Protecting elders from financial abuse
Morgan Stanley Wealth Management10/10/22
Summary: Learn how to help protect you or your loved ones from common elder abuse scams.
Financial abuse of elderly citizens is one of the most common, yet under-reported, crimes in the United States. Between 2013 and 2019, financial institutions have reported more than 180,000 suspicious activities targeting older adults, involving a total of more than $6 billion.1 Worse, true losses may be difficult to calculate since many incidents go unrecognized or unreported.
The best protection for you and your older loved ones is being aware of forms of financial abuse and knowing what preventive steps you can take
Common elder fraud scenarios
With elder financial abuse, fraudsters exploit vulnerabilities of the elderly, including cognitive impairment and lack of familiarity with technology, to collect their personal and financial information to perpetrate fraud. Financial abuse against the elderly includes many types of fraud, such as unauthorized use of a senior’s property, mismanagement of their income for a personal benefit, or persuading a senior to sign a fraudulent document.
While every case will be different, there are red flags that may help you identify elder abuse. For example, since many seniors are dependent on others, the abuser is often someone close to him or her. Deceitful family members and caregivers are in a good position to access the victim's assets illegally without being noticed. They may also coerce, deceive, or manipulate the victim under the guise of being helpful.
Cases like these can be harder to address since investigators must deal with a relationship in which the victim is emotionally attached to the offender. In many instances, the victim chooses not to report the fraud.
Elderly people can also be duped into new relationships with unscrupulous people who seek to obtain money. In 2020, these types of scams resulted in over $280 million in losses to adults over 60 years of age.2 According to Morgan Stanley experts, people who live alone are particularly exposed, as they may come to place too much trust in their new companion. This vulnerability often also arises when a senior’s primary contact with the outside world is through their home caregiver.
The internet also has fueled senior financial fraud. Seniors can sometimes fall prey to notifications of overseas lottery wins, unexpected inheritances abroad, or even “ransom requests” about allegedly kidnapped younger relatives.
First line of defense for elder financial abuse
Trusted family and friends are the first line of defense for detecting elder financial abuse. It is important for seniors to make individuals they trust aware of their financial affairs. Coordinate with your loved ones so you can regularly check their account statements and access information online to review any transactions.
Designate a trusted contact person
Another step to help prevent elder abuse is for an account holder to add a Trusted Contact. A Trusted Contact is a person appointed by an account holder who serves as a point of contact in case a concern arises about the account holder’s health status, financial activities, or wellbeing. Note that, unlike an agent with a power of attorney, a Trusted Contact has no authority to take any action on an account.
Elder financial abuse impacts financial security and produces a huge loss of well-being for the people who need it the most and when they may need it the most. Know the warning signs of elder abuse and ways you can help prevent it.
To learn more about how we work to help secure your and your loved ones’ accounts, visit the Security Center.
The source of this article, Protecting Elders from Financial Abuse, was originally published on June 14, 2022.
- Suspicious Activity Reports on Elder Financial Exploitation: Issues and Trends, Consumer Financial Protection Bureau, Feb. 2019 https://www.consumerfinance.gov/data-research/research-reports/suspicious-activity-reports-elder-financial-exploitation-issues-and-trends/
- Elder Fraud Report 2020 https://www.ic3.gov/Media/PDF/AnnualReport/2020_IC3ElderFraudReport.pdf
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