When an individual is unable to manage their finances alone due to age or disability, it’s necessary for someone else to step in and help. All too often, unfortunately, financial abuse results from those interactions. In 55% of cases of financial exploitation, family members and caregivers with high trust levels are the culprits. In cases of investment fraud, losses can be even higher. While you can’t guarantee that your loved one won’t be the victim of financial abuse, understanding how it occurs and how to prevent it can help keep your loved one safe.
Who Commits Financial Abuse?
There is a wide pool of individuals who have been responsible for elder abuse. Anyone can be guilty: family members, friends and acquaintances, neighbors, and caretakers are high on the list, but professionals, attorneys, bank employees, doctors or nurses, and even pastors can be responsible for financial abuse of elderly individuals. In other cases, predatory individuals and con artists come after the senior without their loved ones’ knowledge.
The Most Common Scams
The most common scams are divided according to the individual responsible. By being aware of them, you can increase the odds that you’ll be able to prevent your loved one from being impacted.
Family Members often use power of attorney or joint bank accounts to allocate funds as they feel appropriate, rather than in an elderly loved one’s best interests. They may create a deed or title transfer in order to shift assets to themselves or to someone that they control. In other cases, living trusts and wills allow them to use money they want. They may deny services to conserve funds for their own purposes or threaten to abandon or harm the victim if they don’t use the money the way they want. More simply, family members and other close acquaintances may take the senior’s money, property, or valuables. They may take ATM cards, steal checks, or borrow money and not pay it back. Cashing social security checks or giving away the elder’s money or possessions without their consent are often common among family members.
Unscrupulous Professionals frequently use predatory lending, annuity sales, or investment or securities schemes to take money from unsuspecting seniors. They may use internet phishing or identity theft to steal from the senior. Medicare scams and in-home care scams are also particularly common.
Predatory Individuals use lottery and sweepstakes scams, grandparent scams, charity scams, and telemarketing scams to target elderly individuals who aren’t prepared to protect themselves. They may attempt a home repair scam in which repairs are sold, but never completed or aren’t completed well. Traveling con men also frequently target seniors. Another common ploy criminals use to defraud unsuspecting seniors, is by gaining access to a blank or canceled check and then proceeding to syphon funds out of the seniors account—especially if checks do not incorporate security features that help combat alteration and counterfeiting.
Indicators of Abuse
One of the first signs of abuse is unpaid bills that should have been taken care of by the individual in charge of a senior’s finances. This also includes seniors who are suddenly unable to pay bills that they should be able to cover on their usual income. Termination of utilities, appearance of property liens or foreclosure notices, collection letters, eviction notices, and other notices of discontinuation of services should all be red flags. A quick look at the kitchen cabinets is also a great way to identify abuse: when a senior has no food in the house, it’s a sign that something is going wrong.
Next, examine your loved one’s accounts. If there are large withdrawals that they can’t explain or transfers between accounts that don’t make sense, it’s a strong indication that financial abuse is occurring. If bank statements and canceled checks no longer arrive at the senior’s house, it’s important to find out and understand where they’re going, locate them, and keep an eye on the accounts. Unexplained withdrawals, especially large ones, are a red flag. Frequent transfers or unusual account activity are all indicators that financial abuse may be occurring.
Make sure your loved one fully understood legal documents at the time they were signed. Power of attorney documents that weren’t understood at the time of signing can be a sign of financial abuse. If oversight of their finances has been transferred to someone else without an explanation to the senior or their consent, their wills or estate documents have been changed, or there’s an absence of documentation about financial arrangements, you need to look deeper into their finances. Keep an eye on any sudden addition of a name to an account or joint accounts that have been opened unexpectedly.
Keep an eye on the actual expenses your loved one has versus the amount they are spending. If the cost of their care doesn’t appear appropriate for the size of their estate—for example, there are large withdrawals for in-home care or nursing home care that aren’t appropriate to their current finances—it might be time for a closer look. Listen to the explanations given by the individual in charge of their finances. If they seem implausible, you need to dig deeper into their story.
Watch your loved one for any signs of abuse. If they show sudden changes in their mood or demeanor or signs of fear of their caregiver, it’s a sign that something is wrong. Make sure the senior shows an understanding of financial arrangements that have been made for them, and make sure they aren’t evasive concerning those arrangements.
Other telltale signs of financial abuse may include suspicious signatures on checks and documents, the sudden appearance of new “best friends” who are suddenly members of the trusted circle, or missing belongings or property. Keep an eye out for excessive use of credit cards, especially use that isn’t normal for the individual. If a caregiver suddenly expresses excessive interest in the amount of money being spent on the senior, it warrants notice.
Addressing Financial Abuse
Keep in contact with the individual in charge of your loved one’s finances and anyone who has access to them. Hold regular money meetings so that everyone understands where the money is going. Encourage the senior to spend more time with elderly neighbors and relatives to reduce their isolation and ensure that they don’t feel alone. This is particularly necessary if financial abuse has already occurred.
Once financial abuse has occurred, close any joint accounts. Revoke power of attorney. Find a responsible person or agency to put in charge of handling financial transactions for your loved one. It’s also necessary to report issues to law enforcement and work with them and the bank in order to reduce the odds of financial abuse.
If these scenarios seem familiar, it’s time to speak up! Seniors should be protected, and they should never have to tolerate being financially abused by anyone—especially those closest to them. You can’t guarantee that your loved ones will never experience financial abuse, but awareness is the key to prevention.
By Noel Morgan