Recent research from AARP shows the rate of elder financial exploitation has more than doubled since the start of the COVID pandemic, costing seniors age 60+ an estimated $28.3 billion annually, according to a recent article from Financial Advisor, “Rise of Financial Exploitation Presents New Challenges for Advisors.”
The size and scope of this problem make protecting seniors’ overall wellbeing, financial goals, and ability to meet their goals something all family members and professionals involved with seniors need to be aware.
Becoming familiar with the most common forms of financial fraud and abuse will help seniors and their professional advisors, including estate planning attorneys, to be prepared. These include:
Power of Attorney or Fiduciary Abuse. When naming a an Agent under a Financial Power of Attorney—a written consent permitting someone else to make decisions on their behalf—the acting Agent is required to act in the principal's (Power of Attorney creator) best interest. Abuse of Power of Attorney or fiduciary abuse can lead to money being mismanaged or being spent on something other than a senior’s expenses and care.
Abuse by a Family Member. This is sadly common and can include identity theft, misappropriating funds for personal use, forging documents or checks, unauthorized use of a family member’s credit card, insurance fraud, financial coercion, etc.
Investment fraud. This is one of the top methods of financial exploitation and includes a number of tactics, from pump-and-dump schemes to investment opportunities offering guaranteed returns, and Ponzi schemes. It also includes affinity fraud (pretending to have things in common with a person to gain their trust) only to aggressively sell inappropriate or worthless investments once they have gotten the senior’s trust.
Medicare or Medicaid fraud. This occurs in several different forms: paying for care never received, being charged multiple times for a service or medical device only received once, fraudulent claims submitted in a senior’s name, or being offered a product or service unauthorized by Medicare or Medicaid.
Homeowner Scams. These schemes include wire fraud, foreclosure or mortgage relief, inappropriate reverse mortgages, home improvement and rental scams. Anyone soliciting a senior for a home improvement project because their company is “in the neighborhood” should immediately be identified as a scammer.
No one wants to see seniors exploited. However, they become more vulnerable to financial abuse as they age. While the topic of aging and money can be uncomfortable and even taboo for many, it is a pivotal discussion to have with family members.
Reference: Financial Advisor (Sep. 26, 2023) “Rise of Financial Exploitation Presents New Challenges for Advisors”
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