A Crisis of Financial Elder Abuse
You know it when you see it. Or think you do. Those phishing emails or random phone calls aimed at getting you to divulge personal information or transfer funds are getting more and more sophisticated.
The American Bankers Association estimates financial abuse of older Americans to have cost victims at least $2.9 billion last year alone. The Federal Bureau of Investigation says all Americans, not just seniors, lost $10.3 Billion to a wide variety of internet scams last year. Other sources put this number significantly higher. The AARP estimates the amount of financial fraud to elder adults at $28 Billion per year. As baby boomers reach retirement age and the number of seniors controlling a large percentage of the nation’s wealth increases, the fraud “industry” continues to develop new and increasingly slick tactics to scam and defraud.
The most common form of phishing scam involves emails or texts that appear to come from a person or company you know, leading you click on unsecured links. Call Center scams, which originate primarily from India, overwhelmingly target the elderly. According to the FBI, almost half (46%) of Call Center victims report to be over age 60, and experience 69% of the losses. Nigeria is another large source of internet scamming, the most common scam from there being advanced fee fraud, involving the opportunity to receive a large sum of money for a small fee. While tech-savvy people in third-world countries have generated easy money out of scamming, there are plenty of bad actors doing the same right here in the United States.
There are a number of things that you can do to avoid being the victim of such scams. Lists abound from a number of sources, such as this one from the Federal Trade Commission or from the FDIC.
The best advice is probably the simplest: Trust your instincts.
Scammers are often very skilled, using sophisticated technology. Don’t be fooled – if something doesn’t feel right or sounds too good to be true, don’t feel pressured or rushed, and trust your gut. And of course, never share your social security number, account numbers, or other personal information over the phone unless you initiate the call.
Financial elder abuse is a bigger problem than just telephone or internet scams. Elder scams involve the transfer of money to a stranger or imposter. Elder theft involves a known and otherwise trusted person. According to the US Treasury’s Financial Crimes Enforcement Network, roughly 80% of exploitation reports involved scams, and the remaining 20% were theft cases. A recent study by the AARP in collaboration with National Opinion Research Center suggests the percentage of elder theft actually dwarfs stranger-perpetrated cases; reporting that over 70% of losses ($20 billion) arise from fraud by people the victim knows.
According to the Department of Justice, the leading sign of elder theft is a sudden change in bank accounts, including unexplained withdrawals of large sums of money by a person accompanying the elder. Other warning signs include abrupt changes in a will or other documents, and account takeover, where another person gains control over a financial account. A relationship of trust or familial connection can provide the opportunity for this financial abuse, particularly with an elder person.
Most of us have heard a story of someone being scammed or otherwise a victim of financial exploitation. The financial cost is enormous, but the psychological cost is also great. My friend’s father was so traumatized after being taken in by a telephone scammer that he never recovered; with a loss of confidence that led to mental and physical decline. And the emotional pain of being taken advantage of by a trusted companion or loved one can be devastating. For families, the burden of care increases as they often must step in to replace the financial resources lost to fraud.
Many elder people tend to be more trusting, and also more impressed by the credentials of others, such as doctors, bankers, and financial advisors. It is always a good idea to have someone accompany you to appointments with such individuals. Perhaps the most important question that should be asked of a person with supposed authority is, are you a fiduciary? A fiduciary will always put your interests ahead of their own, or of their organization. At SineCera Capital, we take our role as fiduciaries very seriously when working with families in our care.