Seniors' wallets are squarely in the crosshairs of financial predators. Financial exploitation runs the gamut from the quaint and quotidian to brazen and breathtaking abuse. Telemarketers sell auto-club memberships to seniors who no longer drive. Caregivers who are asked to help with the banking withdraw cash for themselves. Or an adult child who holds power of attorney drains your retirement savings and pressures you to change your will for his benefit.
The numbers are stark: People 60 and older accounted for 27% of fraud complaints last year, up from 22% in 2011 and the highest percentage of any age group, according to the Federal Trade Commission. In a recent survey of 40 consumer protection agencies by the Consumer Federation of America, scams against the elderly ranked as the worst complaint category in 2013. "Financial fraud is skyrocketing," says Doug Shadel, Washington state director for AARP and a former fraud investigator. There are "not enough investigators and prosecutors to handle the unbelievable surge in this activity," he says.
The statistics actually illustrate only a fraction of the problem because most senior financial abuse goes unreported, fraud experts say. Seniors may be reluctant to report they've been scammed because they are embarrassed, afraid they'll be deemed no longer capable of managing their own finances or unwilling to expose a family member who has been stealing their money. And seniors suffering from dementia may not realize they've been exploited.
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Among the factors that can make seniors targets for scams: ample retirement savings, social isolation and health conditions that may diminish financial decision-making ability. And in recent years, "interest rates have been so low that seniors living on a fixed income have to take on some risk, and con artists know this" and tout inappropriate products, says Lynne Egan, Montana's deputy securities commissioner.
But an array of new tools and techniques are helping seniors and their advocates shed light on elder financial abuse -- and prevent it from happening in the first place. New research is pinpointing which seniors are most susceptible to financial scams. Regulators and senior advocates are recognizing that professionals in the legal, medical and financial industries should play a role in shielding older adults from financial exploitation. And new types of debit cards and smartphone apps are helping protect seniors against fraud.
The Link Between Fraud and Health
New research on the interplay between financial scams and declining health shows how seniors can potentially safeguard their pocketbooks by paying close attention to their medical conditions and even discussing financial problems with their physicians.
More than one-third of people 71 and older have some form of cognitive impairment or dementia, according to Duke University research. And people with even mild cognitive impairment have far more trouble with basic financial tasks such as paying bills and managing bank statements than those without the condition. Indeed, trouble managing money is often the earliest sign of developing dementia.
Other health problems can also make seniors more susceptible to scams. A recent AARP survey of Internet users found that online fraud victims were more likely than non-victims to have experienced a serious illness or injury in the previous two years. These people have a "weakened immune system," Shadel says. "If you've just had one of those negative life events, be particularly cautious."
Given the links between physical and financial health, investor-education group Investor Protection Trust (IPT) has begun training doctors and pharmacists to spot elder financial abuse. The program, which has trained more than 7,000 doctors in the past three years, teaches physicians to ask older patients questions about financial stress and who is managing their money, says Dr. Robert Roush, an associate professor of geriatric medicine at Baylor College of Medicine, who helped develop the program.
Family members and friends can look for many of the same red flags that IPT is training doctors to evaluate. Growing confusion about how to pay bills and sudden concern about running out of money at the end of each month may be signs that a senior needs help.
If you see signs of cognitive decline, a doctor can evaluate whether the senior should be referred for neuropsychological testing or a functional MRI. If you suspect financial exploitation, report it to your local adult protective services agency; for information, visit the Web site of the federal Eldercare Locator (www.eldercare.gov), or call 800-677-1116.
Just as an illness can make seniors more susceptible to financial fraud, suffering financial exploitation can also affect a senior's physical health, researchers say. In some cases, seniors who have been scammed forgo paying for needed health care. In other cases, the simple knowledge that they've been ripped off seems to spark a physical decline.
Howard Tischler, 60, of Potomac, Md., saw his mother's health decline after a period of financial abuse. His mother, a former accountant and single parent, was "fiercely independent" and had arranged her finances so that she wouldn't become a burden on her three sons when she retired, says Tischler.
But when she was in her late seventies, he began to see signs of financial troubles, including hefty credit card bills. One charge that stood out: $80 a month for an auto-club policy -- for a woman who was legally blind and did not have a driver's license. She fell behind on her long-term-care insurance payments and canceled the policy. And when she asked a friend to help her get the bills paid, the friend began writing herself a check once a week.
When Tischler's mother entered assisted living, she had no resources to pay for it, leaving her dependent on her children. After he told his mother about the financial exploitation, "her health declined rapidly," Tischler says. "It starts small and it grows." After his mother's death in 2011, Tischler started EverSafe, a company focused on safeguarding seniors' finances.
A little planning can go a long way toward protecting your finances in the event of declining health. Tell trusted relatives where to find your financial documents in case you're seriously ill. Set up direct deposit of any income and benefit checks you receive regularly. And if you designate a power of attorney for finances -- an agent who can manage all your finances if you're incapacitated -- build in safeguards to prevent abuse. For example, require that the agent periodically report to a third party, such as a friend or lawyer, or that a third party approve any large gifts of your property.
Such steps -- besides protecting you against predators who operate online, by mail and by phone -- can also help prevent financial abuse by people who are close to you. Family members account for nearly 60% of cases of senior financial exploitation, followed by friends, neighbors and paid home-care aides, according to a recent study in the Journal of General Internal Medicine.
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New York City senior care adviser Joanna Leefer, who helps seniors and their families find quality long-term care, has seen this problem personally and professionally. Often, someone will befriend a frail senior and move into his home to help out -- and when it's time for the senior to move into a nursing home, the new friend doesn't want to leave because he or she has found a free place to live. In some cases, a family has to take legal action to get the person evicted, Leefer says.
Leefer's own father had a live-in caregiver at his New Jersey home in the final years of his life, she says. The caregiver asked if her cousin could stay with her temporarily, and Leefer gave permission. But about a year later, she found out that the "cousin" wasn't a relative at all. "She was renting him a room in the house and was making money off the situation," Leefer says. Though no one was really harmed, "she did take advantage of us a little," she says.
If you're inviting someone into your home, secure your personal financial information, Shadel says. Don't leave Social Security cards or credit cards (even expired ones) lying around, he says.
Go Online, But Be On Guard
Yes, the Internet is full of scams. But it may also be your best defense against financial fraud.
One-third of Americans have failed to set up online access for at least one of their bank or credit card accounts, according to AARP. There's a big problem with that: Those who need to wait for their bank or credit card statements to arrive in the mail will likely be slower to detect suspicious transactions in their accounts.
New smartphone apps and online services are also helping seniors and their caregivers detect fraudulent transactions quickly. These services can alert you to massive cyberattacks as well as small-scale abuse, such as a caregiver making personal purchases with your credit card. The senior -- or trusted relatives or friends he has designated to help oversee his account -- will receive alerts about questionable transactions, which can then be verified.
With Tischler’s EverSafe service (www.eversafe.com), launched earlier this year, users can register their credit cards, bank and investment accounts. For $4.99 a month, the service will scan up to five accounts daily, searching for suspicious activity. (A version that includes credit-report monitoring costs $9.99 a month.) Red flags will be raised, for example, if there are suddenly a series of ATM withdrawals for a senior who generally doesn't use ATMs or if total monthly spending falls far outside of the user's typical pattern.
BillGuard, a free app for iPhone and Android devices, also lets users link up credit- and debit-card accounts so that they can quickly review transactions and follow up on any suspicious activity. If other BillGuard users flag transactions with a specific merchant as suspicious, you'll be alerted to review any transactions you made with that merchant.
For seniors who are struggling to manage their money, a new prepaid Visa card is designed to circumvent fraudsters while preserving a senior's ability to make financial transactions. The True Link Financial card (www.truelinkcard.com), which charges a $10 monthly fee, allows adult children or caregivers to monitor a senior's spending, block payments to particular merchants, set spending limits by category, and receive text messages if suspicious activity occurs.
To stay abreast of the latest online scams, visit AARP's newly launched Fraud Watch Network at www.aarp.org/fraudwatchnetwork. The site offers an interactive map showing law-enforcement warnings for your state, scam prevention tips and an option to sign up for e-mail alerts on the latest scams.
Seniors who don't feel comfortable with smartphone apps and other technology can find a growing range of computer-education programs designed specifically for them. Search for technology classes in your area at the Oasis Institute's Oasisnet.org or SeniorNet's SeniorNet.org.
New York City nonprofit Older Adults Technology Services (www.oats.org) last year launched the Senior Planet Exploration Center -- the first technology-focused senior community center, says Thomas Kamber, founder and executive director. The center offers free classes that cover basic computer skills and staying safe online. People looking to enroll "were coming and standing on our sidewalk like it was the Rolling Stones tickets," Kamber says.
Some basic Internet safety tips: For online purchases, use gift cards, prepaid cards or credit cards, which offer better fraud protection than debit cards. Don't post information on social networks about going away on vacation or coming into some money. And learn to recognize "phishing" e-mails, in which scammers may pose as familiar companies or government agencies such as the IRS and ask for personal information.
While high-tech financial scams are grabbing the headlines, remember that low-tech scams are still running rampant. Bogus sweepstakes offers pour into seniors' mailboxes. Scammers call impersonating grandchildren in urgent need of cash or pretending to be Medicare representatives who need to confirm your personal information.
Don't give out personal information over the phone. Put your landline and cell phone numbers on the National Do Not Call Registry at DoNotCall.gov or call 888-382-1222. If your number is on the registry and a caller is from a company you've not done business with before, "it's probably a scam," says Susan Grant, director of consumer protection at the Consumer Federation of America. To stop receiving preapproved credit card offers, which could be filched from your mailbox, go to OptOutPrescreen.com or call 888-567-8688.
With a growing recognition that senior financial abuse often goes undetected, elder advocates, regulators, lawmakers and senior victims themselves are working to spotlight the issue. "We're trying to create a village around people who need assistance," says Don Blandin, president of Investor Protection Trust, which recently partnered with the American Bar Association to train lawyers to spot senior financial abuse.
Last year, 18 states passed legislation or resolutions relating to financial crimes against seniors, according to the National Conference of State Legislatures. Colorado and Hawaii, for example, passed laws requiring certain professionals, such as bank personnel, to report suspected senior financial exploitation.
The North American Securities Administrators Association, meanwhile, this summer formed a committee focused on senior investors' issues. A top priority is to draft a model rule that will give brokers and investment advisers guidance on dealing with senior clients who have diminished capacity.
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