As America’s aging population continues to grow, one crime in particular stands to gain from this booming cohort: elder financial abuse.
It has already proven to be a $2.9 billion a year business, but nothing has stopped it from thriving. Why? It’s under-reported and misunderstood, according to the 2014 “Safeguarding Our Seniors” study by Allianz Life Insurance Company of North America.
Nearly one in five (19%) Americans age 40 to 64 report they have an older friend or family member who has been a victim of financial abuse in the past, the study shows. However, of this 19%, more than half (55%) said the victims did not report financial abuse.
What’s more, only a sliver (5%) of the study’s 2,000 respondents indicated they have suffered financial abuse themselves.
Clearly there’s a disconnect, says Brenda Hart, director of consumer insights for Allianz Life.
“Elder financial abuse is often hard to punish and hard to prove — one, because of the lack of reporting, but two, because it’s hard to identify the intent of that [perpetrator],” Hart says. “Also, every state has a different law around it and a different definition for it. We as a society need to figure out a way that we can globally monitor this and take care of our elders.”
And that starts with awareness.
Who You Need to Beware Of and What You Need to Know
As defined in the Allianz Life study, elder financial abuse is the “unauthorized or improper use of resources of an elder family member or friend, who is 65 years or older, for monetary or personal benefit, profit or gain.”
It spans a broad spectrum of conduct, including, among other actions, taking money or property, forging an older person’s signature, and getting an older person to sign a deed, will or power of attorney through deception, coercion or undue influence, according to the National Council for Aging Care’s Guide to Recognizing Elder Abuse and Knowing Your Rights.
Of survey respondents who reported experiencing financial abuse, 52% indicated a family member, friend or caregiver committed the crime, compared to 22% who said a stranger was the perpetrator.
“There’s a misperception. You think the majority of elder financial abuses are coming through telemarketers or Internet scams, and to find that the majority is coming from a family member, caretaker or friend is alarming,” Hart says.
And this fuels the overall misunderstanding of the crime.
“We learned through several [verbatim comments from respondents] that a number of the elders didn’t even know they were being scammed, or said, ‘Well that’s my grandson, son or daughter,’” Hart says. “Their willingness to report a family member or friend is really small.”
In addition, many victims feel embarrassed or ashamed to admit they have been scammed, which leads to further under-reporting.
What to Watch Out For
The ways family members commit elder financial abuse varies. And their reasons for doing so are just as diverse.
Some family members — including children, grandchildren and spouses — stand to inherit money, valuables or property and feel justified in taking what they believe is “almost” or “rightfully” theirs, the NCPEA reports.
Similarly, some fear that their older family member will get sick and use up their savings, depriving the abuser of an inheritance.
Others have had a negative relationship with the older person and feel a sense of “entitlement,” or have negative feelings toward siblings or other family members whom they want to prevent from acquiring or inheriting the older person’s assets.
Still, strangers also commit elder financial abuse, taking advantage of the wealth and decreasing mental capacity of older Americans.
Some ways they do so are through telemarketing campaigns, Internet scams and U.S. mail solicitation.
How to Protect Yourself from Fraud by People You Know
Resist Pressure: Try not to feel pressured to help friends or family when it is outside your financial means — even if you wish you could be of assistance.
Monitor: Monitor all of your accounts carefully and make sure you know what all charges and debits are.
Seek assistance: Do not sign any documents you do not fully understand. And, consider talking over such matters with an attorney, financial advisor or another family member.
Get arrangements in writing: Sometimes seniors want to offer financial assistance to a loved one in the form of a loan. It is important, however that this be a formal arrangement, not a verbal agreement. You can work with an attorney to get the details of the financial transaction in writing — to protect yourself as well as the family member you are assisting.
Restrict access to information: You should be especially careful with all financial paperwork and passwords inside of your home. It is important to really control access to your financial information.
Background check: If you have hired someone to help in your home, be sure that they have been properly background checked.
How to Protect Yourself from Fraud Perpetrated by Strangers
There are a number of ways you can protect yourself from financial abuse, especially when it comes to crimes committed by strangers.
Get on the Do Not Call List. Put your phone number on the National Do Not Call Registry, which allows you to choose whether you’d like to receive telemarketing calls at home.
Think before you click. Additionally, avoid clicking on any advertisements or links on the Internet that aren’t familiar or trusted sources.
Examine mailed offers. If you receive a piece of mail that looks legitimate, but contains suspicious information — such as a bogus bill or random request for private information — get someone else involved.
Get help. Above all else, seek the help of a financial adviser, who can monitor your accounts and keep an eye out for questionable activity. This is important especially when protecting your finances from family members, Hart says.
“We certainly would put our financial advisers in a position where they can be that first line of defense to notice if things are out of character for a particular client,” she says. “Make sure you have an attorney, financial adviser or CPA who keeps an eye on things that may seem out of place.”
Being aware of the dangers of elder financial abuse can help stop the crime from growing. And with the coming wave of baby boomers, there will undoubtedly need to be a big push for education on the topic.
“It is a growing problem. Boomers are aging and living longer, and it presents an opportunity for scammers unfortunately,” Hart says. “We as an industry can help by educating.”
Find more tips for protecting yourself from investment fraud here or connect with a prescreened financial advisor or estate planner to set up necessary checks and balances on your accounts.