Hi! I’m Emily Lambert, Vice President of Operations & Compliance. On today’s episode of StreetSmarts we’re going to talk about steps you can take to help protect your loved ones from financial elder fraud and abuse. Financial abuse is defined as when misleading or confusing language is used, often combined with social pressure and tactics that take advantage of cognitive decline and memory loss, to obtain a senior’s consent to take his or her money.
We all hope our parents’ golden years will be spent enjoying the financial nest egg they’ve worked so hard to build. Unfortunately, the National Center of Aging estimates that 1 in 3 Americans aged over 70 have experienced some form of financial abuse in the past 5 years and the financial impact of that abuse is estimated to be over $36 billion.
Before we go much further, I’d like to tell you a little about my neighbor, Mrs. Betty. Mrs. Betty is a 76-year-old retired orthopedic surgeon. She is kind, intelligent, and trusting. My toddler often refers to her as the neighborhood baker as it isn’t uncommon for us to come home to find baked goods on our front porch. Recently we were outside watching the neighborhood kids ride their bikes around the cul-de-sac and she mentioned a phone call she had just received – her college aged grandson called her in a panic, he had been in a terrible car accident and was on his way to the hospital but needed $10,000 immediately to help cover the medical expenses. The caller claimed he was unable to reach his parents, so his was calling grandma in desperation. Mrs. Betty, motivated by their sense of urgency and panic, was more than willing to help out her grandson and was ready to wire the money immediately. Fortunately, the story ends well for my neighbor – she agreed to wire the money as soon as she talked to her daughter, the grandson’s mother. When she called her daughter Mrs. Betty quickly realized she had been scammed. Her grandson was safely at college, he hadn’t been in car accident, nor was he in need of $10,000. Scammers had used technology to alter voices and create fake phone numbers well enough to cause her to believe she was truly speaking to her grandson in a medical emergency. Mrs. Betty admitted she was embarrassed, and shocked, by how easily she fell for the scam and it left her worried she would fall for future scams.
This is just an example of the numerous ways scammers are targeting the elder. We often assume that those perceived as most vulnerable, such as widows, the very old, people with severe memory loss, are at greatest risk. In fact, seniors who are young, urban, and college educated lose more money than those who are not. Seniors described as extremely friendly lose four times as much to elder financial abuse, perhaps because they are approachable and may give strangers the benefit of the doubt. And, financially sophisticated seniors lose more to fraud, likely because they are comfortable moving larger amounts of money around.
While each of us may face different scenarios, and it might be a parent or an aunt or an elderly family friend whose financial safety is at stake, here are a few things you can do now, before a financial crisis develops to help protect your loved one’s financial security:
- Start the conversation. Financial conversations can be difficult so start by offering support to open the door to future conversations. Asking questions like: Do they need help with their annual Medicare enrollment? Are they happy with their professional financial team? Are they aware of how prevalent financial scams are? What steps are they taking to protect themselves?
- Identify any warning signs. Pay attention to how aging loved ones talk about their finances. Do they seem confused and overwhelmed? Are they mentioning any new individuals in their lives that you haven’t met yet? Have you noticed a change in behavior or spending patterns recently? Are they still paying their bills on time?
- Meet the team. You should ask your loved one to introduce you to their main ‘team’ so you can learn the key players: their lawyer, their financial advisor, their accountant, and don’t forget to add someone who sees your loved one regularly if you live out of town. Find out if they have updated wills, trusts, and power of attorney documents, and ask to be added as a trusted contact at each office.
- Put financial safeguards in place. Most financial institutions have additional security measures available to help protect potentially vulnerable clients. Work with your loved one to activate the appropriate precautions.
- Stay engaged. Ongoing discussions are ultimately the best way to stay on top of the situation and to best protect your loved ones.
As we age, we naturally become increasingly susceptible to schemes and scams. Caregivers and close family members are often in the best position to pick up on potential threats before they have a devastating impact on the loved ones financial status. If you remain in close and frequent contact with your loved ones about their financial situation you will have a great chance of catching any issues before they cause a financial crisis.