Financial exploitation is the fastest-growing form of elderly abuse. People of retirement age have worked a lifetime to build a sizeable savings to carry them through their golden years. This nest egg is a highly desired target for unscrupulous people looking to make financial gains. Whether you’re concerned for an older loved one, or just want to prepare yourself for your later years, there are actions you can take to protect against elder financial abuse.
What is Elder Financial Abuse?
Elder financial abuse occurs when a family member, friend, or even a complete stranger earns the trust of an older and/or mentally unfit person in order to gain access to their finances for the sake of misusing or stealing their money. Incidences of elder financial abuse are on the rise, and there’s no wonder why. According to Nielson, Baby Boomers account for more than 22% of the U.S. population. They control 70% of the nation’s disposable income and stand to inherit $15 trillion in the next few decades. This makes them an obvious target for scammers.
As people age, most come to rely on the help of individuals in big and small ways, depending on their own physical and mental well-being. Unfortunately, these trusted people sometimes take advantage of the situation to enrich themselves; leaving the person in their care with diminished or even extinguished finances. Studies* show the average loss by individual victims is $30,000 and the annual financial loss throughout the U.S. is an estimated $2.9 billion. But these figures could be much higher, as the national Adult Protective Services Association says instances of abuse are vastly under-reported – only 1 in 44 cases.
How to Spot Elder Financial Abuse
While there are regulations in place that put some of the responsibility on financial institutions to identify elder abuse, the U.S. Department of Justice offers these warning signs to help spot trouble:
- Sudden changes in bank accounts or banking practices, including an unexplained withdrawal of large sums of money by a person accompanying the elder
- Unexplained items on your credit report
- The inclusion of additional names on an elder's bank signature card
- Unauthorized withdrawal of the elder's funds using the elder's ATM card
- Abrupt changes in a will or other financial documents
- Unexplained disappearance of funds or valuable possessions
- Bills left unpaid despite the availability of adequate financial resources
- Discovery of an elder's signature forged for financial transactions or for the titles of his/her possessions
- Sudden appearance of previously uninvolved relatives claiming their rights to an elder's property or possessions
- Unexplained sudden transfer of assets to a family member or someone outside the family
- The provision of services that aren’t necessary
How to Prevent Elder Financial Abuse
If you’re worried about yourself or a loved one, you should know that the biggest risk factors for financial abuse are isolation and cognitive impairment. Therefore, it is vitally important to set checks and balances to ensure uninterrupted care and oversight in the event that you/the elder can no longer handle things on your/their own. In other words, get essential legal documents in order now, such as a will and at least one person with power of attorney – sometimes two trusted people is better because they can compare notes and consult each other on important decisions.
If you’re concerned for an elder, talk regularly with them about whether they’re paying bills and who they’re spending time with to determine if anyone might be a threat.
If you’re a senior, keep these additional tips in mind:
- Never give personal information to anyone over the phone unless you initiated the call, even if they claim to be the IRS, Social Security Administration, or other government or credit entity.
- Consult with a trusted financial advisor or attorney before making any major financial decisions, including, but not limited to: adding a new signatory or beneficiary to your accounts, moving large sums of money, or investing in a product you don’t know much about.
- Do background checks on anyone who may come to work for you. Don't let them have access to your financial information.
- Pay with checks and credit or debit cards to ensure there's a paper trail.
- Check your credit report at least once per year to look for inconsistencies.
What to Do if You Suspect Elder Financial Abuse
If you feel you or someone you love has been a victim of elder financial abuse, speak up! Find a trusted person – be it a close family member, your attorney, your doctor, or an officer at your bank or credit union – and let them know what’s going on. In addition, if you have hard evidence that someone has misused your finances, contact Adult Protective Services or your local police department to file a report as soon as possible.
What Does the Credit Union Do to Prevent Elder Financial Abuse
Seniors have spent their entire lives giving back to the community and working hard so they can enjoy a long, prosperous life. Orange County's Credit Union values this exceptional group of individuals and does all it can do to enrich the financial wellbeing of its senior Members and ensure peace of mind.
The Credit Union has specific policies and procedures in place to combat elder financial abuse that may occur. Associates go through an extensive training program so they are fully equipped to spot when a Member may be falling victim to elder financial abuse and how to take action. Under California law, employees of banks and credit unions are required to report suspected elder financial abuse to Adult Protective Services or law enforcement authorities.
The best way to prevent elder financial abuse is to put protections in place before it’s too late. Because unfortunately, once the money is gone, it’s often gone for good. But with the right checks and balances, and by staying vigilant of warning signs, you’ll have a better shot of preventing abuse from ever happening.
*Sources: Allianz Life Safeguarding Our Seniors study, March 2014; the MetLife Study of Elder Financial Abuse, June 2011