What to do if you are a Victim of Financial Elder Abuse
Elder Fraud a Growing Problem
In Tuesday’s blog I talked about elder fraud and recounted the fraud perpetrated against Jim and Miriam Parker who lost nearly $200,000 of their retirement savings to a fraud scheme. In this blog I look at the techniques used against seniors and what can be done to prevent and report elder fraud.
Financial fraud is the fastest growing form of elder abuse. Broadly defined, financial elder abuse is when someone illegally or improperly uses a vulnerable senior's money or other property. Most states now have laws that make elder financial abuse a crime and provide ways to help the senior and punish the scammer.
Elder financial abuse is tough to combat, in part because it often goes unreported. Many elderly victims are often too confused, fearful, or embarrassed by the crime to report it. One recent study reported by Consumers Digest estimated that there are at least 5 million cases of this financial abuse in the United States each year, but law enforcement or government officials learn about only 1 in 25 cases.
Frauds and thefts against the elderly by people they know and trust are surprisingly common. Examples cited by the Justice Department and other sources include stealing money; cashing checks without permission; transferring the ownership of property; committing identity theft; "borrowing" funds without intending to repay; and denying services to the elderly person – even medical care – to pocket the money.
Friends and relatives also have convinced senior citizens to add their name onto bank accounts, living trusts or wills (perhaps as the sole beneficiary) or grant a power of attorney (giving total control over the person's financial affairs).
Signs of Financial Fraud against Elders
Seniors and their loved ones should be very suspicious if they notice any of the following:
- A relative or caregiver becomes extremely interested in the elderly person's financial affairs.
- A caregiver is reluctant to spend money on necessary medical treatment.
- Someone prevents the elderly person from talking on the phone or doesn't pass along phone messages.
- There are unauthorized withdrawals from checking or savings accounts.
- The caregiver claims that some money is "missing." Or, there are new or recently changed legal documents, such as wills or "powers of attorney" that give this other person rights to conduct transactions.
A recent study by the American Association of Retired Persons (AARP) highlighted characteristics of people older than 50 that make them easy targets for financial abuse. In general, they: expect honesty in the marketplace, are less likely to take action when defrauded, and are less knowledgeable about their rights in an increasingly complex marketplace. And as people over 50 are more likely to be home than their younger neighbors, they are often within easy reach of devious telemarketers and home solicitors.
Scammers target elders that they perceive to be vulnerable -- those that are isolated, lonely, physically or mentally disabled, unfamiliar with handling their own finances, or have recently lost a spouse.
The scam artists often pose as trustworthy helpers. They can be strangers, such as telemarketers and tradespeople, or have a relationship with the targeted victim, such as friends, family members, doctors, lawyers, accountants, and paid or volunteer caregivers. Abusers who are family members often have money troubles that may be made worse by unemployment, gambling, or substance abuse problems.
Common Financial Schemes
Financial scams perpetrated against older people include a broad range of conduct. Here are some common examples.
Telemarketing or mail fraud. The U.S. Department of Justice estimates that dishonest telemarketers take in an estimated $40 billion each year, bilking one in six American consumers -- and the AARP claims that about 80% of them are 50 or older. Scammers use the phone to conduct investment and credit card fraud, lottery scams, and identity theft. Scammers also use the phone to sell seniors goods that either never arrive or are worthless junk.
Getting unauthorized access to funds. In "Sweetheart Scams," alleged suitors woo older people, convincing them that love and care are their motivations for being included on bank accounts or property deeds; the suitors usually disappear along with the property.
Charging excessive amounts of money. Smooth-talking scammers first convince seniors that they need some goods or services and then overcharge them -- often hiding the high cost in extravagant schemes involving interest and installment payments. This tactic is often used for products that many older people might find essential to their quality of life, such as hearing aids and safety alert devices.
Selling bogus items. In the "Rock in a Box" scam a senior is sweet-talked into buying an item, such as a new color television, at a bargain price, that comes in a box that's suspiciously sealed. What the box actually contains is a well-padded rock.
Getting money or property through undue influence or fraud. Many seniors have been duped into parting with their homes or other property because a scammer convinces them it is for their own good. In one infamous case, three officials from the Detroit-based Guardian Inc. were found guilty of embezzlement and fraud after selling a client's house for $500 -- to the mother of a company officer. The company also collected excessive fees from its wards, sometimes as high as 70 percent of their Social Security checks.
Using fraudulent legal documents. Many scammers cloak their actions in legal authority, procuring a power of attorney or will or other legal document giving them access to a senior's property. They get seniors to sign these documents by lying to, intimidating, or threatening the seniors.
Faking an injury scenario. In this situation, a scammer claims to have a connection to law enforcement and tells an elder that a child or other close family member has been seriously injured or is in jail. The scammer then convinces the senior to give him or her money for medical treatment or bail.
Offering false prizes. A good example of this is the "You have won the lottery" scam operating out of Canada. In this scam, thousands of older people were bilked into believing they became wealthy overnight, but had to wire money in "fees and taxes" before they could collect the grand prize. In another version of this scam, con artists tell an elder that he or she has just won a huge cash prize, but needs to send in some money -- usually in money orders -- to free it up from customs officials. This is what happened to the Parkers.
What to do to protect yourself and Loved Ones
The National Fraud Information Center (NCL) provides tips about how to identify common scams and avoid telemarketing fraud. In addition, NCL has information about identity theft, how to get off marketing lists by signing up for the national “do not call” registry at 888-382-1222, and how to protect your personal privacy.
To better understand legal rights for seniors, the National Center on Elder Abuse (NCEA), has prepared a report which focuses on four components of the legal system: the state and criminal justice system, federal investigative and regulatory agencies, the civil legal system, and the victim witness assistance network. Professionals from each system describe challenges they face in handling financial abuse cases and made recommendations for improving each system's response. To view, click here to download it from the NCEA web site.
Other resources include AARP’s website, the Journal of Elder Abuse & Neglect which has one issue is solely devoted to elder financial abuse [(Volume 12 Number 2 (2000)], and. A/PACT: Aging Parents and Children Together. This video is produced by AARP and the Federal Trade Commission and focuses on consumer fraud, daily money management, alternatives to guardianship, and so on.
Fraud against the elderly is a cowardly and despicable act that takes advantage of a vulnerable group of people, and it is one that violates every ethical standard imaginable. Unfortunately, it is likely to continue and grow over time because of our aging population. The fact that we have lost our moral compass as a society feeds into the fraud.
Blog posted by Steven Mintz, aka Ethics Sage, on July 7, 2012