Preventing elder exploitation
Your wellness depends not only on your physical and mental well-being, but also on your financial security. As you or loved ones age, you or they may be more at risk for financial fraud and abuse, which leads to financial turmoil and emotional distress.
To learn more, and to garner strategies for preventing elder exploitation, BeWell spoke with Marguerite DeLiema, PhD, a postdoctoral researcher at the Stanford Center on Longevity in the Financial Security Division.
Please describe the different types of elder financial exploitation that exist.
The two most prominent types of exploitation that come to mind are:
- Financial fraud — where perpetrators are strangers looking to fleece an older adult.
- Financial abuse — by the elder’s friends and family members who take advantage of the elder’s trust.
Both of these types of exploitation cost older Americans billions of dollars each year, as well as inflicting a huge emotional toll (shame, depression, shattered trust) and causing increased dependency on others after the victim’s life savings are gone. Unfortunately, elder financial exploitation is rarely reported to the police or to adult protective services, so victims rarely get restitution and perpetrators are free to go after other vulnerable elders or adults with disabilities.
Are the elderly more likely than others to fall prey to certain forms of financial exploitation?
The science on whether older adults are more likely to be financially victimized is mixed. We know that for some elders, age-related changes in the brain impair financial decision-making, and that dementia and chronic disease make elders more dependent on others for support. Family caregivers may have ulterior motives for helping a loved one, or have a lifelong pattern of financial dependence on the older person. This dependency can turn into financial abuse over time. We also know that older people have comparatively more wealth than younger cohorts in the U.S. — making the elderly more attractive targets for scam artists. Furthermore, social isolation and loneliness may make seniors more willing to interact and share personal information with potential exploiters.
Despite all of these factors, national prevalence studies show that it is actually middle-aged adults (between ages 45 and 54) who report the highest rates of victimization by financial fraud. The most likely explanation is that scam artists cast a wide net to phish for anyone who may take the bait, and that scams are tailored to be effective with different segments of the population. Depending on the pitch — winning a foreign lottery, getting out of debt quick, losing weight without trying, 100% returns on an investment — potential victims can range from young women concerned about their weight to poor older widows looking for a lucky break. It all depends on what people desire, what they find enticing, and how resilient they are to persuasion tactics.
For seniors, common scams include — just to name a few:
- The “grandparent scam”: a fraudster calls claiming that he is a grandchild who wound up in a foreign jail and desperately needs help with legal fees to get out.
- The IRS scam: “Pay now or the police will come to your home to arrest you.”
- Sweepstakes scams: “You’ve been selected as the lucky recipient of $500,000!”
- Bogus charity scams
How can we take steps to prevent ourselves — or our older friends and relatives — from financial victimization?
There are two classic proverbs that we can all live by to avoid scams and fraud: If the offer sounds too good to be true, it probably is; and, there’s no such thing as a free lunch.
When making a big purchase, try not to let emotions cloud your decision-making. Wait until you have “cooled off” before deciding whether to buy or to invest, and do a background search on the vendor, the broker-dealer, or the charity to make sure it’s legitimate. Other strategies include limiting what personal information you share with strangers, not clicking on unfamiliar links, and hanging up right away if you don’t recognize the caller.
To protect older people from financial exploitation, families should have conversations about whom the elder can trust to help with finances in the event that they no longer can manage independently. These discussions should begin early, long before their loved one has any signs of impairment in financial decision-making. Preferences should be clearly documented, perhaps by completing a durable power of attorney or a living trust. It’s best to have more than one person involved to ensure that there are checks and balances — so that no single person is secretly taking advantage of the elder.
Financial institutions offer services that protect seniors without forcing them to give up financial autonomy. With the elder’s permission, selected family members can have “view-only” privileges on the elder’s bank and investment accounts. The family can monitor the accounts for potential financial exploitation, but they cannot withdraw any funds for themselves.
What should we do if we suspect that we — or our older friends and relatives — have already been a victim of elder financial abuse?
- Elder financial exploitation should be reported to adult protective services, the state agencies that help investigate cases of elder mistreatment and that assess the needs of vulnerable older adults in the community.
- The police should also be informed to help identify and apprehend the perpetrator, and sometimes they will issue a scam alert to the community if they are getting many reports.
- Notifying the elder’s bank and/or investment firm right away is extremely important. The firm can place a temporary hold on the elder’s accounts to ensure that no more money is stolen while the case is being investigated.
- If the elder depends on the perpetrator for care, it may be necessary to find a different caregiver or a safer living situation for the elder.
… any final thoughts?
It is important to remember that we are all potential targets for financial fraud. Con artists are very good at discerning our insecurities, preferences, and desires — and they use the exact same tactics that legitimate sales people use to persuade us. This makes it incredibly difficult to differentiate fraud from a legitimate product, service, or charity. Being a savvy consumer means recognizing when you are being persuaded, and having cognitive strategies to resist making an impulsive decision instead of jumping in head first.