Is your senior safe from financial abuse? You might be surprised.
A report by elder financial services firm True Link Financial reveals that the extent of senior financial abuse is much greater than previously reported. Approximately 36.9% of Americans over age 65 are affected in a given 5-year period—at a cost of $36.5 billion a year.
To protect your senior, understand the three common forms of financial abuse and how to prevent them.
Unethical Businesses, Con Artists, and Caregivers
With annual losses of $16.99 billion, financial exploitation by legitimate businesses is the largest category of senior financial abuse. It occurs in the open and is often perpetrated by U.S. corporations with a known address or recognizable brand. These companies deliberately use misleading language and social pressure to trick seniors into giving up their money, typically for phone or mail-order products, or excessive charitable gifts. When challenged, the companies defend themselves by arguing that the senior consented to the payment.
Criminal fraud, on the other hand, includes any explicitly illegal financial activity where the abuser conceals his identity to avoid getting caught. One common example is the grandparent scam, in which a senior receives an urgent phone call from a “grandchild” who needs him to wire money “without telling mom or dad.” Another type of fraud, identity theft, occurs when someone opens a credit card or financial account in the senior’s name, or uses an existing account without the senior’s permission. Criminal fraud costs seniors $12.76 billion a year.
Unlike financial exploitation or criminal fraud, caregiver abuse depends on a trusting relationship with the senior. This category includes the grown child or family friend who frequently “borrows” money, the caregiver who removes valuable items from the home, and the lawyer who takes advantage of an aging client. Caregiver abuse accounts for $6.67 billion in annual losses.
What You Can Do
Confusion and memory loss make seniors especially vulnerable to all types of financial abuse, but you can take a number of actions to reduce your parent’s risk:
- Review Financial Statements Regularly. Checking on your parent’s finances every few months will make you aware of any concerning changes in his spending habits. TrueLink estimates that this simple action prevents 24,500 instances of fraud—or $465 million in losses—every year.
- Consider Any Loss a Sign of Vulnerability. Though an unexplained $25 charge on a credit card or bank statement may seem inconsequential, small losses often lead to greater ones. Gently ask your parent where the money went. Then keep a closer eye on his financials and be ready to step in immediately if you see other trouble signs.
- Reduce Exposure to Financial Predators. Make sure your senior’s phone number is on the “no call” list, encourage him not to be too friendly with strangers, and remind him never to share financial information over the phone.
Though senior financial abuse once flew under the radar, public opinion is now strongly against anyone who preys on vulnerability for financial gain. Act quickly to limit your parent’s contact with questionable caregivers, and always report unethical companies and scams to raise awareness and make it harder for them to exploit others.