Seniors, especially those living independently or who have an Alzheimer’s or dementia diagnosis are vulnerable to financial scams and financial abuse.
According to the U.S. Securities & Exchange Commission, there are three reasons for this:
- Seniors typically hold more liquid wealth in terms of savings, retirement holdings, and checking accounts.
- Cognitive decline makes them more apt to fall for scams or to believe those around them, even if the story doesn’t seem “quite right.”
- A financial trend that shifted “defined benefit” to “defined contribution” plans means more seniors are directly responsible for managing their own assets. Questionable withdrawals are transfers that go unnoticed by financial advisors or others who may spot a red flag.
As a result of their vulnerability, experts theorize that financial scams targeting the elderly have robbed seniors of between $1.5 and $2.9 billion dollars.
Tips For Preventing Financial Scams Targeting The Elderly
Senior experts believe that financial elder abuse is more prevalent than physical abuse, making it equally as important to help elderly parents from becoming the next victim.
The good news is there are several things you can do to proactively protect senior parents from being taken advantage of. In fact, forgetfulness and waning ability to manage finances without assistance are both signs your parents need more support.
Helping elderly parents avoid financial scams involves an awareness of the most typical scammers and financial abusers
For the most part, the perpetrators of elder abuse are most likely to be:
- Family members
- Caregivers (only hire caregivers from licensed agencies that thoroughly vet their employees using complete background checks)
- Phone scammers who create crisis-related emergencies or pretend to be churches/charities requesting donations
- Bank or legal professionals
- Healthcare providers
That’s a daunting list because it turns out the most likely person to be the financial abuser is someone your parent trusts most. Any requests for money should always be shared and verified with you or another trusted member of the family so the “requestor” knows it’s public knowledge.
Most financial scammers back down immediately once they know there are other people paying attention to the money scene.
Work with licensed caregivers and then pay close attention
Never hire anyone to help out in your parent’s home who isn’t licensed, insured and bonded. Any caregiver, driver, errand runner, or caregiver should be vetted by a complete background and employed by a licensed caregiver agency.
Check-in regularly with your parent or senior loved one via phone, Skype, in person, etc., so potential scammers know you and other family members are paying attention. Elders who live alone, and with minimal family contact, are the most likely victims of financial scams.
Never send/wire money as the result of a phone request
Financial scammers are incredibly savvy and lead innocent victims right into their web.
Some of the most common scams include:
- Family members begging to be bailed out of jail or rescued from a mishap, begging for confidentiality
- Excited individuals claiming, “You’ve won an amazing prize…” but you must provide some sort of financial information and/or a small payment to “claim it”
- Medical billing scams, claiming that you owe money on an unpaid bill and will be sent to collections if you don’t “pay now” or send a check in the mail
- IRS impersonators claiming you owe tax money immediately
- Technology/IT scams claiming you have a virus and asking for financial and/or log-in information to “fix the problem”
Share all of the above with your parents. Then, set a policy that they will never send money to anyone via phone claims that can’t be verified. Tell your parents to inform the caller they need to speak with “their financial advisor first,” and ask for a name/number where they can call back.
You, another family member or a legal representative can look into the scenario and go from there.
Choose a “trusted contact” for financial accounts
In order to avoid financial scams targeting the elderly, most retirement and investment funds, as well as financial advisors, ask for someone trustworthy to be named as a “Trusted Contact” on the account.
Then, if there are any atypical withdrawals, spending patterns or other activity that raises red flags, the “trusted contact” is notified to verify whether the activity requires further investigation.
Establish a medical directive and power of attorney (POA)
Finances are often a taboo or very private subject for families.
However, every financial and senior expert agrees that medical directives and POAs are essential to establish prior to cognitive decline. These key “protectors” can also be put in place relatively easily at the very beginning of a dementia diagnosis.
As a POA, you have an equal role in the financial and legal decisions and can override a financial decision. You can more easily pursue legal channels if financial fraud is uncovered.
Automate whatever you can
Anytime someone other than your parent takes care of paying bills, depositing checks, etc., there is a potential for financial dishonesty or abuse. The more you can automate things such as automatic deposits, bill payments, utility payments, and so on, the less opportunity someone else has to access the checkbook, cash, account numbers or PIN codes.
Use financial tracking or security tools
There are programs such as EverSafe that are designed to protect seniors from ID theft and financial scams by identifying any anomalies or unusual spending/withdrawal habits and notifies key individuals. These services also help clients resolve any nefarious activities.
Protection Against Financial Scams Targeting The Elderly
Most importantly, we can’t emphasize enough how important honest, regular and straightforward conversations around money are to helping elderly parents stay safe from financial scams and abuse.
Suspect your loved one has been taken advantage of? Contact the Adult Protective Services in your area, as well as your local sheriff’s department.
Learn more about helping elderly parents in these resources: