How to prevent senior financial abuseEven among older Americans who are active and mentally sharp, senior financial abuse is a serious problem. A study in the American Journal of Public Health found that roughly one in 18 seniors suffer from financial abuse, and estimates put the total cost of this abuse at $36 billion every year. To make the situation even worse, whether it’s due to a lack of knowledge or embarrassment, only a small percentage of senior financial abuse cases are ever reported. To find out more about this terrible issue, and what you can to do prevent it, read on.

What is senior financial abuse?

According to the 2006 Older Americans Act, senior financial abuse is essentially a person or group using a senior’s resources, including money, benefits, belongings and assets, for their own profit, or taking away a senior’s rightful access to those resources. While this can take the form of scams from strangers, many perpetrators of senior financial abuse are people the victims know. Friends, caregivers and even close family members are common sources of financial abuse, and the increased trust and access they have can increase the capacity for loss.

What are examples of senior financial abuse?

In regard to scams, seniors are just as vulnerable as younger Americans to many of the common scams floating around, such as charity scams, work from home scams and debt collection scams, but they are particularly vulnerable to medical scams. Fake pharmaceutical products, medical billing scams and medical identity theft can cause both financial and physical harm and have the potential to affect seniors more because seniors usually receive more regular medical treatment than their younger counterparts. Additionally, there are many scams that specifically target seniors which are technically legal, using obscure and confusing terms of service to take advantage of them. For instance, a telephone order company could advertise a great deal that involves getting multiple products for the price of one, hiding the fact that they charge an exorbitant amount of shipping costs for each item you get.

For senior financial abuse committed by friends, family and acquaintances, abuse can take a variety of forms. Directly stealing money from a senior, either by repeatedly asking to borrowing money from a senior who is having difficulties with memory, or by using a senior’s money without their permission, is relatively common. The same is true for familiar identity theft, where the senior’s identity is stolen and used to rack up medical bills, open new financial accounts or steal benefits. However, these forms of abuse aren’t as possibly damaging as power of attorney abuse, which can give an abuser the ability to make important medical and financial decisions for a senior. A person with power of attorney can gain large amounts of control over a senior’s assets, and even alter wills and estate plans to steal from the senior’s beneficiaries.

How to prevent senior financial abuse

If you’re a senior yourself, there are a number of things you can do to reduce your vulnerability to financial abuse. Keeping track of your finances, which includes reviewing your monthly bank and credit card statements and checking your credit reports at least once a year, can help you uncover early signs of fraud and suspicious expenses. To help make this easier, you may want to consider consolidating your financial accounts so there are fewer things to keep track of. You should also store your checkbooks and financial documents in a safe and secure place to keep house guests from learning about your finances or recording your account numbers. In the event that younger family members begin to help you with your finances, ask several of them to help so they can act as a check against one another. If your finances are particularly complicated and you’re feeling overwhelmed, hiring a financial adviser could both help you sort through things and protect you against abuse. Financial advisers and brokers registered with FINRA, the Financial Industry Regulatory Authority, recently gained new powers to help their clients, which let them put temporary holds on withdrawals if they find evidence of potential financial abuse.

For family of seniors who are worried about them being taken advantage of, you can help. In addition to assisting them with the steps outlined above, regularly asking your senior family members about their lives, any new friends they may have made (including potential romantic connections) and any calls or emails from strangers they’ve received recently can help you spot potential scammers, and it will make them more comfortable coming to you for help if they need it. Also, talking to them about scams and fraud can teach them warning signs they should watch out for (you can use our scams blog for reference). If you’re seriously worried, or you are noticing signs of cognitive decline, talk to your senior family members about preparing legal documents such as power of attorney, a HIPAA release form and a will so trustworthy younger family members can have the power to protect them.

If you suspect a case of senior financial abuse, you can contact your local police or your state’s Adult Protective Services for help. For more information on how to avoid fraud of all kinds, follow our scams blog.