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GUEST POST: Identifying Elder Financial Abuse by John Gower of NerdWallet

John Gower is a writer for NerdWallet.com, a personal finance website dedicated to helping you make smart financial decisions.

Identifying Elder Financial Abuse: The Signs and the Perpetrators

As people grow older, they unfortunately become more vulnerable to certain types of crimes. We all know about the dangers of walking alone at night, or carrying lots of cash, but elder financial abuse is another common risk that many seniors and their families fail to understand. Sadly, it often occurs at the hand of a person the elder knows and trusts.

The Centers for Disease Control (CDC) defines financial abuse (or exploitation) as “the unauthorized or improper use of the resources of an elder for monetary or personal benefit, profit, or gain.” More specifically, this means any forging, misusing, or stealing money or possessions from an elder. This includes forcing or deceiving the elder into surrendering his finances, as well as wrongfully using guardianship or power of attorney for those purposes.

A randomized New York telephone survey released in 2011 estimated that only 1 in 44 incidents of financial elder abuse is officially documented—and it was the most common type of abuse cited by senior respondents.

A seminal national study conducted by the MetLife Mature Market Institute found that the total amount taken from elders suffering from this exploitation is at least $2.9 billion per year—but likely more. According to the study, in 107 cases, seniors lost an average of more than $145,000 due to fraud committed by family, friends, caregivers, and/or neighbors. In contrast, the average loss was $95,000 in the 159 cases of fraud by strangers.

It is believed that older adults will often not report financial abuse.  The reasons may include loyalty to and/or dependence on the abuser. The elder may be fearful of retaliation (physical and/or mental abuse).  There can also be a sense of embarrassment or denial related to being a victim of this type of crime and finally, the elder may not know the abuse is occurring due to diminished physical or mental capacity.

Four Signs of Financial Abuse

It’s important to pay close attention to elderly family members, to ensure they’re safe from financial abuse. Lonely seniors longing for companionship tend to be the easiest victims for criminals to target. Investigate any of the following warning signs to make sure your loved ones are not in danger:

  • Constantly Unavailable: If multiple attempts to talk to a family member by phone in a nursing facility or at home are blocked by a caregiver, this is a major red flag. The caregiver may be blocking the senior from interaction with loved ones to keep them from discussing the financial abuse they’re experiencing.
  • No “Alone Time”: Be very suspicious if a caregiver refuses to let you have any time alone with the elder during visits to the home or facility. It’s possible that they don’t want the elder to give away any hints or signs that there is anything wrong.
  • Suspicious Bank Account Activity: If a senior has new authorized signers added to their account, large unexplained withdrawals, cashed-out certificates, non-sufficient funds fees, new credit or debt, or a number of fund transfers, these can all indicate that abuse may be taking place. If the elder has a joint account, make sure there hasn’t been any extensive changes or inconsistencies. 
  • Changes to Legal Matters: Changes to a senior’s lawyer, power of attorney, or beneficiaries should raise suspicions. If the elder, in a reasonable frame of mind, can’t explain the reasons for the change or doesn’t seem to fully comprehend that they’ve occurred, then there’s reason to question the change’s legitimacy.

Five Kinds of Perpetrators

In the New York telephone survey mentioned above, 4.2 percent of seniors said they’d been exploited by family members or others. Let’s break down the possible groups of perpetrators:

  • Family Members: The close relationship between elders and family members unfortunately makes it easy for abuse to occur. Sometimes the senior citizen is coerced into giving the abuser money, but in other cases the senior may not even be aware the abuse is occurring.
  • Caregivers: Both home health aides and those in nursing facilities have been charged with elder financial abuse. Many of these caregivers receive relatively low wages and the close proximity to the elder’s money can become too great of a temptation.
  • New Friends: Younger people who suddenly start hanging around a senior citizen may not have the best motives. There have been cases of people volunteering to take an older person out to run their weekly errands for the main purpose of having the elder buy them things too.
  • Telephone, Mail, and Internet Scammers: Elderly people can be targeted for scams, especially ones which claim that they have won the lottery or a sweepstakes that they never entered into.
  • Fly by Night Contractors: This generally relates to door-to-door type of sales.  Roof repair, seal coating of driveways and other household repairs are examples.  The salesperson is often aggressive with their sales pitch and utilizes scare tactics as to the urgency of repairs needed.  They often require payment upfront and are never seen again.

The first step toward stopping this type of abuse is to know the signs and the types of perpetrators. This will help you not doubt the situation when you see it, whether it’s odd behavior on the part of the elder or the caretaker (or family member). Standing up to this abuse and acting quickly are very important—it could be your parents’ or grandparents’ welfare at stake.