Elder Financial Exploitation
Older Americans face many financial challenges as they age, one of which is financial exploitation which cost victims $2.6 billion1 in 2009. Financial exploitation can take the form of frauds and scams in which the perpetrator will use deception, trickery, or dishonesty for financial gain.
The general perpetrator of financial exploitation is usually a family member or caregiver. The best ways to try to prevent elder financial exploitation is to raise awareness about the issues and provide tools to assist older Americans, their friends, and family in navigating through financial challenges such as financial exploitation. This is meant to provide information on what financial exploitation is, how to help identify it, how to help avoid it, and provide information on what to do if you suspect that either you or a loved one is a victim.
What does Elder Financial Exploitation look like?2
Elder financial exploitation spans a broad spectrum of conduct, including:
- Taking money or property
- Forging an older person's signature
- Getting an older person to sign a deed, will, or power of attorney through deception, coercion, or undue influence
- Using the older person's property or possessions without permission
- Promising lifelong care in exchange for money or property and not following through on the promise
- Confidence crimes ("cons") are the use of deception to gain victims' confidence
- Telemarketing scams
Why are the Elderly Targeted?3
The following circumstances or conditions, especially in combination, can make an older adult more vulnerable to financial exploitation.
Older adults may:
- Be trusting and polite
- Be lonely and socially isolated
- Be vulnerable due to grief from the loss of a spouse, family member, friend, or pet
- Be reluctant to report exploitation by a family member, caregiver, or someone they depend on
- Be dependent on support from a family member or caregiver to remain independent
- Be receiving care from a person with substance abuse, gambling or financial problems, or mental health issues
- Fear retaliation by the exploiter
- Be unfamiliar with managing financial matters
- Be unprepared for retirement and the potential loss of financial decision-making capacity
- Have cognitive impairments that affect financial decision-making and judgment
- Be dependent on a family member, caregiver or another person who may pressure them for money or control of their finances.
Who takes advantage of seniors?
Perpetrators of financial exploitation can be:
- Family members and caregivers
- Friends or neighbors
- Persons with Power of Attorney or the legal authority to access or manage your money
- Telephone and mail scammers
- Financial advisers
- Internet scammers
- Home repair contractors
- Medicare scam operators
- Other persons known or unknown to the older adult
Red Flags & Warning Signs of Elder Financial Exploitation4
- Living below their means
- Failure to pay bills/buy food/take medication
- Missing personal property or belongings
- Isolation from family/friends
- Confusion about papers being signed
- Can't account for missing money or do not know where it has gone
Recognizing Financial Fraud
Frauds & Scams Targeting Seniors
The Grandparent Scam
A perpetrator calls a senior on the telephone and whispers or mumbles phrases designed to get the senior to reveal a grandchild's name. For example, the caller may say "Grandma, it's me!" or "Grandma, is that you?" Once the perpetrator has the grandchild's name, he or she will impersonate the grandchild and claim to have lost a wallet or been in an accident. Then, the perpetrator will ask the senior to wire money to the perpetrator - which often doesn't require identification to collect.
Medicare's universal coverage makes it easy for perpetrators to pose (either on the phone, in person, or via email) as Medicare representatives and ask seniors to provide personal information which they can then use to set up accounts or apply for credit cards.
Sweepstakes and Lottery Scam
This scam is usually perpetrated with letters, phone calls, or email. Whatever the form, the message will say something like "Congratulations! You've just won a lottery!" with a request to deposit a large amount of money into your personal checking account. However, you need to immediately wire a portion of the funds to a foreign account to cover various taxes and administrative fees.
Tips: Legitimate lotteries pay taxes directly to the government rather than being reimbursed from winners' proceeds. It is against U.S. law to play a foreign lottery by mail or by telephone.
Counterfeit Prescription Drugs
Many seniors, because of health care costs, will shop around online to find the best price for their prescription drugs - and this is where scam artists might rip them off by providing counterfeit drugs. Not only will the senior citizen lose the money, but they will receive drugs that may actually harm their health.
There are two different types of funeral and cemetery fraud to watch out for. First, a perpetrator will read the obituaries or attend a funeral to find the contact information for a widow or widower. Then, the perpetrator will claim he is owed money and continue to extort the grieving victim.
The other scam is perpetrated by disreputable funeral homes that pad the already large cost of funeral services and add in unwarranted charges. Both scams usually are perpetrated in person.
The senior receives a telephone call from what seems to be a legitimate company. There are problems with their account and the company simply needs to verify some information. The caller seems to already have information about the senior so they feel comfortable sharing additional information, such as their account number, to help the company correct the problems.
Fraudulent Anti-Aging Products
Preying on an older person's desire to look (and feel) younger, scammers can create bogus anti-aging products or remedies that do not halt the aging process or even conceal the effects of aging.
Home Equity Scams
Unscrupulous people working in real estate, financial services, or related companies may use reverse mortgage scams to steal equity from the property of senior citizens. In many of these scams, seniors are offered free homes, amazing investment opportunities, or assistance with foreclosure or refinancing in exchange for their home's deed.
Nigerian Letter Fraud
In one of the most common financial frauds of all time, a senior citizen receives a letter, an email, or a fax from a foreign "dignitary." The correspondence promises huge monetary rewards in exchange for helping an official from a foreign country out of an embarrassing legal problem. All the senior needs to do, the correspondence states, is to send a small amount of money (in comparison to what he/she will receive in turn) to help out the foreign dignitary. Of course, the victim never receives any rich reward and loses the money that is sent.
Payments fraud occurs when an individual uses one of several payment devices (e.g., checks, credit cards, etc.) to conduct fraud and steal your money.
Click on the following link for additional information: Fifth Third Privacy & Security.
These scams include a call from someone claiming to be from a large computer company asking for permission to access the senior's computer remotely to resolve a service issue or virus. The perpetrator then accesses saved data on the computer, such as names, addresses, account numbers, and other personal information. They use the information to apply for loans, credit cards, or to steal the senior's identity.
Click on the following link for additional information: Fifth Third Privacy & Security.
Phishing is usually a two-part scam involving emails and spoof websites. Fraudsters, also known as phishers, send an email to a wide audience that appears to come from a reputable company. This is known as a phish email.
In the phish email, there are links to spoof web sites that imitate a reputable company's web site. Fraudsters hope to convince victims to share their personal information by using clever and compelling language, such as an urgent need to update information immediately or a need to communicate with you for your own safety or security. Once obtained, personal information can be used to steal money or transfer stolen money into another account.
How to Protect Yourself & Loved Ones
Take these steps to protect yourself from financial exploitation and abuse:
- Shred receipts, bank statements, and other sensitive documents before throwing them away.
- Never give your Social Security number, account numbers or other personal or financial information over the phone unless you initiated the call.
- Don't open e-mail from unknown sources, and beware of any call or notice claiming you have won a lottery.
- Never pay a fee or taxes to collect sweepstakes or lottery "winnings."
- Order copies of your credit report once a year.
- Monitor your account activity regularly, and report lost or stolen cards and checks or suspicious transactions to your bank immediately.
- Check references and credentials before hiring anyone. Don't allow workers to have access to information about your finances.
- If a stranger needs to send you payment for something, insist on a check for the exact amount. Never accept a check for more or agree to wire the difference back.
- Never rush into a financial decision or let someone pressure you into any agreement. Ask for details in writing and consult with a financial advisor or attorney. Feel free to say "no." After all, it's your money.
- Get to know your local banker and build a relationship with the people who handle your finances. They can look out for any suspicious activity related to your account.
- Trust your instincts. If it sounds too good to be true, it probably is.
Report the Abuse
If someone is in immediate danger, dial 911 or your local police department.
Adult Protective Services
Telephone numbers vary by location
or call for contact information for your area:
A [state or local] government agency, generally a part of your county or state department of social services, that investigates abuse, neglect or exploitation of older adults, or younger adults who have disabilities.
Federal Trade Commission
The FTC online toolkit includes a detailed guide for protecting your information, with instructions and sample letters to help identity theft victims - Taking Charge: What to Do If Your Identity Is Stolen. An online complaint form is available directly at www.ftccomplaintassistant.gov.
National Domestic Violence Hotline
The Hotline is a nonprofit organization that provides crisis intervention, information and referral to victims of domestic violence, and their friends and families. You can reach the Hotline 24 hours a day.
Senior Medicare Patrol (SMP)
The SMP programs, also known as Senior Medicare Patrol programs, help Medicare and Medicaid beneficiaries avoid, detect, and prevent health care fraud. SMPs nationwide recruit and teach nearly 5,700 volunteers every year to help in this effort. Most SMP volunteers are both retired and Medicare beneficiaries and thus well-positioned to assist you. Visit the website above or call for more information or to get contact information for your state SMP.
Social Security Administration
Toll free customer service at 1-800-772-1213. Deaf or hearing-impaired individuals can call Social Security's TTY number at 1-800-325-0778.
Elder Abuse Resources
National Center on Elder Abuse
State directory of helplines, hotlines, and elder abuse prevention resources
Eldercare locator — find help in your community
National Association of Area Agencies on Aging
National Adult Protective Services Association (NAPSA)
Consumer Financial Protection Bureau (CFPB)
- Broken Trust: Elders, Family, and Finances, MetLife Mature Market Institute; produced in conjunction with the National Committee for the Prevention of Elder Abuse and Virginia Tech.
- Source: The National Committee for the Prevention of Elder Abuse (NCPEA).
- Source: *Money Smart for Older Adults.
- 1st District Attorney Office, Colorado: Understanding the Rationale, Recognition, & Prevention of Elder Financial Exploitation.