How To Spot and Stop Elder Financial Abuse
July 23, 2018
By Mandi Sievers
Bank Security Officer, Assistant V.P. of Retail Services
The financial exploitation of the elderly happens more than you think. And unfortunately, it's usually caused by people the victim is closest with.
From a caregiver who comes over to do laundry and steals a debit card, to a family member who finds themselves in trouble and clears out their grandmother's bank account — elder financial abuse comes in many different forms, and unfortunately, it often involves relatives and close acquaintances. There are also other broader types of scams out there specifically targeting seniors. In this article, we discuss all of these types of scams against the elderly, some common elder financial abuse red flags, and what you can do to prevent elder financial abuse from happening in the first place.
What is elder financial abuse?
At Security National Bank, we define elder financial abuse as the improper use of an older person's money or assets, contrary to the victim's best interest. A number of scams against the elderly fall under this definition.
In the state of Iowa, Iowa Code § 235F.2 was enacted by the Iowa Legislature in 2014 to provide greater protection against financial and physical abuse to vulnerable elders. Under this code, a "vulnerable elder" is defined as "a person sixty years of age or older who is unable to protect himself or herself from elder abuse as a result of age or a mental or physical condition."
Elder Financial Abuse From Family Members
Many instances of scams against the elderly involve family members in desperate need of money. For a desperate person, it may be easy to justify taking advantage of their parents or grandparents.
Maybe they've gotten in trouble with the law and will resort to cleaning out their grandparents' bank account in order to pay fines or post bail. Other times, a long lost relative swoops in after a long period of absence and starts to care for their elderly family members, sometimes sneakily stealing checks or debit cards from their home in the process.
Another elder financial abuse scenario involves an elder's power of attorney. When "power of attorney" has been granted to someone, it means they have been given legal permission to act for another person in specified or all legal or financial matters. A person who is granted power of attorney for an elder may not abuse that power right away; they may wait until the person is more vulnerable and less aware of their own financial activities.
In most cases, people don't think to question their trusted power of attorney because they believe that person will act on their behalf with the utmost good faith and loyalty. Unfortunately, this isn't always the case. Many times, a person with power of attorney will claim they took the money for safekeeping, because the elder was "senile" or "needed to be protected from making poor financial decisions."
What to Do If You Spot "Power of Attorney" Abuse
What can an elderly person do if they find themselves victim to power of attorney abuse? First, they should contact an attorney. In most cases, a new lawyer can help revoke the power of attorney, demand the stolen money or property be returned, and if needed, file a lawsuit.
The most common legal claims in cases of abuse of power of attorney are "breach of fiduciary duty" and "conversion." When an elder signs power of attorney, it creates a fiduciary relationship between the elder (the principal) and the person acting as power of attorney (the agent). Under this fiduciary duty, the agent owes the elder the duty to act with honesty and integrity. If the agent fails to meet the fiduciary duties of fidelity, the agent may be liable for breaking this agreement.
A conversion happens when an agent uses an elder's assets for his or her own benefit. If an elder can prove the defendant managed or used the elder's property in a way that was inconsistent with the elder's rights of ownership, the agent has illegally used power of attorney to convert property. In order for this case to be won, the elder must prove they demanded their property back and the defendant refused to return the property to the elder.
How to Prevent Elder Financial Abuse
First and foremost, individuals are their own best line of defense. Here are a few steps a senior citizen can take to protect against elder financial abuse and exploitation:
- Plan ahead to make sure your assets are protected and your wishes are followed. Talk to an attorney or get in touch with a trusted financial institution about the best options for you. At Security National Bank, we meet with customers on a regular basis to discuss protecting their assets.
- Shred all receipts, bank statements, old checks, credit cards — anything with financial information — before throwing them away.
- Lock up your checkbook or other sensitive information before letting others enter into your home.
- NEVER give your personal information to someone over the phone, unless you were the one who initiated the call and the person on the other end of the line is a known, trusted party.
- NEVER pay fees or taxes to collect "lottery winnings" or “free trips.”
- Feel free to say "no" if someone is asking you for money. Manipulation is a subtle form of financial abuse.
- Only grant power of attorney to someone you fully trust.
- Trust your instincts. Scammers are very good at what they do. If something feels off, it's always okay to stop the conversation, hang up the phone and call the authorities or your financial institution to help verify if an offer is legitimate and protect your online safety.
For a full list of precautionary measures to prevent elder financial abuse and exploitation, read this helpful article titled,"Retirees and Financial Scams: How to Protect Yourself," from Dan DeMarest, Vice President of Wealth Management at Security National Bank.
Ways Family and Friends Can Protect Parents and Grandparents
It's always good to be cautious, especially when helping with the financial situations of your most vulnerable family members. Stay on the lookout for these elder financial abuse red flags:
- Suspicious bank account activity
- Random loss of property
- New friends accompanying your parents or grandparents to the bank
- New powers of attorney
- Altered wills or trusts
- Unexpected closing of accounts
- Suspicious signatures on checks.
Unfortunately, the following people who are usually closest to the victim are statistically most likely to commit these financial crimes. This includes spouses, sons or daughters, caregivers and powers of attorney.
If you suspect elder financial abuse, notify that person's financial institution immediately. Then, contact Adult Protective Services in your town or state, and notify the local police. If you suspect fraud, they should open an investigation.
Other Kinds of Scams Against the Elderly
While family members are responsible for many cases of elder financial abuse,, there are other ways the elderly are targeted for fraud and identity theft. In today's digital world, financial abuse and scams are rampant, and older people are often more vulnerable to these types of scams.
Online Romance Scams
A romance scam is an online confidence trick involving fabricated romantic intentions toward a victim. A romance scammer will spend time getting to know you, earning your affection and then using the information they collect to commit financial fraud.
These con artists will pick their victim and research them until they have enough information to spark a conversation, and social media makes it all the easier. By browsing someone's Facebook page, for example, they can find out a person's interests, location and even their marital status. Online romance scams may not seem like common scams against the elderly, but at Security National Bank, we often find retired, elderly or estranged people being targeted for these types of scams.
The scammer's goal is to develop a relationship with the victim and gather personal information by finding answers to questions like, "What was the name of your first pet?”, "What city was your mom born in?" or "What is the name of the street you grew up on?" While these types of questions seem innocent enough, they are often used to reset password information on your online financial accounts. Once the scammer has this information, the victim's accounts have been compromised. Often times, victims have completely fallen in love with the scammer, and they refuse to believe they've been duped — even after losing thousands of dollars.
Phone Call Scams
We often see elderly people being targeted for financial scams over the phone. These types of malicious phone calls can vary, but they all qualify as elder financial abuse:
- A phone call from a person claiming you've just won a trip or a "free" trial offer.
- A caller soliciting donations for a fake charity.
- Someone posing as a soldier in the U.S. military.By pulling on heartstrings, these scammers convince their victims to "support the troops.”
- An impostor claiming to be a grandson or granddaughter currently locked up in a Mexican prison. They ask for bail money and say they need it immediately. These callers tell victims not to tell anyone about the call and not to hang up the phone. Victims are understandably protective and scared for their grandchildren, so they often make a transaction immediately.
To prevent elder financial abuse from happening to your loved ones, make sure they know that they can reach out if they are receiving suspicious phone calls. Help educate them about potential scams and let them know that they can call the police and their bank if they think they were scammed.
Gas Pump & ATM Skimmers
You've probably heard of these data breaches. Skimmers are illegal card readers that are attached to pay terminals. These skimmers steal credit and debit card information from a card's magnetic strip. Criminals can then sell your card information or use it to make purchases.
For more information on skimming, read this helpful article, "How to Detect a Card Skimmer at the Gas Pump" by Tim Russell, Technology Services Manager at Security National Bank.
Payday Loan Scams
With the advent of online loan applications, applying for a payday loan is easier for consumers. Unfortunately, it's also easier for scammers to collect and abuse personal information. A payday loan scam works like this:
- ou fill out an application for a loan online
- You decide you don't want the loan. so you choose to not sign any contracts
- own the road, you receive a phone call from a person posing as a payday loan officer
- This person will then claim you have outstanding loan debt and request that you immediately wire money or provide your bank or card information or you will be sued. They may even pretend to be a government agency.
Other intimidation tactics include threatening to tell your employer and/or family members you're a debtor and saying you will be arrested if you don't pay the loan.
Protecting Your Financial Information
Senior citizens have spent a lifetime earning, saving and investing. That diligence should be protected, not exploited. At Security National Bank, we want to teach people about elder financial abuse red flags and empower people to safeguard their finances and their loved ones’ finances.
We will never tell you how to use your money, but we will give you tips and information to protect your finances at all costs. We also offer the latest technology, like chip-enabled cards and Value Checking with additional identity theft protection. We offer the utmost security and a commitment to preventing elder financial abuse.