Senior fraud is a serious problem. You have probably seen many examples in the news – and it can happen to you or your aging parents. A June 2011 study by MetLife (The MetLife Study of Elder Financial Abuse: Crimes of Occasion, Desperation, and Predation Against America’s Elders) found that financial fraud and abuse perpetrated against the elderly in the United States rose by 12 percent in 2009 to $2.9 billion, compared to $2.6 billion in 2008. Strangers perpetrate more than half of all fraud against older citizens; however, it is likely that the 34 percent of reported cases of fraud committed by family members, friends and acquaintances is too low. In fact, most cases are unreported due to embarrassment or fear. The problem is probably much bigger than statistics indicate.
Seniors, their family and caregivers can prevent financial fraud. First, it’s helpful to look at some of the reasons seniors can be easy victims and some of the ways the fraud is perpetrated.
Vulnerable to Fraud
Why are seniors the most financially abused sector of the U.S. population? According to the MetLife study, fraud against the elderly usually falls into one of three categories: “occasion, desperation and predation.” Fraudsters may simply be opportunistic (in the right place at the right time), have a desperate need for money or premeditate their crime by gaining their victim’s trust.
Seniors are prime victims of financial fraud because they often:
- Live alone
- Have accumulated strong financial assets
- Trust others
- Are physically or mentally declining
- Are too embarrassed to report fraud
Additionally, seniors might fall victim to financial or investment swindles because they are afraid they will not have enough money to last through their remaining years. Parents don’t want to be a financial burden on their children, so some victims think they are doing the right thing; but when they learn the awful truth they feel ashamed and keep the fraud a secret.
Fraudsters can make their scams sound very attractive, and their victims might be persuaded to buy into these schemes to ease their fears of financial hardship. Keep in mind that the perpetrator convinces the victim there is no risk of losing any of their current assets, so this is not as paradoxical as it might seem. If the senior is experiencing even minor dementia, they are more vulnerable to this approach. If the perpetrator is a family member, the senior’s vulnerability actually grows because the trust factor is amplified.
Look for the Signs
Senior financial fraud comes in many forms, and it’s easy to miss the signs that it might be occurring. Question symptoms of possible elder financial abuse by looking at the following:
- Is your parent experiencing a sudden increase in the number of visitors, repeat visits or unusual interest by a certain family member?
- Is another family member, worker or care provider keeping you away from your parent?
- Has your parent become suddenly and voluntarily isolated?
- Have you noticed signs of physical abuse?
Other clues might be manifested in dramatic changes in spending habits, a new will or power of attorney, large home improvement projects, selling off assets and other out-of-character financial behavior.
Financial fraud against seniors is wide-ranging and comprehensive. These might be carried out via door-to-door sales calls, telephone solicitation, email phishing, mail, unscrupulous home healthcare providers, dishonest romantic interests and other avenues. Unfortunately, many cases are not prosecuted because they are perceived as difficult to prove.
Protect your Parent’s Financial Assets
Being alert for any signs that might indicate fraudulent activity against your parent is important, but the first step in preventing any fraud against them is to have an honest, respectful and tactful discussion about the issue, informing them of the risks and their vulnerabilities. This is especially urgent if your parent is showing any early signs of mental decline. Remember to be sensitive to your parent’s feelings – try not to be overbearing or pushy.
Additionally, you can take concrete steps to protect your parent’s financial assets; depending on your parent’s unique situation, you can:
- Help manage your parent’s finances with durable power of attorney.
- Move large amounts of cash into a separate account that you manage, leaving your parent with adequate money for living expenses.
- Be actively involved in managing your parent’s finances and investments by consulting with a financial or investment professional.
- Report any financial fraud or attempted fraud to the proper authorities.
You can minimize the potential for fraud against an aging parent by taking early action. As always, consult a financial professional or attorney before making major investment decisions and doing financial planning that can help protect your or your parent’s future.