Elder financial abuse is a deeply troubling issue that affects millions of older adults every year.
Between 2022 and 2023, the Financial Crimes Enforcement Network (FinCEN) received over 155,000 reports of elder financial abuse, with roughly $27 billion in suspicious activity.
Elder financial abuse occurs when someone illegally or improperly uses an elderly person’s money, property, or assets for personal benefit. This form of exploitation can devastate an individual’s financial stability. It also leaves them vulnerable during a time in life when security and trust crucial to their well-being.
As a loved one, caregiver, or even a neighbor of a vulnerable person, you need to understand how financial abuse happens. Here’s a guide to recognize the warning signs and know how to protect the people you care about.
What is elder financial abuse?
Elder financial abuse can take many forms, from outright theft to subtle manipulation. Common examples include:
- Gaining unauthorized access to bank accounts or credit cards
- Pressuring an elder to make large gifts or changes to their will
- Fraudulent investments or scams targeting seniors
- Overcharging for goods or services or not performing services they were paid to do, especially by caregivers or contractors
- Failing to repay money owed
Often, perpetrators are people the victim knows and trusts, such as family members, caregivers, or advisors. However, strangers can also be culprits, particularly through telephone scams, email phishing schemes, or fraudulent charity requests.
Financial exploitation warning signs to watch out for
To protect your loved one from financial elder abuse, you need to watch out for changes in their financial situation or behavior. Here are some common red flags of elder financial abuse, according to the U.S. Department of Justice:
- Sudden changes in bank accounts or banking practices. Look for unusual withdrawals, bounced checks, bills piling up that were previously paid on time, or additional names on their checkbook, ATM card, or bank signature card.
- Unexplained changes in legal documents. Pay attention to unexpected updates to a will, trust, or power of attorney, especially if the changes seem out of character.
- New “friends” or advisors. Be cautious of new acquaintances who appear overly involved in financial matters or who isolate the elder from their family and long-time friends. This can include the sudden appearance of previously uninvolved relatives.
- Emotional or behavioral shifts. If your loved one becomes withdrawn, anxious, or defensive about finances, this could indicate manipulation or abuse.
- Missing belongings or property. Items of value that go missing, such as jewelry, heirlooms, or car titles may be a sign of theft.
- Unexplained bank or credit card charges. You might find forged signatures on checks or unexplained withdrawals or charges in their bank statements or credit card statements.
Tips for preventing elderly financial abuse
Here are a few proactive steps you can take to spot potential threats, secure your loved one’s money, and prevent financial abuse.
Establish clear legal protections
Ensure your loved one has a financial power of attorney designating someone trustworthy to handle finances if they become unable to do so. The power of attorney form can be customized to meet your loved one’s specific needs, like managing property or paying bills.
Work with an attorney to create or review estate planning documents like wills and trusts. If you don’t have an attorney, you can locate one near you using the federal government’s Eldercare Locator.
Monitor financial accounts
Use online banking to review transactions in bank and credit card accounts regularly. You may also be able to set up alerts for unusual activity, such as large withdrawals or changes in account details.
Also, consider designating a trusted contact with their banks, credit unions, and financial institutions. A trusted contact is someone the bank or financial institution is authorized to get in touch with if they spot questionable activity on the account and are unable to reach the account owner. The trusted contact is not authorized to make transactions—they just receive information about the account.
Contact your loved one’s bank or brokerage to discuss your options.
Educate your family member about common scams
Discuss common fraud schemes, such as lottery or investment scams, phishing emails, and fake charity requests with your family member or other loved one.
Remind them not to share personal information, such as Social Security numbers or bank account details, over the phone or online.
If the individual shows signs of cognitive decline, consider upgrading their cell phone or landline. There are several options out there that prevent incoming calls from unknown numbers.
Encourage connection and open communication
A natural consequence of aging can be losing connections to friends, family, and other members of a person’s community. But social isolation is once of the greatest risk factors for elder financial abuse.
Help your loved one maintain contact with trusted family and friends through regular visits and phone calls. Create an environment where they feel comfortable discussing financial matters and reassure them that asking for help isn’t a sign of weakness.
What to do if you suspect elder financial abuse
If you suspect financial abuse, it’s important to act quickly.
First, gather records of any suspicious transactions, missing items, or concerning interactions to prove elderly financial abuse.
Whenever possible, include your loved one in discussions about addressing the issue. Unless they have limited cognitive abilities, keep them in the loop to help maintain their sense of independence and dignity.
Report the abuse to Adult Protective Services (APS) in your area. You can find a local government agency through the National Adult Protective Services Association. APS specializes in investigating and addressing elder abuse.
If the older person lives in an assisted living community or nursing home, talk to their care team. The Consumer Financial Protection Bureau (CFPB) has a guide for preventing elder financial abuse of people living in nursing homes and assisted living communities.
You should also notify the local police and file a report with the FBI if theft or financial fraud has occurred. Report cases involving financial fraud over the internet to the FBI’s Internet Crime Complaint Center (IC3).
Finally, report elder financial abuse to their bank, financial institution, and other trusted advisors. Financial advisors, accountants, and attorneys can provide valuable assistance in recovering assets, protecting against further abuse, and rebuilding trust.
Take action to protect your loved ones from financial exploitation
Protecting the finances of older adults helps them maintain their financial well-being and preserves their independence and dignity.
If you’re worried about a loved one or need help managing finances to prevent abuse, Firefly Financial Organizing is here to support you. As a CPA and Daily Money Manager, I specialize in helping people who can’t handle their own financial affairs, including looking out for fraud and exploitation.
Let’s work together to protect your loved one and restore peace of mind.
