Beware of Financial Fraud

Financial fraud and exploitation are on the rise for elder Americans. Here are some tips for avoiding this costly and painful problem.

Con men and hucksters may sound like a class of rogues relegated to a bygone era. But the fact is a growing number of today’s elderly are finding out that, more than ever, they are being targeted for financial fraud and exploitation. Financial abuse against this country’s elderly is estimated in the millions of occurrences annually, with the majority of financial abuse happening to women over the age of 70.

There is a difference between the abuse that happens to the frail and mentally impaired and the scams seniors fall victim to because they lack the knowledge to understand a complicated con.

In this article, I will discuss some of the main issues surrounding the financial abuse of the frail and impaired and I will offer ways to avoid being a victim.

What is considered financial abuse of the elderly?

By technical definition, it is the theft or conversion of money or other property by caregivers, relatives, or other people the person trusts, and it takes many forms.

It could be the title to your parent’s home or other assets are transferred to the caregiver who is also known as an abuser and then sold.  Money from checking, savings, and investment accounts are withdrawn without authorization. Wills can be changed through intimidation. Loans are taken out – from personal lines of credit to equity loans and cash out of mortgages and the funds kept by the abuser. It isn’t uncommon to see checks signed over and property stolen.

What are the signs of financial abuse of the elderly?

• Large, frequent gifts are made to a caregiver.

• Your parent/loved one is reluctant to talk about once-routine topics.

• Personal belongings are missing.
• You see unusual bank account activity.
• Frequent checks for cash are written to a caregiver or financial professional.
• Bills are not being paid when someone is supposed to be paying them – usually the caregiver.
• Your parent/loved one transfers title of his or her home or other assets for no apparent reason.
• Attempts are made by the caregiver – who again could also be a friend or relative to isolate the person from you and other people in the family as well as friends.
• Changes are made in a will when the person appears to be incapacitated.
• Your parent/loved one is taking out unexplained loans.
• The live-in caregiver refuses to leave or is evasive about financial arrangements.

Steps to eliminate financial abuse:

Limit the power of attorney.

• A power of attorney is a legal document authorizing a person to perform certain legal or financial acts on someone else's behalf.  In the wrong hands it can be used to steal your parent’s assets. Be sure the P of A is someone who can be trusted.

Limit the powers the P of A has under the power of attorney.

• A person can require the agent/P of A to provide an annual accounting of income and

expenses to an outside party such as an attorney or financial planner.

Involve more than one person.

• Major financial decisions for mom and dad should be made only after consulting several trusted people including relatives and financial professionals.

Have checks directly deposited.

• Direct deposit of Social Security checks reduces the opportunity for theft. The funds though, are still at risk if the abuser is a joint owner on the account.

Use auto- bill pay.

• Routine bills can be automatically paid for mom and dad from a checking or savings account.

Talk to the bank.

• Banks are often the first to see questionable financial activity and can alert mom and dad – or you.

Check references.

• Anyone hired to provide care should be thoroughly screened.

Reduce isolation.

• The elderly should be wary of a caregiver who tries to isolate them. Mom and dad need to keep in touch with friends and family.  

©2010 Debbie Whitlock

Debbie Whitlock is a Registered Representative of, and offers securities through, Woodbury Financial Services, Inc. Member FINRA, SIPC PO Box 64284 St. Paul, Minnesota 55164. Sound Financial Partners and Woodbury Financial Services, Inc. are not affiliated entities. Neither Woodbury Financial Services,Inc., nor its registered representatives provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.