Older Americans 65 years of age or more are increasingly becoming victims of elder financial fraud and abuse. In many states, financial fraud is now the fastest-growing form of elder abuse. Perpetrators can be anyone – from strangers, to family members, to trusted financial advisors and brokers. Often, however, there are obvious warning signs that can prevent elder financial abuse from happening.
The first step to elder fraud prevention is to be vigilant, said Patty Struck, who oversees Wisconsin’s securities division, in a recent Wall Street Journal article. Several years ago, Struck’s office received a call from a man who was concerned about his father’s financial adviser.
According to the article, the son learned that the adviser was helping his father take out a new loan on the house, despite the fact that the mortgage had previously been paid off. The adviser had even driven the father to the bank to help him fill out the paperwork, Struck said in the Wall Street Journal story.
Seeing no financial need for the loan, the son called Wisconsin regulators. As it turns out, the adviser was looting his clients’ accounts. That included not just the caller’s father, but also his grandmother’s money, as well.
Financial scams against the elderly run the gamut. Some of the most common ones include the following:
Phony investments: During a sluggish economy, con artists come out in droves, according to the AARP. Using fear as their motivator, they prey on the elderly with tales of investments that can help them grow their money faster. Many of these financial scams involve phony investment products that promise “guaranteed income” and “consistent high returns.”
Unrealistic returns are a common theme of investment scams, which is why it’s important to do your homework before investing in any financial product. To find out if the company or person offering the investment is truly legitimate, check the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority’s Broker Check.
Telemarketing scams. The U.S. Department of Justice estimates that rogue telemarketers take in an estimated $40 billion each year, bilking one in six consumers. The AARP says that about 80% of these victims are 50 years of age or older. Scammers use the phone and the Internet (and, increasingly, Facebook) to conduct investment and credit card fraud, lottery scams, and identity theft.
Charging excessive amounts of money for a service. Financial fraud perpetrators and scam artists often convince seniors that they need some type of service, such as a furnace cleaning or weatherization program. Then, they overcharge them hundreds, even thousands of dollars. This tactic also is used for products that many older people find essential to their quality of life, such as hearing aids and safety alert devices.
Remember, elder abuse can happen when you least expect it. Every year, billions of dollars are lost to the financial exploitation of the elderly.
“At least one in 10 elders is exploited,” says Jenefer Duane, founder of the Elder Financial Protection Network, a nonprofit group that aims to prevent financial abuse by creating partnerships and public awareness campaigns. “It’s become so rampant, it’s an epidemic situation.”
If you suspect an elderly person may be the victim or target of financial abuse, contact your local authorities.