Original Article | Elder Guru
The elderly are vulnerable and often targeted for financial exploitation. Sadly, family members are the most likely people to financially exploit an elder.
Decreasing mobility, cognitive lapses, and misunderstanding technological advances can leave seniors open for exploitation. Financial exploitation is defined as using an adult’s resources by another that either creates a disadvantage for the adult (in that they no longer have the funds to access) or profits someone other than the funds’ owner. Financially exploitation can come in many forms and be caused by several organizations or individuals. Let’s take a look at who is most likely to exploit an elder financially.
Types of Financial Exploitation
The most common type of financial exploitation experienced by seniors is having someone steal or spend their money without permission, taking property, or forging signatures. Financial abuse is another type of exploitation that occurs when the senior gives tacit consent to financial manipulation. This type of tacit approval often occurs when the exploiter is a family member.
Senior financial exploitation can include:
- Forcing a senior to sign financial documents
- Abusing joint signature authority
- Misusing credit or debit cards
- Cashing a check without authorization
- Misappropriate of pension funds
- Misleading an older adult resulting in misappropriation of funds
- Coercing or persuading a change in beneficiaries on a will or insurance policy
- Misusing Power of Attorney privileges
- Negligent mishandling of assets
- Overcharging for caregiving
- Denying the older adult access to their accounts or money
Who Is Most At Risk?
Seniors who have fewer social activities outside the home are at higher risk for financial exploitation. Belonging to a racial minority and being male also increases risk in some instances. Other studies have shown the older white women are more likely to become victims of financial exploitation, especially if they live alone or have recently lost a loved one. Elderly individuals who no longer have the competence to conduct their own financial affairs because of poor health or dementia are another at-risk group.
Who Financially Exploits Seniors?
Anyone can financially exploit a senior, but it can generally be broken down into 3 categories: family members, nursing home staff and caretakers, and strangers.
One study found that more than 90 percent of financial abusers were family members or close friends. Family dynamics can set up a situation where a relative financially exploits a senior. In this situation, financial exploitation may be referred to as financial mistreatment, fiduciary, or economic abuse. This type of abuse may occur if a relative feels they are entitled to the senior’s assets or the senior wants to reward heirs or caregivers.
Nursing Home Staff and Caretakers
Because an older person is often dependent on nursing home staff or caretakers, there’s a chance that financial exploitation will occur. Coercion by caretakers might include withholding needed medications or treatments or threatening violence.
The most common type of financial exploitation by unfamiliar individuals comes in the form of phony magazine subscriptions, donations to charities that do not exist, and prize scams. Seniors who engage in remote or telemarketing purchasing increase their risk of this type of fraud. The elderly who purchased something due to a telemarketing call have a 200 percent more likelihood of being victimized.
Other types of scams involve individuals misrepresenting their services, such as a home repairman who isn’t repairing anything or a bail bondsman calling to post bail for a relative that isn’t in jail.
Effects of Financial Exploitation
The result of financial abuse can be financial ruin. The extent of the losses varies. Someone who is systematically exploited may end up losing all of his or her assets. The advanced age of seniors often means these losses can not be recovered through hard work or other investments, leaving the exploited individual destitute, reducing the overall quality of life.
A loss of independence and a sense of insecurity can arise. Financial exploitation also results in psychological distress. It can result in the same trauma as being the victim of a violent crime. Seniors that have been victims of financial abuse become fearful and are no longer able to trust others. They may also experience a drop in confidence in handling their financial affairs or isolate themselves. In extreme cases, financial abuse can result in depression and suicide.
Even after the victim dies, there may be additional effects. Family members who have lost their inheritances because of financial exploitation may feel abused as well. Some states require family members to pay outstanding credit card bills or assume responsibility for the debt, even if it occurred through coercion or trickery.
How to Detect Elder Financial Exploitation
Detecting financial exploitation may come too little, too late in many instances. However, there are signs you can look for, including:
- Unpaid utilities and bills
- Money transfers to “friends.”
- Checks written to “cash”
- Inability to explain where his/her money went
- Unexplained cash withdrawals, missing valuables
- Unauthorized changes to wills, bank accounts, or insurance policies
- The appearance of foreclosure notices or property liens
Financial abuse should be reported to an Adult Protective Services office in your area. Once financial abuse has been detected, interventions include closing joint accounts, revoking attorney power, and finding a responsible person or agency to assist with money management.
How to Prevent Financial Exploitation
Forty-eight states and the District of Columbia have laws to punish financial abuse. However, the statutes vary on what is considered financial abuse and who can be charged with it. The best course of action is to find ways to prevent financial exploitation.
If finances are confusing for a senior because of multiple accounts, simplify it so that it is easier to manage. Authorize emergency contacts that are notified by the bank if fraudulent activity is suspected. Trusted individuals and seniors should meet regularly to go over finances.
Draft power of attorney documents so that they require periodic third-party accounting, a second signature for large transactions, and grants the authority to revoke to a third-party individual.
Seniors who have been victims of financial exploitation on average lost between $13,00 and $45,000. The age group who tend to lose the most are those between the ages of 70 to 70. Those over 80 have the second-highest average losses. These groups are targeted because perpetrators feel confident their victims’ age and health will prevent them from prosecuting the abusers.
Educating seniors about possible scams and appointing a trustworthy individual to oversee financial transactions are two methods to avoid financial exploitation. Elder law attorneys should also be considered if there are significant assets to protect.