Financial Scams Targeting Seniors [Top 10 Financial Fraud]

Seniors and Financial Fraud: Be Aware of These Warning Signs and Common Scams

In this series, we look at a real and persistent threat facing seniors: financial fraud and scams. In this first post, we highlight some of the most common scams to be aware of. The second post will provide tips to help protect you and your loved one from fraud. We also share some resources to consult in the event you fall victim to a scam. In the third post, we look specifically at how technology is leveraged to perpetrate fraud among the elderly. Today, as everyone is home more amidst the COVID-19 pandemic, seniors rely on the internet and devices for social connection, entertainment, financial services, and food and medical deliveries.

At 1+1 Cares, we know that the aging journey is challenging, beautiful, and complex. As the adult children and family of aging loved ones, we all try our best to ensure that our seniors are comfortable, cared for, and engaged. But there’s one real and persistent threat that is often neglected until it’s too late: elder financial abuse.

Every year, hundreds of thousands of seniors are abused and exploited. Elder abuse, according to the U.S. Department of Health and Human Services Administration for Community Living, is any knowing, intentional, or negligent act that causes harm or risk of harm to a vulnerable person. Often this occurs within relationships where there is an expectation of trust. Elder abuse can take many forms, including physical abuse, neglect, abandonment, and emotional abuse.

Exploitation can happen on other vectors, too. Today, we, unfortunately, see far too many cases of elder financial abuse. This is the illegal taking, misuse, or concealment of funds, property, or other assets of a senior, for the benefit of someone else. According to AARP and the National Adult Protective Services Association, most cases of elder financial abuse go unreported—only 1 in 44 cases are ever reported.

In this post, we share some of the warning signs of elder financial fraud. We highlight the most common scams that persist today. The goal of this post is to inform you of the risks so that you can best protect yourself and your loved one from the nefarious actors that sadly prey upon our vulnerable aging loved ones.

What is elder financial abuse?

One of the challenges with elder financial abuse is that it can take many forms. The abuse can range from investment scams to stolen goods like jewelry to forged checks and lottery scams. The National Council on Aging (NCOA) shares a list of the top ten scams that exist today, including:

1. Medicare or health insurance scams. Perpetrators may pose as Medicare representatives to obtain personal information or provide bogus services.
2. Counterfeit prescription drugs. Most often, counterfeit drug scams exist on the internet. Scammers prey on seniors who seek lower costs on medications. Not only is this a financial scam, but it can lead to dangerous and unsafe medical conditions.
3. Funeral and cemetery scams. In one approach, a perpetrator scans obituaries or even attends the funeral service of a stranger to take advantage of a grieving person. The scammer may claim that the deceased owed them money and try to extort it from your loved one.
4. Fraudulent anti-aging products. Some scammers will attempt to sell treatments or medications to maintain youthful appearances. (For example, a Botox scam in Arizona netted the scammers $1.5 million over the course of one year!) As with counterfeit prescription drug scams, this can have dangerous medical side effects, in addition to financial loss.
5. Telemarketing scams. Perpetrators also prey on seniors over the phone. Often under the guise of providing contact to lonely seniors, these scammers are notoriously hard to trace. There is often no paper trail or face-to-face interaction involved with a given scam.
6. Internet fraud. Especially amidst the pandemic, many seniors are learning to navigate the internet and other new technologies. Internet scams come in many forms, from pop-ups for fake virus-scanning software to email or phishing scams. (We’ll visit technology-related scams in an upcoming post.)
7. Investment schemes. Your loved one has likely planned for retirement and managed their savings accordingly. Perpetrators are incentivized to scam seniors of this money through investment scams. This can range from the all-too-familiar “Nigerian prince” email scam to selling complex financial products or pyramid schemes.
8. Homeowner/reverse mortgage scams. Many seniors own the home in which they continue to reside, whether or not they live with family members or in-home caregivers. Scammers will take advantage of this to send fraudulent letters, such as a fake letter from a county assessor’s office.
9. Sweepstakes and lottery scams. Scammers may attempt to solicit payment from your loved one to “unlock” a supposed prize. Or they might be sent fraudulent checks to deposit in their accounts, for a fee or a tax on the prize.
10. The grandparent scam. NCOA refers to this as, “so simple and so devious because it uses one of older adults’ most reliable assets, their hearts.” Scammers will claim to be a grandchild of your loved one to ask for help with rent payment, car repair, or a medical bill. Often these scammers will research actual family members in an effort to more convincingly fake their identity.

Source: Top 10 Scams Targeting Seniors, National Council on Aging

And that’s not all. Kiplingers, for example, shares other common scams today, including wire transfer scams and gift card scams.

Fraud and financial abuse: warning signs

Also complicating the situation is that often the abuse is perpetrated by people familiar to the elderly victim. The National Center on Elder Abuse reports that a whopping 90 percent of scams are committed by family members or people the victim knows well. But there are warning flags to look for to better protect yourself and your loved one. The Washington State Department of Financial Institutions shares several signs to be on the alert for, including:

• Unusual activity in bank accounts, including large, frequent, or unexplained withdrawals.
• ATM withdrawals from someone who has never used a debit or ATM card.
• Withdrawals from accounts or transfers between accounts that your loved one cannot explain.
• Large withdrawals from previously inactive accounts.
• New joint accounts are suddenly opened up.
• Sudden appearance of credit card balances.
• New “best friends” wanting to accompany an older person to the bank.
• Sudden non-sufficient fund activity.
• Unpaid bills.
• Closing CDs or other savings accounts without regard to penalties.
• Uncharacteristic attempts to wire large sums of money.
• Suspicious signatures on checks, or outright forgery.
• Checks written as “loans” or “gifts” to someone the family doesn’t know.
• Bank and credit card statements that no longer go to the customer’s home.
• New credit cards showing up in your loved ones’ name.
• New powers of attorney the older person does not understand.
• A caretaker, relative, or friend who suddenly begins conducting financial transactions on behalf of an older person without proper documentation.

Source: Warning Signs of Elder Financial Abuse, Washington State Department of Financial Institutions

Vulnerable scenarios for elder financial abuse

In addition to watching for the above signs that signal changes in seniors’ established financial patterns, make sure to assess and consider the particular situation of your loved one. Financial scams against elders are so prevalent that the National Council on Aging considers it “the crime of the 21st century”. Seniors are often targeted because of their perceived savings and the money that resides in retirement and other accounts. They’re also targeted because of their vulnerability. AARP shares several common situations in which the elderly find themselves, and which predispose them to abuse, summarized here:

• Lack of knowledge about major financial issues: As our loved ones age, they may experience memory loss, confusion, a decline in reasoning, and other diagnosed dementias, such as Alzheimers. One immediate red flag to watch for is when your loved one who was previously sharp and engaged starts to demonstrate a significant lack of recall about important matters. AARP writes, “This isn’t the garden-variety type of lapse — like “I don’t know where I put my keys” — that nearly all of us experience from time to time. It’s more like when a retiree whose signature is on a bank withdrawal slip for a large amount later says, “That doesn’t ring a bell,” or “I don’t recall taking that money out of the bank.”
• Physical frailty issues: As our loved ones age, many lose the physical strength to maintain their household and complete previously manageable chores. This can introduce a vulnerable situation in which unqualified, unvetted caregivers, other providers, and even family members can scam seniors into unnecessary or exorbitant repairs and services. The result can be costly, unnecessary home repair bills. Or, in some cases, even a series of monthly charges for non-existent repairs.
• Isolation, which is especially relevant amidst the COVID-19 pandemic: Does your loved one live far from family? If no relatives are close and no friends or qualified caregivers regularly check in, your loved one could be in a vulnerable position. This has become especially true amidst the pandemic. Often, these once-routine visits have become less frequent or non-existent in an effort to keep elderly people safe. A lack of interaction might also open your loved one up to making connections with just about anyone.
• Questionable behavior of relatives: Sadly, you might even need to watch for signs of financial abuse among family members who currently reside with your loved one. People who live with your family member (if it’s not you) will have greater access to the person’s accounts and personal documents. Watch for any sudden changes from this person, such as quitting their job or buying large-ticket items, like a car or furniture. This can be a delicate situation to navigate; each scenario and family will be different.

Source: How to Spot Early Warning Signs of Elder Financial Abuse, AARP

How can I protect my loved one?

Your loved one might currently have an in-home caregiver who provides as-needed services or live-in or 24-hour care. One of the most effective ways to ensure that the caregiver does not engage in elder financial abuse is through careful vetting. If you’re currently exploring your in-home caregiving options, keep this critical consideration in mind. Be sure to ask if your caregiver carries the proper liability insurance and can provide extensive references. Not all agencies will offer this, especially if you go with a stand-alone or private-found care provider. It’s a critical step, but it can be time-consuming and challenging.

1+1 Cares proactively seeks to prevent elder financial abuse among the qualified caregivers we refer. We take critical measures to safeguard your loved ones. At 1+1 Cares, we are your ally and a line of defense against elder financial abuse. We employ a stringent vetting process for every caregiver that we refer you to. 1+1 Cares is a referral service for home care assistance, meaning that we screen every interested caregiver and do an end-to-end background check on everyone. To be included in our referral service, caregivers must have a minimum of two years of experience or one year with CNA/HHA. For further security and protection, we do a criminal background check and also verify:

• Work eligibility in the U.S.
• Sufficient liability insurance
• Current driving insurance
• Driving record
• References

We also do face-to-face interviews (or virtual face-to-face, these days) to ensure that every caregiver who is included in our referral service is a solid partner not just for 1+1 Cares, but for you.

We hope that this post provides some helpful information about elder financial abuse. The health, safety, and wellbeing of your loved one are of utmost concern to the entire 1+1 Cares team. This includes the qualified caregivers we refer you to. At 1+1 Cares, we aim to make this process easy and affordable. Referring you to a qualified caregiver is our way to relieve some of your stress and uncertainty. This includes protecting your loved one from financial fraud and other scams.

Please get in touch with us today!

In the next post in this series, we’ll dive deeper into some tactics to protect your family. Suggestions range from being around when house repairs are scheduled or paying attention to sudden, new, or odd friendships your loved one makes. We’ll also provide a checklist of resources to consult if you or your loved one suspects fraud has occurred.