Protecting Your Loved Ones from Elder Financial Fraud

It has taken older adults a lifetime of working hard and building savings to be able to retire. And it is precisely because of that nest egg that seniors are vulnerable to financial exploitation, the fastest growing form of elder abuse. The cases vary, from swindlers posing as trusted financial advisers to adult children taking advantage of parents' vulnerability and assets.

Elder financial fraud and abuse is estimated to cost victims about $3 billion a year, according to one study, though some say it's actually much higher. Shockingly, around 90 percent of perpetrators are people the victims know and trust — family members, neighbors, friends or caregivers, according to the National Center on Elder Abuse (NCEA).

This guide will help older adults, and their loved ones, understand the warning signs and schemes that pose a threat - and the moves to make to protect their bottom line.

Sources:

U.S. Department of Justice
Consumer Financial Protection Bureau
MetLife
Allianz Life
National Adult Protective Services Association

Family members who are managing relatives' finances or helping them pay bills might come across suspicious activity, such as unusually large bank account withdrawals or credit card statements that document expensive purchases. Perhaps quarterly investment account statements show uncharacteristic activity involving the buying and selling of stocks, racking up fees and broker commissions.

Whether they involve money management misdeeds or outright theft, one thing is certain: There is no shortage of financial schemes perpetrated against older adults. If you're helping mom and dad manage their money and recognize any of these signs of suspected abuse, here's how to proceed:

Most caregivers, whether they're relatives or hired helpers, are compassionate people dedicated to the safety and well-being of their charges. But some use their position to take financial advantage of older adults. Sadly, seniors are less likely to report wrongdoing by relatives or caregivers because they are dependent on them for care.

That's why it's important for other family members to remain involved in the senior's life and keep tabs on how he or she is doing. When going outside the family to hire a trusted caregiver, consider using a well-known agency that will vet candidates' credentials and training. If you're hiring a caregiver on your own, find candidates by asking friends, neighbors, coworkers or other caregivers you know for referrals.

• Ask each applicant to bring a resume and contact information for at least two references. Make sure a family member takes part in the interview.

• Describe the duties of the job as well as the health concerns of your loved one. Ask questions to help you decide whether the candidate is a good fit for the job and the older adult.

• Ask to see proof of identity such as a social security card, driver's license or other photo ID.

• Ask whether the person has ever been in trouble with the law. Consider hiring a reputable agency or service to run a background check.

• Discuss the candidate's breadth and length of experience, training and certifications and why he or she left the last position.

• Discuss salary, work schedule and paid time off. Encourage questions about the job and your expectations.

Seeking the services of a trusted financial adviser may be wise; however, requirements for credentials vary. Make sure the financial or investment advisers you do business with operate under the fiduciary standard, which requires them to put their clients' best interests first. If you're not sure whether your adviser is a fiduciary, ask. Make certain he or she is licensed to sell products in your state. Always check that person's background for possible disciplinary action.

Financial exploitation of older adults at the hands of financial professionals is not all that uncommon. According to the Investor Protection Trust, some 7 million people over age 65 have been the victims of financial swindles. Watch out for these situations in order to protect your bottom line:

Con artists look for victims they believe are vulnerable. Understanding how and what types of scams impact seniors can help you avoid common rip-offs. The more you know, the better you can protect yourself or a loved one. The following are some of the most common schemes perpetrated against seniors, and advice for taking action so you don't become a victim.

As people age, cognitive changes can affect their financial literacy along with their ability to make wise money decisions. This leaves them open to preventable mistakes at best, and at worst, to financial devastation at the hands of predators. By the time a swindle is discovered, it may be too late to recover the financial losses.

That's why it's important to take precautionary measures. If you're an adult with elderly parents or relatives who may be showing signs of confusion, consider initiating a frank conversation to gain their trust and create a plan of action. You may want to undertake this effort with the support of another trusted family member or enlist the help of a lawyer or financial adviser to work under your supervision.

Consider these tips:

• First, be present in your relatives' lives and encourage them to stay socially connected with others. That makes it more difficult for would-be predators to act.

• Locate important documents such as wills, financial account information (banks, investments, insurance and other accounts), debt statements and tax returns, along with names and contact information for their advisers, such as lawyers and accountants.

• Help your relatives gradually. Start by setting up a bill payment schedule and automatic bill paying. Eventually, consider becoming a cosigner for their financial accounts.

• Help them get copies of their credit reports at Annualcreditreport.com to ensure they are not victims of identity theft.

• You may wish to seek power of attorney or guardianship before any older relative becomes incapacitated.

• To help older relatives avoid telephone scams, put their home and cell phone numbers on the national Do Not Call Registry at www.donotcall.gov or by calling 888-382-1222.

Sally Balch Hurme has spent her entire professional career as an elder law attorney and consumer fraud expert, helping to educate and protect the public. And yet her husband fell victim to an impostor scheme. He received an urgent call from an "attorney" requesting that he send $3,000 to get his daughter out of a Los Angeles County jail.

For Hurme's husband, it was simple. "He really loves our daughter and wanted to help her," Hurme said. "He got caught up in the moment. The caller was adept at pushing buttons and convinced him of the emergency, the need to act promptly, and the importance of not telling anybody."

While their daughter was safe in Virginia, teaching biology like any other workday, Hurme's husband was instructed to rush to the bank to withdraw funds, then rush to the store to get a prepaid card to wire cash, and then rush home to wait for a follow-up call. He did as he was told, reading to the caller the numbers off the prepaid card. And just like that, $3,000 was gone forever. Although Hurme and her husband reported the theft, the cash card and the scammer's disposable phones could not be traced.

Hurme's advice: Don't answer calls from numbers you don't recognize. If you do and the caller describes an emergency involving a loved one, independently verify this claim.

There are many organizations and structures in place to serve seniors, whether you're looking for day-to-day resources or seeking specific guidance or assistance in response to fraud. These resources can help you protect your loved ones.

• Contact your bank if money is missing from your accounts.
  

• National Adult Protective Services Association
  Click your state on the U.S. map to be taken to your state's APS.

• Eldercare Locator
  Provided by the U.S. Administration on Aging to connect you with services for older adults; 1-800-677-1116.

• National Center on Elder Abuse
  Offers a wealth of information and resources about elder abuse, including financial exploitation, but is not for reporting suspected abuse; 1-855-500-3537.

• Consumer Financial Protection Bureau
  Its Office of Financial Protection for Older Americans page offers information for safely navigating financial challenges.

• Elder Justice
  A U.S. Department of Justice website containing information on how to report elder abuse and financial exploitation. Just enter your zip code to find local resources.

• National Association of Area Agencies on Aging
  Simply type in your zip code to find resources for aging adults in your area.

• National Long-Term Care Ombudsman Resource Center
  To report suspected abuse in a nursing home or long-term care facility, contact your local ombudsman via this website.