Targeting Retirees: Elder Financial Abuse on the Rise

With countless news stories in the past weeks revolving around the Equifax data breach, many Americans have renewed concerns about the risks of identity theft and fraud.  While all demographics are susceptible to harm via these channels, retirees in particular are an increasingly frequent target of scams, fraud, exploitation, and other forms of “elder financial abuse,” as it is now termed.  Retirees are a lucrative target, having more wealth on average than younger Americans, and they sometimes have vulnerabilities due to physical or emotional circumstances on which exploiters can prey.  Reports vary regarding the impact of these schemes, but estimates of annual financial losses are consistently measured in the billions.  Perhaps even more concerning, victims of elder financial abuse have often exhibited feelings of anxiety, anger, guilt, and depression and have become more isolated after the incident.  Below we provide a brief overview of the types of abuse being perpetrated and some tips for our clients and friends on how to protect themselves or their loved ones.

Types of Elder Financial Abuse:

• Scams.  There are a wide variety of scams targeting retirees, most of which prey on the victim’s hopes, fears, concerns, or sympathy to elicit money and/or personal information, which can then be sold on the black market.  Many common scams promise good fortune—that you’re receiving an inheritance, you’ve won a prize or the lottery, you can sell an unused time share for an attractive price, you can get a particularly good deal on medical equipment—if you provide a deposit (“to cover transaction fees”) and hand over your personal information.  Similarly, scams may use fears—that your grandchildren are in trouble, your computer has a virus, your roof or other parts of your home urgently need to be repaired—to elicit money or information.  Sometimes even using publicly available information (such as obituaries), scammers can target those in a particularly vulnerable state of mind.  For example, an article on CNN Money describes the story of an 83-year old who had recently lost his wife and fell victim to a computer virus scam in part because he didn’t want to lose access to emails and photos that held memories of his wife.
  
• Exploitation.  Unfortunately, sometimes elder financial abuse originates closer to home—among caregivers, family members, friends, or hired professionals, who exploit an older person for their own financial or personal gain.  This can take many forms, including promising care or services for money and not following through, getting an older person to lend or give money through deception or coercion, and using money or property without the person’s consent.  According to a recent study, the cost of this type of abuse far outweighs that of scams.  We at PFS have seen this even among new clients, who come to PFS from other financial advisors or investment brokers.  In one case, a broker had sold an 80-year old client a bond that not only was issued by an unstable municipality but was a 30-year zero coupon bond, meaning that he would not receive any interest payments on the bond until he was 110 years old. 

How to Protect Yourself or Your Loved Ones:

• Regardless of age, it is beneficial to consult with one or more family members or close friends before divulging personal information or dispensing money, particularly when a request comes over the phone or email.  Often scammers will try to attach a sense of urgency to their promises or threats, but this should make you even more skeptical of their claims.
• Unless you initiated the call, you should never have occasion to give out sensitive personal information over the phone, such as bank account, Social Security, or Medicare numbers.
• The AARP has established a Fraud Watch Network that is available to join free of charge (regardless of age or AARP membership status).  They will email with alerts of any new types of scams, as well as with prevention tips and access to related resources.
• If you feel particularly vulnerable to these risks, there are private companies that you can pay to monitor your accounts and credit reports.  If a loved one has financial power of attorney for you, they might also be able to do this on your behalf.  If so, they should set up reminders to check your accounts on a regular basis.
• If you need professional services—whether financial, legal, medical, or otherwise—try to obtain referrals from family or friends of persons or organizations who they trust and with whom they have long-standing relationships.  Guarding who you let into your “inner circle” may lessen the likelihood of exploitation down the road.

If you are concerned about the risks of elder financial abuse or face any unexpected demands for money or personal information, please give us a call to discuss the best course of action.  In general, if any promises seem too good to be true, they probably are, but we would be happy to serve as a trusted point of contact for any clients or friends.