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How to Prevent Elder Financial Abuse

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By Susan Melony

Elder financial abuse is an all-too-prevalent problem. Whether you are an older person and you want to protect yourself, or you want to protect your loved one, understanding the warning signs of elder financial abuse and also how to spot scams is important.

The COVID-19 pandemic gave rise to new opportunities for scam artists to take advantage of older people. For example, there have been reports of scammers targeting older people, telling them they can get the COVID-19 vaccine in exchange for money.

Beyond specific scenarios, the following are some things to know about preventing elder abuse.

Know Who Is at Risk

Certain demographics are more at risk of being the victim of financial abuse than others.

People between the ages of 80 and 89 are most at risk, and the majority of victims are women.

Elderly people who are experiencing cognitive decline are more at risk, as are people living alone or who rely on others for care.

The annual loss by victims is estimated to be at least $3 billion, and the average individual loss is estimated to be $41,800.

Warning Signs

Learning how to detect suspicious behavior or activity before it becomes problematic is one of the best ways to prevent elder financial abuse.

There are some of the more obvious signs of a problem to watch for, such as large withdrawals from a bank account or unusual purchases on a credit card. Transfers between accounts can be a red flag.

If you’re helping a parent or another loved one with their finances, you might consider having a joint account so that you can monitor activity.

You should also be able to access things like power of attorney and wills so that you can get an alert if there are any changes.

Carefully Vet Caregivers

Caregivers tend to be good people who are in their line of work because they truly do care. However, some may use their position to take advantage of the people they care for. This includes not only hired caregivers but family caregivers as well.

Even if you fully trust your loved one’s caregiver, you should still frequently check in with them.

If you’re about to hire a new person, go over their resume carefully. Perform a background check, contact references, and ask for proof of identity.

Check on Financial Advisers’ Credentials

If you’re an older person, you may rely entirely on your savings and investments as your income.

With that in mind, you’re thinking about changing financial or investment advisers, do so very carefully.

You want to find someone who is required to operate under the fiduciary standard. That means they are legally required to put the best interest of their clients first, and not all financial professionals are fiduciaries.

The individual you’re thinking about working with should be licensed to sell financial products in your state, and you should check into their background to make sure they’ve never faced disciplinary action.

The best option is to only work with financial professionals who are personally referred to you by people you trust.

Also, keep in mind that if a financial professional is a broker-dealer, that means they offer suitable investment products, but that doesn’t necessarily mean they’re the best for you.

Common Scams

Some of the common scams that older people are victims of include:

  • A grandparent scam: A victim who has an older grandchild might receive a call that they’re in trouble, for example, and they need money right away to get out of it. The fake grandchild might even do all of this by text, and they would beg their grandparent not to tell their parents. Then, in an effort to help, you might send money to a scammer.
  • Dating scams: People of any age can and do fall prey to online dating scams. However, if you’re older, you may be less technologically-savvy so you could be more likely to find yourself in one of these situations. You might think you’re dating someone online, particularly someone in a different country, and they could frequently ask for money.
  • Charity scams: If people call soliciting donations for any type of charity or non-profit, vet the organization carefully before giving them anything.

Finally, there are also home improvement scams. People might go door-to-door and try to convince you that your home needs repairs. Your home may actually need the repairs they mention, but they could charge you more than the market rate or take your money and leave before completing the work.

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