Simple steps like checking in frequently and blocking robocalls can make a meaningful difference.
The U.S. Centers for Disease Control and Prevention declared elder financial abuse a public health crisis in 2016. The reason? A dramatic decline in assets dramatically affects your quality of life. Think about it: An already vulnerable person may have no way of making up the loss of their life savings, which means they may not be able to afford housing, much less the care they need, and they may feel deeply depressed at being taken advantage of.
An estimated $3 billion to $30 billion in elder financial fraud occurs each year.
Cognitive impairment and the need for help with daily activities can make individuals more vulnerable to financial abuse. But the truth is that anyone – young and old, highly educated and not – can be tricked by a sophisticated scheme. Read on for practical steps to prevent financial abuse in your family.
If you’re used to calling your parent monthly, consider making contact more frequently, just to check in. It’s especially important if they’ve recently lost a spouse or close friend. Research from Wayne State University’s Institute of Gerontology shows that loneliness and feeling undervalued increase someone’s risk of falling for scams by 30%.
You’ll also want to start a conversation about whether your loved one needs help with financial management. Gaining some sort of financial oversight, even if it’s view-only access through a budgeting app or a fraud monitoring service such as EverSafe, can help you detect abuse and fraud. Look for red flags, including:
The timing of your calls can also be crucial. Calling in the afternoon or evening could help spot “sundowning,” a state of confusion that can be a tipoff to cognitive issues.
Calls can be especially persuasive these days with “neighbor spoofing” tech that allows telemarketers’ calls to appear to be coming from a local number.
“The best thing you can do is not answer calls you are not familiar with,” says Mark Fetterhoff of the AARP Foundation. Consider taking advantage of free services such as Nomorobo for VoIP phones and the Hiya app for cellphones to block robocalls entirely. For landline phones, you can purchase hardware that will block robocalls.
It’s also a good idea to dump all of those bogus direct mail fliers in the garbage, avoid clicking links in phishing emails and suspicious text messages, and refuse to open the door to those you don’t know well.
Knowledge is power, so make sure your loved ones know about the latest scams – like the sweetheart scam, in which a fraudster poses as a suitor to gain your trust and eventually ask for money. The FBI said sweetheart scams cost 15,000 people more than $230 million in 2016 alone.
If an aging parent is fiercely independent and would balk at direct financial oversight, encourage them to get a second opinion. Suggest they run any large transaction past you, a friend or a trusted advisor first.
Other fraud prevention safeguards include:
Banks and brokerages are required to make an effort to get the name of a trusted contact for clients’ accounts. This trusted contact won’t have any power over the account, but will instead be a resource in the case of suspected financial exploitation.
Encourage your loved ones to name a trusted contact to put this safeguard in place, and do so for yourself. It’s also a good idea to designate a power of attorney to help with finances now or in the event you or your loved one becomes incapacitated. The time to put safeguards in place is before you need them.
Talk to your advisor about ways you can protect your loved ones from fraud, and be proactive in your own financial planning. Though these scams will continue to make headlines, taking action can help keep yourself and your family one step ahead of scheming criminals.
Sources: SIFMA Senior Investor Protection Center, sifma.org; FBI’s Internet Crime Complaint Center, ic3.gov; fbi.gov; finra.org; aarp.org; “This scam is once again targeting Southwest Florida seniors,” nbc-2.com; “Psychological and functional vulnerability predicts fraud cases in older adults,” ncbi.nlm.nih.gov; napsa-now.org; U.S. News & World Report infographic, “The High Cost of Elder Financial Abuse”; Weill Cornell Medicine