As of 2019, it is estimated that elderly adults in the US lose more than $3 billion annually to financial fraud.^[1] Up to 10% of older adults are subject to financial abuse and fraud each year. This theft destroys wealth and can leave vulnerable adults with few or no resources to support themselves in their final years.

When it comes to stopping fraud and abuse, we all have a role to play.

Knowing what Elder Financial Exploitation is, how to spot it, and how to stop it are key to protecting our parents, grandparents, and beloved elders from predators and fraudsters.

Elder Financial Exploitation

Elder Financial Exploitation is the illegal or improper use of an older adult’s funds, property, or assets. The key word here is “improper”.

There are two common subcategories of this form of abuse. Elder Theft is the taking of an older adult’s assets or income by a trusted person. Elder Scams involve the victim voluntarily transferring money to a stranger for a promised benefit or product that the victim never receives.

Elder Theft is typically committed by a person known to the victim like a family member or caretaker who abuses their position of trust. The perpetrator will often isolate their victim from friends and family so that they can more easily defraud them by taking control of their financial affairs.

In the case of Elder Scams, the victim likely does not know the fraudster. Elder Scams typically involve a perpetrator who tricks victims into sending payments or disclosing personal information under false pretenses. Scammers will contact their victims via phone, text, email, mail, online dating apps, or social media.

Common scams include: 

Sweetheart scams – The fraudster creates a fake profile on a dating app to establish a romantic relationship that they can use to manipulate their victim into sending them money or assets.

Government imposter scams – Scammers will impersonate government officials or government offices and make threats that benefits will be cut off or that the victim will be prosecuted for a crime if they fail to make a payment or share personal information. 

Lottery or sweepstakes scams – A scammer will impersonate a lottery or sweepstakes representative and claim the victim has won a prize. The scammer will then tell the victim that they need to pay fees or costs to claim that prize. 

Technical support scams – A fraudster will impersonate a technical support representative claiming that the victim’s computer has a virus to gain access to the victim’s computer and all the sensitive information stored on it.

Signs of Elder Financial Exploitation

Victims of Financial Exploitation will often exhibit behavioral red flags. There are also often financial red flags.

Common behavioral red flags include:

• An older adult may talk about a new online friend of romantic partner who has asked them for money
• An older adult may show an excessive level of fear or submissiveness to a family member or caregiver
• An older adult may suddenly make major changes to their Financial Power of Attorney and other estate plan documents
• A caregiver or friend may show excessive or inappropriate interest in the financial affairs of an older adult
• A new caretaker, friend, or long-absent family member may suddenly begin to conduct financial transactions on behalf of an older adult
• An older adult, who is typically very engaged with their finances, may no longer be able to answer basic questions about their finances

Common financial red flags include:

• The purchase of a large number of gift cards or prepaid access cards
• Frequent large cash withdrawals from ATMs
• Suddenly and frequently overdrawing bank accounts
• Failing to pay regular bills
• Liquidating assets without regard to penalties or tax consequences
• Uncharacteristic, abnormally frequent, and large withdrawals of cash or asset transfers from one or more of their accounts

In every instance, what should tip you off is a sudden and unexpected change in the behavior, social circle, and habits of an older adult.

What We’re Doing

The exploitation of elders is never ok, and financial institutions are on the front lines of the fight against fraudsters and scammers. Federal law requires that firms like Baird and its employees identify and investigate any potentially suspicious activities.

To that end, all associates receive regular training on how to spot potential abuse and how to report potential abuse so that it can be investigated and stopped.

One tool in our toolkit is the Trusted Contact. Each client is asked to provide us with the name and contact information of a person they trust. This is done when accounts are opened.

If we spot a red flag, we can first address the red flag with the client and then with their Trusted Contact if needed.

What You Can Do

Be in regular communication with the vulnerable elders in your life. Get to know their routines, habits, and social circle. Most importantly, get to know the people who help them with their money. That might be their Financial Advisor, Wealth Manager, Banker, Accountant, or CPA.

Watch for major changes in behavior. A major change in behavior is the first sign that they may be in trouble.

Many victims never report their abuse because they are embarrassed. If you suspect abuse, approach the potential victim with compassion and understanding.

If necessary and appropriate, help them contact the financial institutions with whom they do business so those institutions can take steps to protect the elder’s assets.

You may even contact law enforcement to report the crime. Even if the perpetrator is outside local jurisdiction, reporting will help law enforcement keep up with the latest scams and that might help save someone else from becoming a victim.

We all have a role to play in protecting the most vulnerable among us.