Elder Financial Abuse

How To Spot and Stop Elder Financial Abuse

July 23, 2018
Mandi SieversBy 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 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 financial abuse, some common warning signs, and what you can do to prevent 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. 

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.”

 Unfortunately for most, this type of financial abuse isn’t always easy to spot.

Elder Financial Abuse From Family Members

Many instances of elder financial abuse that we see involve family members in desperate need of money, 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. Other times, a long lost relative swoops in after a long period of absence and starts to care for their elderly family members; stealing checks or debit cards from their home.

Another 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 — and this right is usually granted by the victim at an earlier point in time. In most cases, people don’t think to question their trusted power of attorney, so financial exploitation is overlooked. Why? Because when a person grants power of attorney to a family member or close caregiver, 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 the elderly 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 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 (the principal) between the elder 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, then 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.

Protecting The Elderly From 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 financial 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 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 won trips.
  • Feel free to say “no” if someone is asking you for money.
  • 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.

For a full list of precautionary measures to prevent financial 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:

  • 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: spouses, sons or daughters, caregivers and power of attorneys.

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 fraud is suspected of being committed, they should investigate.

Other Kinds of Elder Abuse Scams

While the elderly tend to fall victim to financial abuse from family, 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 it doesn’t take a good scammer much effort to exploit someone’s finances.

Online Romance Scams

A romance scam is exactly like it sounds: it is an online confidence trick involving fabricated romantic intentions toward a victim, earning their affection, and then using the information they collect to commit financial fraud.

Think of a good scammer as an incredible detective, but with bad intentions. These types of 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. At Security National Bank, we often find the people targeted online are usually the retired, elderly or estranged.

Once a scammer feels like they have enough information to approach you (i.e. find similarities with you), they will initiate contact. Scammers are suave, patient, and manipulative — and they start subtly. Their whole goal is to build up trust with their victims. In some cases, they go so far as to make their victims fall in love with them.

The con artist'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?” or "What is the name of the street you grew up on?" While these types of questions seem innocent enough, they are also questions that are often used to reset password information on your online financial accounts. And once the scammer has this information, the victim's accounts have been compromised.

Have you ever heard that “love is blind”? Often times, when a victim has completely fallen for a scammer, they refuse to believe they’ve been duped. This makes it extremely difficult for loved ones, friends and even law enforcement officers to convince them otherwise — even after the victim has lost thousands of dollars falling for the scam.

Phone Call Scams

Often times, elderly are targeted for financial scams over the phone. These types of malicious phone calls can vary:

  • A phone call from a person claiming you’ve just won a trip, “free” trial offers or requests for donations.
  • Someone posing as a soldiers in the U.S. military. After all, people like to support the military. By pulling on heartstrings, these scammers convince their victims to “support the troops” and “be patriotic”.
  • 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 - not allowing the victim to hang up the phone. Often, grandparents are so protective and scared for their grandchildren, they make the transaction.

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 unknowingly steal credit and debit card information from a card’s magnetic strip. Criminals can then use your card info to buy things online, or sell for money.

For more information on skimming, read this helpful article titled, "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 applications, applying for a payday loan is easier for you. Unfortunately, it's also easier for scammers to collect your information. A payday loan scam works like this: you fill out an application for a loan online, decide you don’t want the loan so you choose to not sign any contracts, but down the road 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

At Security National Bank, we take the time to educate our customers on the dangers of giving away too much sensitive information. While we will never tell you how to use your money, we will give you tips and information to protect your finances at all costs. We have also formed close relationships with local law enforcement, and offer the latest technology — like chip-enabled cards and Value Checking with additional Identity Theft protection service — to offer the utmost security to our customers.

About the Author

Mandi Sievers

Mandi Sievers is the Assistant Vice President of Retail Services and Bank Security Officer at Security National Bank in Sioux City, Iowa. She has more than a decade of management experience in the financial industry, and works with local law enforcement on a regular basis to prevent fraud and identity theft around Siouxland.