older woman looking at cell phone and bills

Protecting Our Seniors: Understanding and Preventing Elder Financial Abuse

By: Bonita Van Otterloo, Marketing Officer
Published 
June 14, 2024

Elder financial abuse is a growing concern that affects many seniors worldwide. The Financial Crimes Enforcement Network (FinCEN) recently released a report of elder financial exploitation that showed over 155,000 suspicious activity reports filed related to elder abuse in the last year. These reports alone showed $27 billion in suspicious activity!

It’s crucial to understand what it is, how it happens, and what steps can be taken to prevent it. At Peoples Bank, we are committed to educating our community and protecting our customers from financial exploitation. 


What is Elder Financial Abuse?

Elder financial abuse involves the illegal or improper use of an elderly person’s funds, property, or assets. This can occur through deceit, coercion, or manipulation and often comes from trusted individuals such as family members, caregivers, or financial advisors.

Investment scams were the most expensive type of elder fraud in 2023, costing victims more than $1.2 billion in losses.

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How Does Elder Financial Abuse Occur?

Elder financial abuse can take many forms, each with unique tactics and methods. Understanding these can help in identifying and preventing potential abuse. Here are some common ways elder financial abuse occurs:

Scams and Frauds

  1. Lottery or Sweepstakes Scams:
    • How it Works: Seniors receive a call or letter informing them they have won a significant prize, such as a lottery or sweepstakes. To claim the prize, they are instructed to pay fees or taxes upfront.
    • Red Flags: Any request for payment before receiving a prize is a major warning sign. Legitimate lotteries and sweepstakes do not require winners to pay fees to claim their prizes.
  2. Telemarketing Scams:
    • How it Works: Fraudsters call seniors, pretending to be from reputable companies, charities, or even government agencies. They solicit donations, claim there is a problem with their bank account, or offer services and products that do not exist.
    • Red Flags: High-pressure tactics, demands for immediate payment, or requests for personal financial information over the phone are typical signs of telemarketing scams.
  3. Phishing Scams:
    • How it Works: Seniors receive fraudulent emails, texts, or phone calls that appear to be from legitimate institutions such as banks or government agencies. These messages often include links to fake websites designed to steal personal information or infect computers with malware.
    • Red Flags: Suspicious emails or calls asking for personal information, urgent language, unfamiliar links, and poor spelling or grammar can indicate a phishing attempt.

Unauthorized Transactions

  1. Unauthorized Withdrawals:
    • How it Works: Someone can gain access to an elder’s bank account or ATM card and make unauthorized withdrawals by stealing the card or obtaining the elder's PIN.
    • Red Flags: Unexpected withdrawals, missing checks, or a sudden depletion of funds are indicators of unauthorized withdrawals.
  2. Credit Card Fraud:
    • How it Works: Fraudsters use the elder’s credit card information to make unauthorized purchases. This can happen if the card is stolen or if the elder is tricked into revealing their card details.
    • Red Flags: Unrecognized charges on credit card statements and frequent calls from debt collectors about unfamiliar purchases are signs of credit card fraud.
About 72% of financial abuse losses are due to someone the senior knows such as caregivers, friends, or relatives.
(Opens in a new Window)Exploitation by Caregivers or Family Members
  1. Coercion:
    • How it Works: A trusted individual pressures the elder into making financial decisions that are not in their best interest, such as signing over assets or changing wills and trusts.
    • Red Flags: Sudden changes in financial documents, unusual bank activities, or the elder expressing fear or anxiety around certain individuals.
  2. Manipulation:
    • How it Works: Manipulators use deceit to gain control over the elder’s finances. This might involve convincing the elder to grant them power of attorney or to include them in their will or trust under false pretenses.
    • Red Flags: The elder making significant financial decisions they do not understand, changes in beneficiaries or estate plans, and isolation from other family members and friends.

Legal and Financial Protections

Detailing the legal protections available for seniors and how they can take advantage of them is crucial in preventing elder financial abuse. This could include information on:

  1. Durable Power of Attorney:
    • How it Works: A durable power of attorney allows an elder to appoint someone they trust to manage their financial affairs if they become incapacitated. It remains in effect even if the elder loses mental capacity.
    • Importance: It is essential to choose a trustworthy agent. The agent should act in the best interest of the elder and make decisions that align with their wishes.
  1. Living Trusts:
    • How it Works: A living trust allows an elder to place their assets in a trust managed by a trustee. This can help protect assets from being misused and ensure they are distributed according to the elder’s wishes.
    • Benefits: Living trusts can provide more control over assets and can be an effective way to manage and protect them.
  1. Guardianships and Conservatorships:
    • How it Works: When an elder can no longer make decisions for themselves, a court can appoint a guardian or conservator to manage their affairs. This ensures that the elder’s needs are met, and their assets are protected.
    • When Necessary: Guardianships and conservatorships are typically considered when no other less restrictive options are available, and they require court supervision to protect the elder’s interests.

Only 1 in 24 cases of elder financial abuse is reported to authorities.
 
Community Resources and Support

Providing information about local and national organizations that offer support and resources for elder abuse victims is essential. Here are some resources specific to Iowa, Minnesota, and South Dakota:

  1. Adult Protective Services (APS):
  1. Local Senior Centers:
  1. Elder Law Attorneys:

Elder financial exploitation results in approximately $28.3 billion stolen annually from seniors aged 60 and older.
(Opens in a new Window)Prevention Tips and Best Practices

Expanding on specific, actionable steps that seniors and their families can take to prevent financial abuse is crucial:

  1. Regular Financial Reviews: Encourage seniors to regularly review their bank statements and financial documents with a trusted family member or advisor.
  2. Establishing Checks and Balances: Set up dual control for financial transactions or require two signatures for large withdrawals.
  3. Open Communication: Maintain open lines of communication among family members about financial matters.

By recognizing these common tactics, individuals can be better prepared to protect themselves and their loved ones from elder financial abuse. Education and vigilance are key in preventing these crimes and ensuring the financial well-being of our seniors.

Protecting our seniors from financial abuse is a responsibility we all share. By staying informed and vigilant, we can help safeguard their financial well-being. If you have any questions or need assistance with reviewing your finances, please don't hesitate to reach out to Peoples Bank.


More Information on Preventing Fraud and Protecting Finances

 

Peoples Bank Resources:


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