Identity theft. Financial fraud. Catchphrases that evoke fear of economic ruin at the hands of scheming pitchmen, cunning hackers, organized crime, grandchildren …
The financial exploitation of seniors by those closest to them is on the rise. According to the National Center on Elder Abuse, 90% of the perpetrators are family members or those who are well-known to the victims (e.g., neighbors, friends and caregivers).
Malefactions include unauthorized access to checking, savings and credit card accounts, impersonations for the purpose of establishing new credit lines, and other schemes that are intended to defraud this particularly fragile segment of the U.S. population.
Unsurprisingly, only one in 44 financial elder abuse cases are ever reported, according to the National Adult Protective Services Association, perhaps because so many of these involve family members, and one in 10 of the victims end up impoverished to the point of becoming Medicaid recipients.
I had an opportunity to hear some of these stories firsthand over the past year and a half when I participated in a grant-funded family financial literacy program that was sponsored by the Financial Industry Regulatory Authority and run by the Hartford Public Library in Connecticut.
I worked with scores of small groups of inner-city residents who gathered in library branches, public housing lunchrooms, high school auditoriums and senior citizen centers to listen to my informal talks on such topics as budgeting, banking and safeguarding credit. But it was the seniors who were far and away the most animated of them all.
Some talked about the often ingenious systems they devised to manage their fixed-income benefits (from Social Security, pension, 401(k) and other savings); many more felt compelled to share stories of the financial frauds that left them feeling angry and ashamed.
They talked about the cash and jewelry they lost to the drug-addicted children and grandchildren who saw them as easy marks (a problem that isn't limited to inner-city residents), spouses who forged their names on credit card and mortgage applications to pay off undisclosed gambling debts, and siblings and best friends who seemed to always be in a bind.
Of course, I heard about high-priced check-cashing services and predatory short-term-lending schemes that prey on consumers with limited means like them. I also heard about neighbors and hired caregivers who forged and cashed the checks they stole —including those that are intended to draw down on reverse-mortgage lines of credit.
Some of these instances were fresh, leaving me with the difficult task of having to deliver bad news: predatory practices are a matter for authorities to address and the banks are not required to make them whole for the checks they had a responsibility to safeguard in the first place.
Invariably, these talks ended with advice that, sadly for some, comes too late. Here are some steps seniors looking to safeguard their finances should consider taking:
- Hang up on telemarketers. If you have Caller ID, use it to screen these calls.
- Never give out your Social Security number or date of birth to anyone who calls you, unless you are certain that you know him or her.
- Never give out any personal information — especially account numbers and passwords — when you are in a public space, or even if someone you know is close enough to eavesdrop on your conversation.
- Never do your online banking in a public place or with someone else's computer, tablet or phone.
- Be sure you receive and verify every single monthly checking, savings and credit card statement and insurance benefit summary (because fraud in that area is escalating as well). Promptly report anything that doesn't look quite right.
- Request a free annual credit report every year, which you are entitled to receive for free from each credit bureau via AnnualCreditReport.com. Report any unusual activity to major credit bureaus Equifax, Experian and TransUnion. (Editor's Note: You can also get a monthly free credit report summary from Credit.com.)
- Lock up your credit cards, checks and passwords, if you've written them down.
- Buy a cross-cut shredder and use it to dispose of all correspondence that contains any type of personal account information.
- Have a backup plan for when you are unable to handle these matters on your own — hopefully with a family member or friend who deserves your trust.
As for the hard-luck stories that are intended to loosen your purse strings, I once heard a very effective metaphor in that regard.
Recall how flight attendants begin their public-service announcements by directing you to buckle up and stow your bags overhead or under the seat in front of you. They also say that in the event of an emergency, oxygen masks will drop down in front of your face, and that you should put on your own mask before attempting to help a child or anyone else.
The same goes for sharing your financial resources: you come first. And even if you have more than you need, listen carefully to the story you're being told. Is the crisis a singular event, such as due to an unexpected illness, or what amounts to an advance against cash that'll arrive any day now?
Ann Landers, the iconic personal advice columnist whom most seniors fondly remember, had what is perhaps the best one-liner about that: "No one can take advantage of you without your permission."
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