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6 Hallmarks of Elder Fraud and How To Protect Yourself — and Your Loved Ones

Cameron Huddleston

Recently, the Department of Justice announced the largest crackdown on elder fraud in U.S. history. About 260 defendants were charged with victimizing more than 2 million older adults, who lost more than $750 billion to elder fraud schemes.

That crackdown made the headlines and hopefully raised awareness about elder fraud. However, financial exploitation of older adults largely goes unreported — not by the media, but by the victims themselves. That’s because older adults can be too embarrassed to report that they’ve been exploited, are unable to report financial abuse because they’re isolated or are unaware that they’ve been victimized, according to a study by the New York State Office of Children and Family Services.

Unfortunately, there’s no surefire way to prevent financial exploitation later in life. But being aware of the types of elder fraud and the warning signs can help reduce the risk. Learn more about the hallmarks of elder financial exploitation and what you can do to protect yourself and your loved ones against these scams.

Fraud by a Family Member

Unfortunately, when an older adult becomes a victim of fraud, it’s typically a family member who is committing the fraud. Nearly 58% of perpetrators in cases of elder financial abuse are family members, according to the National Center on Elder Abuse.

With this type of abuse, family members take advantage of older adults for financial gain. It can range from cash withdrawals from a bank account to transferring assets to threats of violence or withholding care until they get paid. Often, these family members are caregivers or have easy and frequent access to an aging adult.

How To Spot the Warning Signs

Be on the lookout for a family caregiver who suddenly is doing things with your or your loved one’s money that doesn’t align with your or your loved one’s needs — such as buying expensive jewelry, a vehicle or property, or going on lavish trips. “If there are things that are happening that don’t seem in line with the victim’s needs, it’s worth looking into,” said Jeff Abramo, communications advisor for fraud prevention programming at AARP.

Also, watch out for isolation. A family caregiver who is financially exploiting an older adult might prevent that person from interacting with other family members. “If you’re getting a lot of pushback, hearing messaging along lines that this person can’t see you and it becomes a pattern, you need to investigate,” Abramo said.

How To Protect Yourself or a Loved One

To protect against fraud by a family member, have discussions with all family members about what role everyone will play as you or your loved one age and how everyone can be aware of what the other is doing. “It’s about building layers of accountability,” Abramo said. “If one goes wrong, there will be other parties who are aware and can step in.”

Fraud by a Caregiver

Most caregivers do a wonderful job, Abramo said. But some take advantage of vulnerable older adults to exploit them financially. In fact, about 15% of perpetrators in elder fraud cases are paid caregivers, according to the National Center on Elder Abuse.

The victims typically live alone and don’t have any relatives who live close by. “For those people, it will be easier for a caregiver to step in and befriend the person,” Abramo said. “In some cases, the victim is aware that it doesn’t sound right but they appreciate the contact so much that they go along with it.”

How To Spot the Warning Signs

The biggest red flag that someone could be a victim of fraud by a caregiver is if the caregiver is intentionally isolating the person, said Michael Hackard, estate trust and elder financial abuse litigation attorney and author of “Alzheimer’s, Widowed Stepmothers & Estate Crimes.” The caregiver might limit or prevent contact with friends and family members.

Other warning signs are large cash withdrawals or transfers from the victim’s bank account. And the victim might appear intimidated or uncomfortable when the caregiver is around.

How To Protect Yourself or a Loved One

If your parent has a caregiver, stay connected with phone calls, visits and texts so your parent feels connected to you, Abramo said. Also, form a friendly relationship with the caregiver. Having a connection to you might cause the caregiver to have second thoughts about trying to take advantage of your parent.

Stress to your parent the importance of not signing anything a caregiver asks to be signed without a family member or lawyer present. Let your parent know it’s always good to have a second set of eyes, Abramo said.

To protect yourself from unscrupulous caregivers, make sure you designate a power of attorney while you still are healthy. A power of attorney is someone who can make financial decisions for you if you no longer can. An attorney can draft this legal document, and you should name someone you trust. Then ask your power of attorney to keep watch over your financial accounts for any unusual transactions.

Romance Fraud

The number of romance fraud victims has been rising — from 15,372 in 2017 to 18,493 in 2018, according to the FBI’s Internet Crime Complaint Center. With this type of fraud — also called a sweetheart scam — scammers use dating sites or social media to develop online relationships and build enough trust with victims to persuade them to send money.

“More and more older adults are using social media or platforms that can make them more vulnerable to scammers,” Abramo said. So that new love interest you or your parent met online might have ulterior motives.

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How To Spot the Warning Signs

People who are not who they say they are typically will send pictures of themselves that look like professional headshots rather than casual snapshots, Abramo said. This could be a red flag that they got an image off the web to create a fake persona.

Sweetheart scammers who meet victims through dating sites will try to communicate directly via email or text rather than through the dating site, Abramo said. They also will escalate the relationship quickly to build trust and start asking for financial help. They likely will say they want to meet in person — and might ask for cash to cover travel costs if they have to go a long distance — but will postpone or cancel meet-ups.

How To Protect Yourself or a Loved One

To guard against sweetheart scams, take new relationships slowly and ask a lot of questions, Abramo said. Be aware of inconsistencies in a person’s story. And if a person is being overly affectionate or insistent on email, cut and paste the text then search it online to see if it comes up as standard language that scammers use. If you think the person is a scammer, flag it to the dating site or social media site. If the site has gotten multiple reports about that person, it could deactivate his or her account, Abramo said.

If you have a parent who is starting to date again, tell them about the warning signs of a sweetheart scam. If your parent already is dating and becomes invested in a relationship quickly, don’t be afraid to be nosy. “Get engaged,” Abramo said. “Try to stay involved in that relationship and ask questions.”

Misuse of Power of Attorney

A power of attorney is a legal document that gives one or more people the right to make financial decisions for you if you cannot. The power can be limited to specific financial transactions or broad enough to allow someone to manage all of your financial affairs.

In short, the person you name to be your power of attorney can have a lot of power. That’s why it’s so important to choose someone you trust. Otherwise, an unscrupulous person could rob you blind by taking advantage of the power you’ve given him or her.

How To Spot the Warning Signs

The signs of power of attorney abuse aren’t always clear, Hackard said. One warning sign could be a family caregiver or child with a history of financial troubles who appears to have suddenly come into money — which could mean that person is using power of attorney to steal from an aging parent’s accounts or cash the parent’s benefits checks.

“A good holder of power of attorney should have scrupulous accounting and good records to the use of power of attorney,” Hackard said. If your parent’s power of attorney is unwilling to share details about how he or she is managing your parent’s finances, it’s a red flag.

How To Protect Yourself or a Loved One

It’s so important to name a power of attorney while you’re young and healthy. If you wait until you’re older, having health issues and relying on someone to care for you, you might be influenced to name someone to be your POA who isn’t the best person for the job. Even if you have named someone you trust, let that person and other family members know that there need to be open lines of communication about how your money is being managed if you’re no longer able to manage your finances on your own.

To protect a parent from power of attorney abuse, start by making sure they meet with an attorney to name you or someone they trust to be power of attorney. If they’ve already designated a power of attorney and you suspect that person is abusing the power, alert your parents’ financial institutions to be on the lookout for unusual activity in their accounts if your parent has dementia or another cognitive impairment. And ask your parent’s power of attorney to report to you and other family members so you can keep tabs on how your parent’s finances are being handled.

Coerced Property Transfers

Coerced house transfers are a common form of financial elder abuse, Hackard said. They can involve caregivers, family members, neighbors or friends persuading older adults to sign over the title to their home to them. They might lie about the document they’re getting the older adult to sign, claim the property needs to be transferred so the person can qualify for public benefits, or simply say they deserve the property because they’ve been taking care of the person. Caregivers might even claim that they should get the house so the older adult’s children can’t sell it and send the parent to a nursing home, Hackard said.

A similar type of fraud occurs when someone such as a real estate agent cons an older adult into selling his or her home at a low price. Hackard said he had a client whose neighbor started helping her out by buying her groceries and other things. The woman was then swindled into selling the neighbor her house as a form of repayment, Hackard said.

How To Spot the Warning Signs

Of course, if your parent starts talking about transferring or selling their home to someone, intervene to find out what really is going on. It likely won’t be that obvious, though. So watch for signs that your parent is being cut off by a caregiver from contact with family members or the caregiver is overly protective. And pay attention to comments from your parent that a caregiver is the only person who really cares about him or her and deserves more than just a paycheck.

Another red flag is someone telling you or your loved one to keep quiet about transferring or selling your home. The person might claim that the deal could fall through if you tell someone, Hackard said.

How To Protect Yourself or a Loved One

Check in on your older parents frequently to maintain a close relationship and to ensure they are being treated well by caregivers. If you don’t live close by, ask friends of your parents to check in on them. The key is to prevent aging parents from becoming isolated and vulnerable to people who want to take advantage of them.

You (or your parents) could create a living trust and transfer property to that trust to prevent others from getting access to it, Hackard said. With a living trust, you have to name a trustee to manage the assets in it. That would create an extra layer of protection to your property or your parents’ property to ensure it doesn’t end up in the wrong hands as you or they age.

Investment Fraud

Anyone can become a victim of investment fraud. But older adults can be especially vulnerable if their mental or physical health has declined and impacted their financial decision-making ability. Investment fraud can range from Ponzi schemes to financial professionals who sell older clients investments that are unsuitable for them to the theft of funds from clients’ accounts.

How To Spot the Warning Signs

Red flags of investment scams include claiming that an investment offers a high return with little to no risk or high-pressure sales tactics, like saying that something is a limited-time offer. Be wary of people who can’t answer questions about the investments they’re trying to sell, can’t clearly explain the investment strategies they use or won’t disclose their fee structure.

How To Protect Yourself or a Loved One

If your parents talk about a new investment they’re thinking about or a new financial professional they’re working with, ask questions. Help them research the investment or check the background of the financial professional with the Financial Industry Regulatory Authority’s BrokerCheck at finra.org. You should do the same.

Be sure to ask financial professionals what licenses they hold, how they get paid, whether they can provide references or whether any disciplinary actions have been taken against them. Also ask whether they are fiduciaries, which means they are required to by law to work in clients’ best interest.

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This article originally appeared on GOBankingRates.com: 6 Hallmarks of Elder Fraud and How To Protect Yourself — and Your Loved Ones