How to avoid senior financial fraud

Scamming seniors out of their hard-earned savings is a billion-dollar industry.

Matt, 73, has advanced Parkinson’s disease. When he saw an ad on the Internet for supplements that claimed to alleviate symptoms of Parkinson’s, he got his debit card out. Almost instantly his bank account decreased by $3,000. Matt didn’t realize he had signed up for auto refills of the supplements and that he would be charged repeatedly.

Still, Matt was optimistic that the supplements would alleviate his symptoms even though he was rapidly declining. His daughter, who knew that anything claiming to treat a disease had to be approved by the Food and Drug Administration, discovered the scam and cancelled his debit card.

Seniors lose anywhere from $2.9 billion to $36.5 billion each year in financial exploitation schemes, according to the Consumer Financial Protection Bureau. The agency’s estimate varies widely because not everyone reports fraud.

Dorothy, 88, lived alone. Although she wasn’t monitored constantly, none of her family members thought she demonstrated signs of dementia. One day, she received a call from a man claiming to be a lawyer. He said that her grandson had been kidnapped and was being held against his will in Mexico.

The man on the phone told Dorothy her grandson would be released if she went to Western Union, paid a $12,000 ransom and didn’t tell anyone about the situation. The caller let her speak with someone she said sounded like her grandson with a bad cold. Later that day she received a second call, saying the first $12,000 didn’t go through, so she wired another $12,000. A day and a half after the first call, she got a request for a third wire transfer. Dorothy then called a friend who notified family members. Although litigation is pending, she may never see that $24,000 again.

Financial fraud can begin anytime a senior answers the phone, opens a piece of mail or logs onto the Internet. Scamming seniors out of their hard-earned savings is a billion-dollar industry. Seniors lose anywhere from $2.9 billion to $36.5 billion each year in financial exploitation schemes, according to the Consumer Financial Protection Bureau. The agency’s estimate varies widely because not everyone reports fraud.

Money is very personal, and seniors often don’t want to give up control of their finances, much like they don’t want to hand over their car keys, says Anek Belbase, a research fellow at the Center for Retirement Research at Boston College. But in the cases of Matt and Dorothy (not their real names) and many other seniors, it’s time for a family member or caregiver to step in and take control of finances or, at the very least, monitor them. There are also steps relatives and/or caregivers can take to lessen threats.

On the Phone

Seven out of 10 people reporting scams in 2017 said they were contacted by phone, according to the Federal Trade Commission.

Here’s what you can do to make your loved one less of a target on the telephone:

  • Put the senior on the Do Not Call Registry.
  • Cancel their landline and buy them a cell phone. Fraudulent telemarketers call landlines more often.
  • Get your loved one an unlisted phone number.
  • Tell your senior not to act right away. Grandparents should always try to contact their grandchildren first if there’s a suggestion from someone else that they are in trouble. Tell them about the common scam, which has taken a new twist now, according to the National Council on Aging. The caller asks for cash to be sent in several envelopes hidden in a magazine and sent by several different carriers like the Post Office, UPS, FedEx, etc.

In the Mail

Because many elders suffer from loneliness and grew up in a time when there wasn’t much junk mail, they often read all the mail they get now. They may respond to offers for credit cards, sweepstakes, illegitimate charities and whatever else they find in their mailbox. They then get placed on an ever-growing number of lists, which results in an upsurge of junk mail.

The U.S. Postal Inspection Service reports that 60 percent of people over the age of 59 are victims of prizes and sweepstakes schemes. Alluring postcards and envelopes arrive in the mailbox saying the addressee has won a big prize, such as money, a trip or a car, but first they must send money to claim their winnings.

Help your senior by doing the following:

  • Put him or her on the Direct Marketing Association’s opt-out list.
  • To opt out of prescreened credit and insurance offers, use this site. It asks for a Social Security number but says it’s not necessary.
  • When you visit, look around to see if stacks of junk mail take up lots of table and counter space in your loved one’s home. Suggest they recycle or do it for them.

In-person visits also give you a chance to bring up the latest warnings about fraud and scams, and you can recommend how the senior should react and what to say. Someone who is in the beginning stages of Alzheimer’s doesn’t usually realize they have bad judgment, so a little rehearsal might help.

Assist With Your Loved One’s Finances

“Most people in their 70s and 80s can still manage their money if they’ve been doing it their entire adulthood,” Belbase says. “Money management becomes a problem when the spouse who handled the finances dies and the other one, a financial novice, has to take over. That person will need help.”

It also becomes a problem when a senior shows cognitive decline. When judgment is impaired, people become more susceptible to scams involving money.

In either case – financial novice or someone with cognitive decline – you can suggest the following changes:

  • Ask for access to all their bank accounts and investments.
  • Put their monthly bills on autopay to reduce mistakes.
  • Give them prepaid credit or debit cards to control their spending.
  • Make sure the banks will notify you of any unusual withdrawals or purchases.
  • Teach them not to become a victim. Remind your loved one to never give out a Social Security number, bank account information or birth date to anyone who contacts them. Suggest never sending a check or wiring money to someone they don’t know. Advocate for them to never act quickly, especially when pressured to do so.

The billion-dollar business of scamming seniors is increasingly drawing action from financial institutions. In 2018, the American Banking Association published a report titled “Protecting Seniors: A Bank Resource Guide for Partnering with Law Enforcement and Adult Protective Services.” The report notes that 70 percent of account deposits are made by people over 50. Since bankers see elders in their branches more often, they can quickly identify inconsistencies and report them.

AARP, the CFPB and the Financial Crimes Enforcement Network are also working to expose and publicize the latest frauds against seniors.

After watching her aunt suffer through the grandparent scam, Dorothy’s niece has some advice for others. She suggests that families speak with any seniors living by themselves several times a day, while monitoring bank activity and setting up autopays for things like utility bills.

“They are vulnerable and need us more than ever,” she says.

This article first appeared on MemoryWell News for the Ages

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