Financial fraud is the fastest growing form of elder abuse. Broadly defined, financial elder abuse is when someone illegally or improperly uses a vulnerable senior's money or other property. Most states now have laws that make elder financial abuse a crime and provide ways to help the senior and punish the scammer.
Elder financial abuse is tough to combat, in part because it often goes unreported. Many elderly victims are often too confused, fearful, or embarrassed by the crime to report it. One recent study reported by Consumers Digest estimated that there are at least 5 million cases of this form of elder abuse in the United States each year, but law enforcement or government officials learn about only 1 in 25 cases. The National Council on Aging estimates that the annual cost of elder financial abuse is up to $36.5 billion.
You can protect yourself or your loved ones from financial abuse by becoming familiar with the most common scams and learning what to do if you suspect foul play.
A recent study by the American Association of Retired Persons (AARP) highlighted characteristics of people older than 50 that make them easy targets for financial abuse. In general, they: expect honesty in the marketplace, are less likely to take action when defrauded, and are less knowledgeable about their rights in an increasingly complex marketplace. And as people over 50 are more likely to be home than their younger neighbors, they are often within easy reach of devious telemarketers and home solicitors.
Scammers target elders that they perceive to be vulnerable -- those that are isolated, lonely, physically or mentally disabled, unfamiliar with handling their own finances, or have recently lost a spouse.
The scam artists often pose as trustworthy helpers. They can be strangers, such as telemarketers and tradespeople, or have a relationship with the targeted victim, such as friends, family members, doctors, lawyers, accountants, and paid or volunteer caregivers. Abusers who are family members often have money troubles that may be made worse by unemployment, gambling, or substance abuse problems.
Elder fraud abuse scammers can be tough to catch. Many scammers have paperwork that appears to give them legal authority to act -- including powers of attorney, authorizing signature cards, and vehicle pink slips. Some work at a bank or other financial institution and have intricate ways of hiding their tracks by manipulating electronic records and such.
Financial scams perpetrated against older people include a broad range of conduct -- from outright taking of money or property to using technology to get personal or financial information, to getting paid for care, products, or services and then not providing them.
Keep an eye out for these common scams.
Catfishing scam. Catfishing is when someone steals from a person they are 'dating' online. Today, many seniors turn to online dating and social media to make romantic connections. However, some alleged suitors are really just people hanging around the web waiting to prey on elderly individuals who are lonely. These scammers may convince the elderly person of their undying love -- and then ask them for money to help with an emergency like to bail them out of jail or make a flight back to the United States. Usually, the suitor will never meet the elderly individual in person and is located in another state or country than the suitor claims.
Telemarketing or mail fraud. The U.S. Department of Justice estimates that dishonest telemarketers take in an estimated $40 billion each year, bilking one in six American consumers -- and the AARP claims that about 80% of them are 50 or older. Scammers use the phone to conduct investment and credit card fraud, lottery scams, and identity theft. Another form of this senior citizen fraud is when scammers use the phone to sell seniors goods that either never arrive or are worthless junk.
Phishing scam. Phishing is when a criminal uses fake emails, calls, or texts to steal a victim's personal information. In one common phishing scam, an elderly person will receive an email that says it is from the person's bank or investment account and that the elder needs to update their information. This is really just a ploy to get the elder's information and steal their identity.
Social Security spoofing scam. Scammers contact elderly people by phone and claim that the victim's Social Security number has been suspended due to suspicious activity and asks the victim to confirm their number or risk the possibility that the number will be seized. The scammers are sophisticated and may use caller ID spoofing to make it look like they are actually calling from the Social Security Administration.
Internet fraud. Some older people are slow to embrace new technology, which is why they are sometimes targeted in internet scams. Seniors may download a fake anti-virus program or viruses by clicking on pop-up windows. This action allows scammers to extract personal information about the senior.
Fraudulent legal documents. Many scammers cloak their actions in legal authority, procuring a power of attorney or will or other legal document giving them access to a senior's property. They get seniors to sign these documents by lying to, intimidating, or threatening the seniors.
Texting scam. A scammer texts the victim deceptive messages to try to get the elder person to provide their personal or financial information. For example, the scammer might promise a prize to the first 100 people who respond to the message. The scammer then uses the information to steal the elder's identity or to commit fraud.
Grandparent scam. In this situation, a scammer calls the elderly person and pretends to be their grandchild. The grandchild will then ask for money for an unexpected financial problem like not having money for rent, medical bills, or car repairs. The scammer will plead with the grandparent not to tell their parent.
Undue influence or fraud. Many seniors have been duped into parting with their homes or other property because a scammer convinces them it is for their own good. In one infamous case, three officials from the Detroit-based Guardian Inc. were found guilty of embezzlement and fraud after selling a client's house for $500 -- to the mother of a company officer. The company also collected excessive fees from its wards, sometimes as high as 70 percent of their Social Security checks.
Lottery scam. Scammers inform elderly victims that they have won the lottery or sweepstakes -- but they just need to pay for taxes or other fees before the rest of the money will be released. They might even send a check to the victim to make it seem more real, but the check will just bounce.
In one of these scams in Canada, the U.S. Attorney General and the Solicitor General of Canada estimated that scammers were able to steal about $1 billion a year from its citizens.
Home repair scam. Typically working in teams of two or more, scammers scour neighborhoods with a high concentration of older residents, or even track recent widows and widowers through obituaries and death notices, then appear on their doorsteps claiming to spot something in need of fixing -- a hole in the roof or clogged drainpipe, for example.
The scammers demand payment upfront, and then often claim that their initial investigation reveals a more serious problem, with a more expensive solution. The "work" they do is unlicensed and often shoddy, such as applying paint to a roof to make it appear as if it has been tangibly fixed.
In a twist on this scam, one alleged worker might distract the elder while another enters the house to steal money and other valuables.
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