Elder financial exploitation takes on many forms. Family, friends, and other trusted caregivers are typically the perpetrators of elder abuse such as physical abuse or neglect. However, financial exploitation falls into a different category. For one thing, the victim is more likely to consent to this form of abuse, because it often doesn’t appear abusive (because it’s a scam). For another, it often involves individuals or companies not in a caregiver role.
The Demographics of Elder Financial Exploitation
Financial fraud and scams target everyone, of course, but older Americans tend to endure these attacks more often, sustaining greater losses in the process. MetLife estimates that the cost of elder financial exploitation to be nearly $3 billion annually, with around 20 percent of seniors (i.e. those over age 65) falling prey to financial fraud at least once. The average amount lost? $30,000.
Thieves target the most vulnerable members of society. They most often set their sights on elders who live alone or are isolated, are between the ages of 80 and 89, and who are experience cognitive issues. The majority of victims are also women.
The scams included here target anyone who is vulnerable, but especially prey on seniors.
1. Advance Fee Fraud
Sometimes known as 419 Fraud, this is the now-infamous Nigerian prince scam. The scheme has morphed and changed over the years, as more and more people become familiar with the Nigerian prince angle. However, the basic premise remains the same: I have a fortune I’m unable to access for X reason. Send me money and I’ll reward you with a percentage of my fortune.
Though this earned fame as an email scam, the thief may also approach his or her victims via snail mail and fax.
2. Unsolicited Work
In this scam, the fraudster approaches the victim with an offer to perform work on either the home or vehicle. In some instances, no work is actually needed (at least not before the thief begins). The “contractor” demands money up front for the services and then either never completes the job, or does such a horrible job that the victim must hire a legitimate contractor to perform the repair.
The scammer may request further payment as the job continues, and sometimes insists on following the victim to the bank.
3. Debt Relief Scams
Anyone may fall prey to one of these outfits, but seniors often have rapidly increasing debt issues as medical bills pile up and retirement funds are stretched past the breaking point.
Companies that promise debt relief typically do nothing more than take advantage of government services that come with either minimal cost or even no charge to the consumer. The organization charges exorbitant fees for their “services,” typically as a percentage of the payment, which they request the victim pay directly to the company rather than the creditor holding the debt. Often, the payments never make it to the creditor at all.
These companies also request payment via cash or money order, which means that the payment cannot be tracked.
4. Telemarketing Scams
This is another scam that targets anyone, but for which seniors are particularly vulnerable. This is due to the increased likelihood that seniors (1) have a landline and (2) are home during the day to answer the call. A further vulnerability lies in social isolation, as many of these scams involve numerous calls, with the fraudster creating the semblance of a friendship with the victim during these calls.
The details of the scam change. Some claim to seek donations for a charity, others are seeking investors for a fake company or product, and some claim to be selling a product that may or may not exist. The goal of every scheme, though, is defrauding the victim of money.
5. Fraud Committed by the Employee of a Financial Institution
Though banks and credit card companies do all they can to hire honest employees, and implement measures to prevent employee fraud, it does happen. Some employees take advantage of their intimate knowledge of clients, and their access to those accounts, to steal from customers. With the move from paper to electronic record keeping, seniors are more vulnerable to these tactics. This is a form of identity theft (see number 9).
6. Sweetheart Scams
This is an age-old con (no pun intended) in which the con artist enters the victim’s life as a romantic interest. He or she does not immediately begin stealing (usually). Instead, the thief manipulates the victim’s emotions, gaining a position of trust and influence, with the ultimate goal of gaining control over the victim’s finances.
Embarrassment often leads these victims to remain silent. They may also choose to remain in the relationship, even after realizing what’s happening, due to loneliness.
7. Foreclosure Relief Scam
This scam grew greatly during the early 2010s, due to the implosion of the housing market, and it has a few iterations. In one, the fraudster (sometimes a company, sometimes an individual) claims to be able to stop the foreclosure process. The victim pays the fee, and the perpetrator files for bankruptcy in the victim’s name, without the victim’s knowledge. Foreclosure proceedings do cease at this point. However, as soon as the bankruptcy court realizes the victim did not file for bankruptcy, the case is dismissed and the foreclosure process resumes. In the meantime, the thief disappears with the victim’s money.
In a similar scam, the thief has the victim sign over the deed, claiming he or she will rent the property to the victim, with a promise to sign the deed back over to the victim once his or her credit improves. The thief then takes out a loan against the property, receives a lump sum of cash, and never makes payment on the loan. The property goes into foreclosure and the victim is evicted. Another variation of this scam involves the thief offering to loan the victim funds to get the mortgage up-to-date. Once the victim reviews the loan documents, he or she discovers the property was deeded to the fraudster.
8. IRS Lawsuit Scam
A recent scam is a phone call from a person claiming to be an IRS agent. The caller then states that you owe back taxes and unless you pay immediately over the phone, the IRS will initiate a lawsuit against you. First, the IRS would never notify someone by telephone that they owe back taxes. That notification would always be delivered in writing. Second, never give someone a credit card over the phone to satisfy an IRS debt.
Seniors are particularly vulnerable to this scam, as the caller tends to use heavy-handed scare tactics that their life will be ruined if they are sued.
9. Identity Theft
Identity theft is one of the fastest growing crimes. Of course, it’s always been around, but the ease with which thieves and hackers now steal information, and the many channels available for stealing it, helped fuel its growth.
In short, the identity thief acquires the victim’s personal information and uses it to access, control, or drain the victim’s finances. Medical records are highly prized, because they contain an enormous amount of personal information.
Seniors are particularly vulnerable to phishing scams, in which hackers send emails purporting to be from a trusted website, such as a bank. The victim clicks the link and logs into his or her account, and now the fraudster has all of this information.
10. Fake Relative Needs Money
This happens to anyone, but seniors are particularly vulnerable, especially if they suffer memory loss or other cognitive issues. In this scheme, the fraudster contacts the victim, usually by phone, claiming to be a relative (typically a grandchild or great-grandchild). What follows is a story describing financial distress, often including claims of being stranded in another country, and a request for the victim to wire the thief money.
Protecting Seniors from Elder Abuse
If you seek to protect a family member or friend from thieves and scammers, diligence is key. Only hire caregivers through a qualified agency, one that performs background checks and provides references. Trust your instincts about a caregiver, as well, and do not be afraid to fire or refuse to hire someone.
Seniors may protect themselves, as well. Never sign anything without first showing the document to an attorney, accountant, financial advisor or trusted friend or family member. Ask an objective third party to review financial statements to help discover discrepancies. Finally, exercise caution with any person who suddenly shows interest in your finances or personal life.
