How to Keep from Falling Victim to Financial Fraud
Comparitech, a cybersecurity research company, has estimated that 7.86 million cases of elder financial fraud occur annually in the United States, resulting in $148 billion in financial losses. Of those cases, only around 334,000 are reported to authorities.1
Elder financial exploitation can happen to anyone, yet cases are often vastly underreported often due to victim shame, the fact that the abuser is a family member or trusted caregiver, or because the victim does not know how to report the abuse.2
Signs of Elder Financial Fraud
The key to identifying financial exploitation is to be on the lookout for unexpected transactions or a change in your loved one’s financial patterns. The following are potential signs of financial abuse.
- Unusual banking activity such as large, unexplained withdrawals
- The shut-off of electricity, phone, water or other utilities due to unpaid bills
- The sudden closing of investment accounts or CDs regardless of penalties
- Unauthorized ATM withdrawals or checks made out to cash
- Sudden changes to estate planning documents, such as wills and trusts
- An unexpected transfer of assets to a family member or unrelated individual
- Unusual credit card charges
- The inability of the elderly loved one to access financial accounts
- Suspicious signatures on checks and checks written to unknown individuals
- New credit cards or joint accounts
- Sudden activity in a previously inactive account
- New “friends” who offer financial advice and accompany your loved one to the bank
- A family member or caretaker/service provider threatens to withhold access to loved ones or a vital service unless money is given or an inflated fee is paid
- The disappearance of money, financial statements or valuable objects
Ways to Prevent Elder Financial Fraud
It’s always better to stop elder financial abuse before it begins. Consider taking the following preventative measures to protect your finances or the finances of your loved one.
- Use automatic bill pay and direct deposit – Automating routine debits and credits helps ensure a record of all transactions and can make it easier to identify suspicious activity.
- Keep all financial documents and statements in a secure location – It’s important to keep all financial documents in a locked safe or other secure location to prevent unauthorized access. Also, remember to shred any documents that might contain personal information before throwing them in the trash.
- Know what documents are in place – Know what financial and estate planning documents have been completed and where they are stored so you can identify any unexpected changes to these documents. Consider wills, trusts, insurance policies, retirement accounts, outstanding loans, etc.
- Maintain ties – Elders most susceptible to fraud are those who are isolated and without strong connections to family and friends. Make plans to regularly connect with loved ones, either in person or over the phone/video chat.
- Designate a financial power of attorney – Regardless of your age, it’s wise to designate a trusted individual to serve as your financial power of attorney in case an unexpected event renders you unable to make financial decisions.
- Conduct thorough background checks of caregivers – When hiring in-home medical caregivers, consider using a bonded agency to conduct rigorous background screening of any applicants. Some of these agencies may even offer reimbursement in case of theft.
- Cancel unused credit cards – It’s easier to monitor credit cards you use on a regular basis.
- Regularly monitor your credit report – A primary way elder financial fraud is identified is when unknown accounts appear on an individual’s credit report, so it’s important to keep an eye on your credit. Federal laws allow you to access a free copy of your credit report every 12 months.
- Offer to help – If you have a parent or relative who seems to be struggling, offer to provide assistance in a manner he or she is comfortable with. Perhaps you can help establish online accounts and bill pay, or maybe you can compare credit cards to determine the most appropriate option, based on your loved one’s needs.
What to Do If You Suspect Elder Financial Fraud
If you suspect you or a loved one has been the victim of elder financial fraud, report the abuse to your local police and contact your local Adult Protective Services agency. Also report the fraud to your bank and investment institutions and request additional security protections be placed on your accounts.
Many states have a toll-free hotline to report suspected elder physical and financial abuse. You can find state-specific information here.
Creative Planning Legal can provide elder law services and has access to in-house support from wealth managers, accountants and insurance specialists who can assist with comprehensive long-term planning needs and asset protection. For more tips about how to prevent elder financial fraud, or for any other financial matter, please contact us.