How to Help Prevent Elder Financial Fraud

Seniors have long been targeted for fraud that enables crooks to steal their money, property, investments or personal information. In fact, between July 2022 and June 2023, the U.S. Justice Department brought nearly 300 criminal and civil actions against more than 650 defendants who collectively stole more than $1.5 billion from over 2.4 million victims, according to the attorney general's report to congress.

 

What is Elder Financial Fraud?

Elder financial fraud is a fraudulent act that targets older adults in an attempt to deceive them into providing money or access to their financial accounts. Fraudsters often promise goods, services or financial benefits that are misrepresented or will never be provided.

Similarly, financial exploitation is the illegal or improper use of an older adult's finances or property.

While financial fraud and exploitation can affect people of any age, seniors are a more frequent target for multiple reasons, including:

• Older generations are more likely to have more wealth, lifelong earnings, investments, retirement funds and savings. Scammers prefer victims with a higher net worth.
• Many older adults rely on others to help them with personal care, mobility and transportation, and safety and security. As these helpers gain access into seniors' homes and lives, they become trusted contacts and are often allowed to see into their clients' day-to-day financial activity, yet not all of them are trustworthy, well-meaning individuals.
• Scammers perceive elder adults to be less tech savvy and easier to exploit, since they did not grow up with cell phones, email and the internet. In an increasingly digital world, banks have implemented many technological innovations, which were not around when elderly adults opened their financial accounts.

 

Common Fraud Schemes Targeting the Elderly

When financial criminals target older adults, they often pursue one of these four common schemes.

Tech Support Scams

A scammer may call or text posing as a tech support representative claiming that there is a problem with the elder adult's computer or phone. The caller will offer to resolve the issue or offer assistance on how to use certain functions. If the older adult agrees, the scammer can then gain remote access to victim's device and steal sensitive information, such as banking credentials or credit card information.

Romance Scams

By creating fake dating profiles online, a scammer might attempt to gain an elderly adult's affection and trust. Through romance scams, scammers try to manipulate elderly adults with intense flattery and the illusion of a romantic relationship, even if they've never met in person.

When the victim wants to meet in person, scammers will often provide an excuse such as serving in the military or being committed to a remote location. After spending weeks or months building a connection, the scammer will likely ask for money for reasons such as travel expenses to meet in person, medical emergencies or debt relief to start a new life together.

Grandparent Scams

Similar to a romance scam, the grandparent scam involves a fraudster creating false confidence in the victim. The fraudster impersonates a grandchild in desperate financial need, asking for help from their grandparents.

This scam sometimes involves "voice phishing," also known as vishing, which means making phone calls or leaving voice messages using voice impersonation to purport to be someone else. If the grandparent believes that the fraudster really is a grandchild in need, they may be convinced over the phone to send money immediately.

Investment Scams

Investment fraud can refer to a variety of financial crimes, such as Ponzi schemes, pyramid schemes, and real estate and stock market investment frauds. The scammers will often guarantee "returns" that are higher than average.

In many cases, the scammers will target victims online and require payment in cryptocurrency. Contacting the victim online means they don't see the scammer face-to-face. By using digital currency, there's no requirement for a bank or financial institution to verify the transaction and possibly catch the fraud. Notably also, money sent this way can't be retrieved once a person sends it.

 

6 Tips to Help Prevent Elder Financial Fraud

Create Awareness

Helping your elderly friend or family member avoid fraud starts with having a conversation. Some older adults might be lonely and eager to chat with anyone, but they need to know that there are criminals interested in defrauding them and be wary about whom they engage.

Explain some of the common scams and share the warning signs, such as someone asking for their banking information or other personal information. Tell them that if they have any doubt, they should call you or another trusted person or talk directly to their financial institution for input.

Review Accounts & Assets

It's important to develop a clear financial management plan as you age. When developing a plan, start by listing all assets and existing accounts that could be compromised by a scammer. If things are overly complex now, the family may opt to consolidate some accounts for simplicity and safeguarding.

Frequently Monitor Accounts

Older adults or their caregivers should frequently review their bank accounts and credit card activity. Review credit reports for any unexplained debts and use online banking to check banking activities. Immediately report any unauthorized transaction to your financial institution.

Keep the Conversation Going

As parents and grandparents age, they may forget earlier conversations about financial fraud or become less vigilant about keeping up with their finances. Continue to monitor accounts and look out for the red flags for elder financial fraud, including mysterious withdrawals from financial accounts and missing personal items, such as cash, checkbooks and debit or credit cards.

Protect Financial and Sensitive Information

Inform elderly adults to avoid giving their account information, driver's license number, Social Security number, passwords or other sensitive information to anyone who contacts them unprompted.

Some vendors and companies may ask for this sensitive information without the actual business need to have it. If someone feels uncomfortable disclosing personal information, encourage them to ask questions about why it is needed. Remind them to always take their time when making financial decisions or investments; any pitch for their money that comes with an urgent deadline is probably a scam and definitely a red flag. 

They should also properly dispose of all documents containing sensitive information such as bank statements, credit card statements, copies of checks and proof of insurance.

Make Power of Attorney Decisions Cautiously

Some elderly adults may give power of attorney to another person to transact business on their behalf if they become ill or incapacitated. While this may be helpful, having power of attorney also allows the appointed person to take money from your account, take out loans in your name, and make decisions about medical situations - so be very cautious about granting it.

 

What to Do if You or a Loved One was Scammed

If you or your loved one becomes the victim of a financial scam, it's important to take action as soon as the fraud is discovered.

Take the following steps if you suspect fraud:

• Contact your bank or financial institutions.
• Report financial abuse to the proper government agencies.
• Contact local law enforcement.
• Contact credit bureaus.
• Tell loved ones.

 

How to Report Financial Abuse

Elder financial fraud is monitored by government agencies. Report any fraud to your financial institution, the local office of Adult Protective Services, the local sheriff's office, or the District Attorney's office. You may also call the National Elder Fraud Hotline for additional help, at 1-833-372-8311.