There were warning signs: A constantly ringing phone. Bank accounts in disarray after an apparent hack. Messages from her family that went unreturned for days because she was extremely busy. A new man in her life, with whom she talked over the phone but never in person. Rochelle, an active, social, independent 86-year-old resident of Los Angeles, was being exploited by an international fraudster. But it was only months after those signs first appeared that the people who cared about her made sense of them.
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Concerned friends and neighbors refrained from asking too many questions out of respect for Rochelle's privacy. It was only when Rochelle's son Brad and daughter-in-law Nancy, who live in Sacramento, visited her last September that they realized something sinister was at play. (Last names are withheld to protect their privacy.) Rochelle was in such a deep state of depression that she ended up in the hospital, where the couple found out that she was also experiencing cognitive decline. When they entered her condo, they found scraps of paper with a mysterious name and phone number, a FedEx receipt to Jamaica, and stacks of unpaid bills.
Nancy and Brad are still trying to piece together how Rochelle fell under the spell of a seductive caller, who manipulated her into opening credit cards and lines of credit, as well as buying expensive watches they couldn't subsequently trace, over the course of several months in 2019. "I think the root of the problem is that she was lonely living by herself, even though she was surrounded by lovely neighbors and good friends," says Nancy. After talking to Rochelle as she recovered, they found out that she had tried to resist the caller's demands, but the pressure and the threats became too much to bear.
Financial exploitation is one of the most vicious kinds of abuse inflicted on seniors. It can range from petty financial crimes, such as stealing cash or forging checks, to more-elaborate deceptions in which the perpetrator manipulates an older adult into handing over money or control. Only one in 44 cases of elder financial abuse are reported, according to the New York State Elder Abuse Prevalence Study from 2011. Victims are hesitant to speak up because they are embarrassed, fear losing their independence or are reluctant to sever ties if the perpetrator is a loved one.
Financial abuse and elder fraud can do more than devastate an adult's savings, credit or ability to pay for long-term care. Many victims suffer medical and psychological harm, and they experience higher mortality rates than seniors who are not abused.
"Older adults make great targets because they have accumulated assets over time and are living off their savings," says Larry Santucci, who coauthored a report about elder financial victimization for the Federal Reserve Bank of Philadelphia. "Some are also very lonely or socially isolated, which makes them susceptible to exploitation." Moreover, cognitive decline--which hampers your ability to gauge risk or sense that something is awry--starts seeping in as early as your 50s. It may lead to diminished financial capacity, compromising your ability to handle your own money. "When you lose the ability to manage your day-to-day finances and make good banking and investing decisions, you are your own worst enemy," says Santucci. "You start to make financial mistakes before you even realize it."
Whether you are concerned for your aging family members or want to protect yourself, it's vital to fortify your finances from crooks before you become a target.
How it happens
As much as 90% of elder abuse is committed by a family member or someone the victim knows and trusts. Ted Halpern, president of Halpern Financial, in the Washington, D.C. area, discovered a ruse by his father's caregiver to acquire $5,000 from him, purportedly to pay for her child's surgery. "This nurse had cared for my mother in her final days, and we trusted her implicitly," he says. But "these caretakers are with your family members all day long, and their influence is significant." The caregiver had convinced Halpern's father to keep his gift a secret, so even after Halpern sat down with him to address the strange transaction, his father was reluctant to share the truth. "It's frightening for people to think that the person who is in their home every day and making their meals is taking advantage of them," says Halpern.
Scams by strangers are less common, but could also involve a larger amount of money. Many older adults are in the habit of answering ringing telephones, which makes them prime targets for phone-based fraud, says Amy Nofziger, director of fraud victim support at AARP. This can include imposters posing as IRS agents, Social Security representatives or grandchildren. Seniors who are new to social media, or in the habit of opening junk mail, are susceptible to other schemes.
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When you visit your parents or another aging relative or family friend, watch out for signs that something is amiss, such as a decline in his or her standard of living, stacks of gift cards, unfamiliar pieces of mail, or an unusually secretive or giddy demeanor. If you are involved with their day-to-day finances, look for missing check numbers or uncharacteristic bank activity that deviates from normal patterns.
Protect and prevent
Educate your parents about elder fraud by keeping abreast of common scams and dropping the topic into casual conversation. (Review the latest warnings from the AARP, Better Business Bureau, Federal Trade Commission, and Fraud.org.) For example, you can mention an article you read about scams targeting older adults and ask your parents what they would do in a similar situation, says Nofziger. Be sensitive; you don't want to instill unnecessary fear or make your parents feel like they are losing control.
But education only goes so far, says Elizabeth Loewy, cofounder of EverSafe, an online monitoring service designed for seniors. "The nature of mild cognitive impairment is that a victim can believe something is a scam one week, then forget or not understand a week later," says Loewy. You'll need to take other steps to minimize openings for an opportunistic fraudster.
Thwart nefarious callers. Start by registering your parents' phone number on the National Do Not Call Registry. Install a call screening and blocking device on their landline to deflect unwanted callers, and download a robocall-blocking app, such as YouMail or Nomorobo, onto smartphones. (Nomorobo costs $1.99 per month per mobile device but is free on VoIP landlines.) Set up a voicemail service to ease their concerns about legitimate calls being ignored and explain that even familiar-looking phone numbers that pop up on caller ID can be "spoofed," or faked.
Impress upon older adults that any unsolicited caller who is aggressive or initiates a request for their credit card number, Social Security number or other personal information is up to no good. Anecdotally, the number one method scammers use to get money is to convince their marks to buy a prepaid gift card and read them the numbers on the back of the card, says Nofziger. She suggests posting a "refusal script" by the phone with polite language your loved one can use to quickly end a strange call, such as "Thank you for calling, but I do not do business over the phone." At the same time, trawl your parents' social media pages to see what personal information they have made publicly available, and help them remove it.
Lock down their finances. Quiz your parents' banks and brokerages about features that can help you stay engaged with their accounts, because these benefits are not often advertised. For example, a bank may be able to grant you "read-only" access to online banking, set up a "convenience" account where, unlike with a joint account, there is no right of survivorship, or provide alerts that ping your phone when certain activity occurs. Ted Halpern and his siblings uncovered their father's caregiver's deception quickly because his sister received alerts every time a withdrawal bigger than his father's largest bill--his mortgage--cleared his account. They fired the caregiver and demanded that she return the money, which she did.
Brokerages may be able to designate you as an "interested party" on a parent's account, meaning you will get statements and may be able to log in as often as you like to monitor investments, but cannot make transactions. The Financial Industry Regulatory Authority, or Finra, now requires broker-dealers to request a "trusted contact," who will be notified about suspicious behavior, when clients open new accounts or update existing ones. At the same time, ask your bank and brokerage how they monitor accounts for unusual transactions and handle cases of potential financial abuse. Separately, help your parents review their credit reports and freeze their credit.
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You also need to guard against unscrupulous financial advisers and other professionals looking to exploit your parents. Hayden McCoy, a certified financial planner and owner of Synergy Wealthcare Solutions, was horrified when her recently divorced mother was persuaded by a financial adviser at a big-name firm near Dallas to sell her home and car and invest the proceeds with his firm, among other ill-advised decisions. When McCoy urged her mother to ask more-probing questions, the planner "tried to turn my mother against me," she says.
Look for certified financial planners who are fee-only, meaning their compensation comes entirely from their clients, rather than fee-based, meaning they may get commissions from other sources. Study your adviser's business card or website for fine print, which should disclose any affiliations with broker-dealers. (CFPs are now required to act as fiduciaries at all times when giving financial advice to clients.)
Encourage your loved ones to protect their assets through estate planning as well. Besides making sure their wills or revocable living trusts are up to date, older adults should prepare a durable financial power of attorney with a lawyer who specializes in elder law. (Find one through the National Academy of Elder Law Attorneys, the National Elder Law Foundation, or through your state bar if they certify elder law specialists.) The power of attorney means an agent can make financial decisions on their behalf. A lawyer can help an older adult appoint a trustworthy agent, especially if he or she doesn't feel that any close relatives fit the bill. Letha McDowell, an elder law attorney who practices in both North Carolina and Virginia, says one client chose her next-door neighbor's son, whom she felt was organized and capable. The son agreed, knowing that he could turn to McDowell's firm for guidance on her financial matters.
Get outside help. If managing a parent's finances becomes too onerous, consider hiring a daily money manager. These professionals work remotely or in person to help adults of any age pay bills, organize tax documents and bank records, negotiate with creditors, and more. Many daily money managers charge by the hour and meet with clients anywhere from once a week to once or twice a month as needed. Find a manager in your area at aadmm.com, or ask your financial adviser for a referral.
Online tools can also help older adults keep on top of their finances. "A smart scammer will steal small amounts across different institutions over time," says Loewy. Monitoring service EverSafe offers three plan subscriptions that range from $7.49 to $24.99 per month. The basic service tracks bank and credit card accounts for erratic activity and sends alerts to designated relatives and friends. Consider setting up automatic bill pay for your parents' bills.
Be careful about caregivers. Make sure any caregivers you hire through an agency are licensed, bonded and insured, and that they have undergone a background check. Ask your homeowners insurer whether your liability coverage extends to a contracted employee in the home.
Before a caregiver visits, lock up sensitive financial documents such as bank statements and checkbooks, shred personal documents rather than leaving them in the trash, and secure computers and smartphones with passwords rather than leaving them open and logged in. Store valuables in a safe or safety deposit box. Retired pastor Earl Ussery, 94, who lives near Baltimore, had no idea that a caregiver had forged his signature on stolen checks to pay herself tens of thousands of dollars until Cindy Stevens, his daily money manager, stepped in. The caregiver had been fired by the agency at that point, and the bank determined that it was not responsible for the forgery, leaving few options to recover his funds.
Report it. Nancy and Brad spoke with a detective in Los Angeles, who said there was little chance of catching the criminal (or criminals) who went after Rochelle if they were operating outside of the U.S. Instead, the couple is still trying to figure out what happened and have moved Rochelle into an assisted living facility, where she is much happier. "If you suspect anything might be of concern with an elderly neighbor, friend or relative, be bold and share it with family members right away," says Nancy. "Otherwise, it may be too late to prevent the damage."
Even if there's little chance of nabbing the bad guys, contact your local law enforcement and adult protective services agency to report financial exploitation or other abuses. Find contact information for APS agencies at napsa-now.org, under Get Help, and search other local resources at eldercare.acl.gov. The National Center on Elder Abuse lists help lines and resources by state.
The feds and states step in
Congress, state regulators and lawmakers, and the financial services industry are taking action to fight elder fraud. The Senior Safe Act allows certain employees at financial institutions to report suspected cases of elder financial abuse to federal and state authorities without fear of being sued. Details on training and reporting still need to be worked out. AARP is training bank tellers to spot signs of abuse.
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The Financial Industry Regulatory Authority, or Finra, lets broker-dealers put a temporary hold on certain suspicious activities. It also requires broker-dealers to request a "trusted contact" when clients open new accounts or update existing ones (the client can choose not to supply one). In 23 states, broker-dealers and registered investment advisers must report suspected cases of senior financial exploitation.
Copyright 2019 The Kiplinger Washington Editors