The topic of elder financial fraud is becoming a bigger topic by the day. CNBC (I will give them credit) had a good article on it recently. Before we run down some of the facts let me mention something. One of the first lines of defense when it comes to elder financial abuse falls onto financial advisors. Because I take this responsibility seriously I will be adding some new services for my clients that help not only identify cognitive issues but also better insulates them from elder financial abuse issues. I will give you more details soon, however, this is another service I know separates me from the average advisor. In the meantime, let's look at some of the details from the article.
A report in 2015 estimated older Americans lose over $36 billion annually to financial frauds and scams. The worst part is some believe this estimate is low because many victims do not report!
30% of state securities regulators report they have had an increase in the number of reports and complaints on financial fraud directed at elderly people. Only 3% of regulators said their reports have gone down.
The Boomer generation is the perfect target. They are the wealthiest generation and a high enough percentage is dealing with cognitive issues that predators are preying on them. Sadly, it is easier to scam a senior citizen than rob a bank.
Over 75% of the complaints come down to three issues: Third Party Abuse/Exploitation (27%); Account Distributions (26%); and Family Member, Trustee or Power of Attorney Taking Advantage (23%).
Cognitive decline has a 33% increase in being susceptible to a financial scam. However, many healthy older adults fall victim as well.
One study showed in a given year 1 in 18 "cognitively intact" older adults is a victim of financial abuse, scam or fraud.
So, what are some tips to deal with this issue? Below is some advice from the National Council on Aging.
Fraud can come from outside and inside the family. 90% of reported elder abuse comes from a family member. Don't assume you have to only worry about an unknown predator coming after you.
Don't isolate yourself. Similar to domestic violence, elder financial fraud easily happens behind closed doors. Be sure to stay engaged in a larger community.
Do NOT buy anything from anyone who calls you or knocks on your door. If you are interested have them send you information in writing. Take it another step and make sure your home phone and cell phone are both on the Do Not Call list.
Shred all documents with account numbers, including credit cards, bank accounts, investment accounts and more.
If you are receiving monthly deposits from Social Security, a pension, or distributions out of your investment accounts, set them up so they direct deposit into your bank account. This is safer than having a check sitting in your mailbox.
The only time it is safe to give out any personal information on a phone call, including credit card numbers, is if you initiated the phone call. NEVER when they call you!
Whether this is you as a "senior citizen" or you are worried about a parent, aunt, uncle or grandparent, there are other signs to watch for. They include caregivers not allowing access; bills not being paid although there is sufficient income; unusual changes in financial accounts; and there are piles of "feebies" like magazine subscriptions.
Finally, please know every state has an Adult Protective Services program that is tasked with investigating reports of elder abuse. Reporter's identities are kept confidential as well as the services of the APS, so you may never know the outcome of a report. However, if you think there is a concern please report it. In the meantime, take some of the steps I mentioned above to protect yourself or your loved one.