to decide how much financial transparency feels appropriate for your loved one. Be sure to acknowledge how frustrating the very existence of elder fraud is. Work slowly towards creating a family financial management plan, and try to avoid bombarding your loved one with the topic.
One of the best ways to stay on top of preventing elder financial abuse is to have consistently scheduled meetings. If you and your loved one stay engaged with finances, it will be harder for instances of fraud to slip under the radar.
The more family members who get involved, the better your loved one will feel. Regular meetings and conversations will build trustworthiness across the board and lessen the opportunity for family members to take advantage of your loved one.
2. Watch for Changes in Financial Accounts
If your loved one permits you to watch their financial accounts, make sure to keep a close eye on their regular patterns. Watch for warning signs on their accounts, such as:
- Extreme spending habit fluctuation
- Bounced checks
- Late payment charges
- Missing deposits
If accounts are not regularly checked on, instances of fraud may occur before anyone notices. Sometimes, if financial exploitation isn’t caught right away, it can be too late to track down the culprit.
You can even set up suspicious activity alerts and choose a few people to get the alerts. Make sure your aging loved one has all essential legal documents in one place, so you can easily access them in case of an emergency.
3. Stay Aware of the Latest Scams
Many scammers use the same tactics to trick people into giving away their money or credit card information. Stay up to date on the latest local scams, and keep your loved one informed. Regularly remind them to never give out their social security number or credit card number to someone over the phone, email, or regular mail. Limit spam calls by registering your loved one on the National Do Not Call Registry.
Common scams carried out by impersonators are:
- Law Enforcement: Thieves pretend to be law enforcement agents and claim that the aging adult owes a fine.
- Lotteries and Sweepstakes: A scammer calls to tell the victim that they won a prize, so they need to give out their bank information for the deposit or send money to cover the taxes.
- Home Repair: A scammer pretends to offer a home service at a discounted rate but requires payment in advance and doesn’t complete the project.
- Charity: Someone impersonates a charity foundation and attempts to collect donations.
- Email Phishing: The aging adult may receive an email from a legitimate appearing entity such as the IRS. The email asks them to update their personal information, such as their social security number and credit card information.
In general, caution your loved one against sharing personal information with people they don’t know or spending money on services they didn’t ask for.
4. Simplify Finances
If your loved one has multiple credit cards, whittle them down to one or two credit cards and one debit card connected to their bank. The fewer cards they have, the less opportunity there is for credit card fraud. Depending on your loved one’s cognitive ability, you or another family member may need to take responsibility for paying the bills on time.
If your loved one is still sufficiently independent, help them set up automatic bill payments and direct deposits. Automatic bill payments help take the guesswork out of what services need to be paid for. If your loved one knows that all their bills are automatically taken care of each month, they are less likely to fall for scams that claim the opposite.
5. Stay Social
Isolation significantly contributes to elder financial vulnerability. Being cut off from the outside world makes it challenging to detect warning signs from scammers or caretakers. A robust social community helps aging adults feel confident and financially secure.
If daily or weekly visits aren’t in the cards for you due to location or other commitments, consider regular phone calls and emails. Effort speaks volumes, and any attempt at connecting with your loved one will go a long way.
Join the Team Effort to Combat Elder Financial Abuse
The effects of elder financial abuse are heartbreaking. Not only do financial abuse victims lose money, but they lose trust, dignity, and confidence. Watching someone you love get taken advantage of is challenging. To protect your loved one, work together as a family to create a financial plan and stay informed about scams.
All instances of elder financial abuse are now protected federally by the Senior Safe Act. If your aging loved one has been a victim of elder financial exploitation in Minnesota, you can report the abuse to The Minnesota Adult Abuse Reporting Center.