Financial fraud against elders is a big problem, and it’s getting bigger. Reports of elder financial exploitation quadrupled between 2013 and 2017, according to the Consumer Financial Protection Bureau, and financial institutions reported $1.7 billion in suspicious activities in 2017, including both losses and attempts to steal money from older adults. People who lost money lost an average of $16,700, but some lose much more: Those ages 70 to 79 lost more than $45,000, on average.
Elder fraud is the act of targeting older adults in an attempt to deceptively get their money or property. This can happen in a variety of ways, whether through scamming them over the phone, targeting them with web ads suggesting they donate to a fake charity after a natural disaster, or befriending them in order to get them to “loan” you money.
Unfortunately, the senior population is more prone to fall for these scams because they’re less likely to suspect deception, they don’t understand their rights, and they tend to expect people to be honest. About 10% to 20% of elders 65 and older have some type of mild cognitive impairment, according to the Alzheimer’s Association. They’re also more likely to answer the phone when a strange number calls.
Common Scams Against Retirees and Seniors
According to the National Council on Aging, here are the most common scams that target senior citizens and retirees:
- Social Security spoofing calls: A caller claims to be from the Social Security Administration and threatens arrest or legal action if the recipient doesn’t call a provided phone number, or the caller says the recipient must activate a suspended Social Security number. Tip: The Social Security Administration rarely calls people.
- Grandchild scam: Someone calls pretending to be a grandchild who’s in trouble and needs the recipient to send money immediately. A concerning number of older adults send cash in response to these requests, but the best response is to call the grandchild back (or their parents) and confirm the situation.
- Natural disaster scam: After a terrible incident such as a hurricane, tornado or earthquake, scammers call older adults and impersonate charities to trick them into sending money or revealing private information. It’s always wise to give money directly to a charity by looking them up on a site like Guidestar or Charity Navigator to confirm their legitimacy and web address.
- Medicare scams: Callers pretend to be a representative from Medicare to get seniors to give them their personal information.
- Fake prescription drugs: Some scammers advertise counterfeit medications online, and seniors purchase them in an attempt to save money.
- Funeral and cemetery fraud: A scammer might attend a funeral service and claim the deceased had an outstanding debt with them, taking advantage of the grieving widow or widower.
- Email/phishing scams: A senior or retiree might get a message that appears to be from a legitimate organization, or even the IRS, asking them to update or verify their personal details. (Tip: Never click on these.)
Warning Signs of Potential Elder Fraud
If your parent or another senior or retiree start displaying any of these signs, you should be on the alert for possible elder financial fraud:
- There are big withdrawals from an account that hasn’t seen much activity
- They suddenly open a new joint account
- There are new credit card balances
- They have new “friends” accompanying them to the bank
- They’re trying to wire large amounts of money
- They’re writing checks to someone unfamiliar
- There are unpaid bills
- They’re closing CDs or other savings accounts
- Their bank and credit card statements no longer come to the house
- They’re getting new credit cards
- A caretaker, relative or friend suddenly starts making financial transactions on behalf of the older person without proper documentation
- There’s a sudden change in the senior’s lifestyle
- Their power of attorney or will has changed under unusual circumstances
What You Can Do
Elder fraud frequently goes unreported because the senior knows the person who’s committing the fraud, or they’re ashamed to have been caught in a scam. You can help the elders in your life avoid these troubles by doing some of the following:
- Stay in touch. Isolation is hard for the elderly, and they may latch on to that new “friend” who doesn’t have their best interests at heart. Call and visit regularly so you’re aware of what’s happening in your elder’s life.
- Have talks about money. It’s hard to keep an eye on an elder’s financial life if you aren’t involved with it at all. If it’s your parents, ease into money conversations with them by asking them for advice in your own money dealings. Over time, you should be able to get a sense for whether they’re keeping up with bill paying and whether they’ve developed any new friendships you should be aware of.
- Make sure their estate planning is set. Encourage your parents to get their estate planning in place, including wills, financial power of attorney and healthcare power of attorney. Ideally, their financial power of attorney will be someone trustworthy who can keep an eye on the situation.
- Help them consolidate accounts. Your parents’ finances will be more manageable if their money is in just a few spots, rather than spread all over the place. If they’ve got a collection of dangling IRAs and other accounts, help them combine some of them so there’s less to wrangle.
- Mention current scams. When you hear about frauds that are trending, let seniors know it's happening so it's on their radar. Remind them never to provide their Social Security Number, credit card number or bank account information via phone, mail or email.
- Freeze their credit. Freezing your parents’ credit (or helping them do so) can make it difficult for someone to take out a credit card in their name or for them to take out new credit or a loan at the urging of a scammer. It’s now free to freeze your credit at all three bureaus—Equifax, Experian and Transunion—and it can be unfrozen for temporary credit needs.
Staying connected with senior friends and loved ones can go a long way toward spotting problems before they get out of hand. Be involved, be alert, and you’ll be able to serve as a helpful resource.