Older Americans are increasingly falling victim to financial fraud and scams, losing billions to scammers and even friends and family members.
Banks, credit unions and other financial service companies reported more than $6 billion in assets held by seniors that may have been impacted by fraudulent activity from 2013 to 2017, according to a report earlier this year from the Consumer Financial Protection Bureau. Their study looked at so-called “Suspicious Activity Reports,” which are filed by banks and other financial providers to report suspected fraud or money laundering.
Elder financial fraud quadrupled during those years, reaching 180,000 Suspicious Activity Reports, the study found. On an individual basis, the sums aren’t small: adults between 70 to 79 years old lost an average of $43,000. When the older adult knew the suspect, the average loss was even higher, about $50,000.
It’s an issue that impacted the late comic book legend Stan Lee, whose former business partner and caretaker was of an elder or dependent adult, among other issues. The former business partner allegedly mishandled more than $5 million of Lee’s money.
The problem has prompted some action from lawmakers, with the House passing the Senior Security Act earlier this month. The bill would create a task force at the U.S. Securities and Exchange Commission to help stop financial predators from defrauding Americans over 65.
But what can families do to help their older relatives avoid fraud?
Understand the pitfalls
Elder financial fraud doesn’t always involve scammers. It can be as simple and annoying as recurring fees charged to credit cards for subscriptions that were requested to be cancelled.
But other forms of elder fraud are far more serious and can involve overcharging for health services, charging Medicare and Medicaid for services never delivered and funeral and cemetery scams.
Telemarketing and internet scams requesting immediate payment of bogus fees and fines is another rapidly growing problem. According to the Senior Investor Protection Resource Center, one in five people over the age of 65 have been a victim of financial fraud. Senior citizens lose at least $2.9 billion annually to financial exploitation.
Creating a plan
The key to detecting and preventing fraud and scams targeting seniors it to be aware that it happens and have a plan in place to monitor for it. Families with older parents and relatives need to understand who is the most susceptible to be a target of elder fraud.
Hold a family conversation about the family members you are most concerned could become susceptible to elder fraud and what financial accounts they own. Identify who has access to each financial account, how often are accounts are monitored and how bills are paid.
After that conversation, someone in the family should take the lead to create a list of monthly expenses, income and all financial accounts. It’s also a good idea to identify the most important accounts for paying bills, and which accounts have investments that should be monitored and managed.
Consider using technology-based services such as EverSafe, a subscription service which monitors bank, credit cards and investment accounts. EverSafe analyzes historical activity and patterns in accounts and develops a personal pattern of activity. Then it flags erratic behavior, triggering suspicious activity alerts and warnings about unusual withdrawals or missing deposits and unpaid bills, which helps customers guard against fraud and scams.
This is also a time to discuss establishing a power of attorney for financial accounts, and a durable power of attorney for other matters, including advance directives for health care.
Another good step is to set up automatic payments for as many monthly bills as possible. This is especially important to do for insurance policies for the home, auto, health insurance and long-term care insurance. Finding out an important insurance policy lapsed because the policy holder forgot to send the premium payment can result in excess fees or worse, loss of coverage.
It’s also wise to cancel all unused or extra credit cards and consolidate bank and financial accounts. Reducing account clutter will help to simplify the individual’s financial situation, as well as reduce incoming statements. That will help make the situation easier to manage.
Finally, and most importantly, create and stick to a regular process of monitoring all bank accounts and credit cards. Also, don’t forget to obtain and review credit reports and compare to a past credit report to look for changes that could indicate suspicious behavior.