by Barbara Kate Repa
Learn about the most common financial frauds and scams targeting seniors.
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 financial abuse in the United States each year, but law enforcement or government officials learn about only 1 in 25 cases.
You can protect yourself or your loved ones from financial elder abuse by becoming familiar with the most common scams and learning what to do if you suspect foul play.
Profiles of Elder Abuse Victims and Scammers
A recent study by the American Association of Retird 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 financial 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.
Common Financial Scams
Financial scams perpetrated against older people include a broad range of conduct — from outright taking of money or property to forging a signature on a legal document, such as a will or deed, to getting paid for care, products, or services and then not providing them.
Keep an eye out for these common scams.
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. Scammers also use the phone to sell seniors goods that either never arrive or are worthless junk.
Getting unauthorized access to funds. In “Sweetheart Scams,” alleged suitors woo older people, convincing them that love and care are their motivations for being included on bank accounts or property deeds; the suitors usually disappear along with the property.
Charging excessive amounts of money. Smooth-talking scammers first convince seniors that they need some goods or services, then seriously overcharge them — often hiding the high cost in extravagant schemes involving interest and installment payments. This tactic is often used for products that many older people might find essential to their quality of life, such as hearing aids and safety alert devices.
Selling bogus items. Among the most egregious of false sales ploys is dubbed “Rock in a Box.” In them, a senior is sweet-talked into buying an item, such as a new color television, at a bargain price, that comes in a box that’s suspiciously sealed. What the box actually contains is a well-padded rock.
Getting money or property through 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.
Using 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.
Making pigeon drops. In a typical pigeon drop, two suspects approach an older person — often in a retail shopping area or near an ATM machine — and claim they have just found a package or wallet containing a large amount of money. One of the suspects volunteers to check with a “boss” offsite to get advice on what to do with the found money, then reports that it came from an illegal source such as gambling or narcotics.
The scammers offer to split the money — but only after the older person shows “good faith” by producing money of his or her own. When the scammers send the senior to the “boss” to get the promised share of the money, the senior discovers that there is no boss and the suspects have disappeared.
Faking an injury scenario. In this situation, a scammer claims to have a connection to law enforcement and tells an elder that a child or other close family member has been seriously injured or is in jail. The scammer then convinces the senior to give him or her money for medical treatment or bail.
Offering false prizes. A good example of this is the “You have won the lottery” scam operating out of Canada. In this scam, thousands of older people were bilked into believing they became wealthy overnight, but had to wire money in “fees and taxes” before they could collect the grand prize. In a joint crackdown, the U.S. Attorney General and the Solicitor General of Canada estimated the take from this mass-marketing fraud to be about $1 billion a year.
In another version of this scam, con artists tell an elder that he or she has just won a huge cash prize, but needs to send in some money — usually in money orders — to free it up from customs officials.
Doing unsolicited home repair work. 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 up front, 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.
Look out for certain factors that may indicate that a loved one is a likely target of financial abuse. Of course, no single sign is conclusive proof, but staying aware will help you avoid or limit the fallout if there are any problems.
- Unusual or large withdrawals or transfers from bank accounts, or large credit card charges that the older person can’t explain.
- Checks that are missing or include suspicious signatures.
- An individual who suddenly forms a close relationship with the older person, getting easy access to his or her home, money, and other property.
- Newly executed documents, such as a will or power of attorney, that the older person doesn’t seem to understand.
- Changes in account beneficiaries or authorized signers.
- A large number of unpaid bills.
- Missing property.
- Entry forms and prizes from contests, and payments made for “free” vacations or other merchandise.
- Untreated physical or mental problems, including a dramatic change in mood or disposition, or other evidence of substandard care.
- Sudden social isolation.
Where to Report Suspected Abuse
There are now a number of individuals and groups dedicated to investigating suspected financial abuse, and finding and stopping perpetrators. Here are some options for taking action.
Notify bank personnel. Depending on the type and extent of financial abuse involved, giving a heads up to the bank tellers and officers who commonly handle the elder’s accounts may be enough to stop the wrongdoing. Bank employees are often in a good position to note suspicious activity, such as a sudden withdrawal of large sums of money or use of an ATM card by an elder who is housebound.
The laws in most states encourage or require bank officials to report suspected elder financial abuse. And a federal law requires financial institutions to file a Suspicious Activity Report with the federal government when they suspect elder financial abuse.
Get help from a senior services group. While the services offered — from counseling to legal assistance — vary widely depending on the locale, the Eldercare Locator, at 800-677-1116 directs callers to local programs and services that help prevent financial elder abuse. And INFO LINK at 800-394-2255 helps arrange and coordinate assistance with crimes.
Contact Adult Protective Services. Adult Protective Services (APS) is the government-affiliated agency charged with investigating reports of elder financial abuse and offering assistance to victims. To find your state APS office, visit the National Center on Elder Abuse’s website at www.ncea.aoa.gov (click on “Find State Resources”).
Alert law enforcement. The police or local prosecutor’s office will often intervene when there is good evidence that a crime is being committed.