With a record number of US citizens turning 65 this year—often referred to as the ‘silver tsunami’—elder financial fraud will certainly be a continued area of concern. And as our population ages and technological advancements give rise to more kinds of scams, it’s important for individuals approaching retirement, older adults, and their loved ones to be aware of the risks of fraudulent behaviors that target senior victims.
As a community bank that serves a wide range of customers, we have seen the consequences of elder fraud firsthand. In an effort to help educate and protect our customers and the older adults in their lives, we’re devoting this post to the topic. Keep reading to learn more about elder fraud, from the official legal definitions of elder and how to recognize common elder scams to ways you can prevent fraud and what to do if you are an older adult in your life falls victim.
What is Elder Fraud?
Elder adults in the US are often preyed upon by scammers and other individuals—even their own loved ones. There are a variety of reasons for this. They may possess some wealth that they’ve accumulated over their lifetimes. They may be more trusting of strangers posing as professionals or government agencies. They may lack tech-savvy. They often value their independence and may be worried about seeking guidance or assistance in certain situations. And lastly, they may experience loneliness, which may make them more inclined to trust others when seeking companionship. All of these characteristics combine to make older adults common targets for fraud.
But what exactly constitutes elder fraud? As the US Department of Justice explains, elder fraud occurs when an individual acquires or utilizes the property, income, resources, or trust funds of an elderly person without legal authorization, when they should reasonably know that that person does not have the capacity to consent. Elder fraud can also include using deceit, intimidation, or undue influence to take or use an elderly person’s property, income, resources, or trust funds for the benefit of someone else.
In Arkansas, the Adult Maltreatment Custody Act includes protections against:
- Illegally or improperly using or managing an elderly or impaired person’s funds, assets, or property.
- Using a power of attorney, guardianship, or fiduciary role for personal gain or the benefit of someone else.
- Exploiting them for financial or personal gain by someone in a fiduciary role.
- Denying them access to their rightful benefits, resources, belongings, or assets.
- Misusing the property of a resident in a long-term care facility.
Penalties in Arkansas for elder fraud range from a Class A misdemeanor to a Class B Felony.
How to Prevent Elder Financial Fraud
Preventing elder fraud for yourself or an elderly loved one requires a multi-pronged approach including setting up appropriate legal protections and measures to reduce vulnerabilities and actively watching out for possible scams and fraud. Let’s take a look at some simple steps you can take to create a holistic approach to elder fraud prevention.
Choose a Designated Decision Maker or Financial Power of Attorney
If you are an older adult, choosing a trusted friend or family member to assist with financial decisions and obligations is an important first step. Their familiarity with your assets and accounts and ongoing help with financial management can be crucial in emergency situations or at preventing future fraud.
However, simply choosing someone to help with your finances—or choosing to help an elderly loved one with theirs—has no legal binding. That’s why selecting a power of attorney (POA) and completing the appropriate official paperwork is so crucial for preventing elder fraud.
A POA is an individual that is lawfully appointed to help manage a person's financial and legal affairs. This trusted agent can monitor accounts, handle transactions, and make decisions that align with the elder adult’s best interests, preventing unauthorized access or exploitation by others. Having a POA also ensures that there is a clear and legally binding authority in place to safeguard an elder adult's assets and to act swiftly if any fraudulent activities are detected, reducing the risk of ongoing financial elder abuse.
However, it’s important to choose the right power of attorney, selecting someone who is not only trustworthy and has the elderly person's best interests at heart, but also has the ability to make sound financial decisions, and the willingness to take on this responsibility. This person should ideally be a close family member or a long-time friend who understands the elder's values and wishes.
It’s always best to work with a legal professional in this process. Consulting with an attorney can help in drafting a POA that clearly defines the agent's responsibilities and limits, providing additional protection against potential abuse. Once a POA is in place, it’s important to provide copies of the document to important financial partners: banks and financial institutions, wealth managers, and medical service providers.
Monitor Financial Accounts
Elder adults and individuals holding powers of attorney need to be vigilant against fraud, always on the lookout for signs or evidence. Unauthorized or suspicious charges on accounts are often the first sign of elder fraud.
When monitoring for fraud, look out for the following activities:
- Large, frequent or unexplained withdraws or checks
- Checks going to people or companies that you don’t recognize—especially those written as gifts or loans
- Changing bank account types or closing accounts without regard to penalties
- Checks with suspicious handwriting
- Unpaid bills
Additionally, because fraudulent activity may not appear on known accounts, it’s also important to monitor credit reports. By law, individuals and POAs can obtain a free credit report each year from the three credit reporting agencies: Equifax, Experian, and TransUnion. By spacing out requests to each individual agency every 4 months, you can help ensure an ongoing picture of credit activity.
AnnualCreditReport.com is the only website authorized by the federal government to provide free annual credit reports. You can request your reports in the following ways:
- Online at AnnualCreditReport.com
- By calling 1-877-322-8228 (TTY: 1-800-821-7232)
- By completing the Annual Credit Report request form and mailing it to:
Annual Credit Report Request Service
PO Box 105281
Atlanta, GA 30348-5281
PO Box 105281
Atlanta, GA 30348-5281
When you examine a report, be sure to:
- Review all accounts listed to make sure that they are familiar and authorized.
- Check for any recent inquiries or applications for credit that you or your loved one did not initiate.
- Ensure your name, address, and other personal details are correct and haven’t been changed.
- Verify that the credit balances and limits are accurate and reflect personal usage.
- Look for any bankruptcies, liens, judgments, or public records that are unfamiliar.
- Check for any accounts marked as delinquent or in collections that you are not aware of.
- Confirm there are no fraud alerts or security freezes placed on your report without your knowledge.
- Look for unknown accounts opened in your or your loved one’s name that you do not recognize.
- Check for unauthorized individuals listed as authorized users on accounts.
Check References
Many older individuals may require private assistance within the home, whether with daily living tasks, ongoing home or yard maintenance, or with medical care. By verifying backgrounds and credentials before hiring or admitting an outsider into the home, caregivers can ensure that only trustworthy individuals are allowed access to vulnerable elders, their accounts, and their valuables. This precautionary measure helps safeguard against potential exploitation, abuse, or neglect and can provide peace of mind to both the elders and their families.
Additionally, thorough reference checks can help identify any red flags or past incidents that might indicate a risk of other forms of mistreatment and can help you make better informed decisions when selecting caregivers or service professionals. Working with a reputable agency that properly vets their employees can also help reduce risks.
Keep Information Secure
When scammers get ahold of personal or financial account information, it can give them all they need to open new credit accounts, rack up bills, or drain funds from current accounts. That’s why it’s so critical to secure personal and financial details and be exceptionally cautious about who has access to this information.
- Keep personal and financial information secure and out of sight of strangers or casual visitors.
- Store important documents and account information in a safe and secure place, like a safe, lockable cabinet, or safe deposit box. Make sure a trusted family member or POA has access to this location.
- Never give out Social Security numbers, dates of birth, or personal information to unverified strangers. Limit dispersal of this information to medical professionals in an official setting, financial institutions, and government agencies—in person, or when you make the phone call.
- Never share account numbers, login information, or PINs.
Maintain Close Relationships
Lastly, perhaps the best way to protect yourself and elderly individuals in your life is to maintain close relationships.
If you have an elderly loved one, it’s important to remain active in their lives and accessible to them. With regular communication and interaction, you can often detect unusual behavior or changes in financial habits (which could indicate potential fraud or exploitation), early on, preventing further loss. More importantly, building trust and open communication with elderly family members creates a supportive environment where they feel comfortable disclosing any concerns or suspicious activities they may encounter, and can make it less likely for elders to seek companionship from untrustworthy individuals who may have ulterior motives.
By staying connected and involved in their lives, family members can also offer guidance, support, and assistance in navigating complex financial decisions or situations, reducing the likelihood of falling victim to fraud or financial scams.
Common Scams Targeting the Elderly
Unfortunately, 60% of elder financial fraud cases are committed by a family member of the victim. While this figure is disheartening, it also makes sense—family members often have greater access to an elder adult’s resources, which can be a temptation for many individuals, especially those experiencing financial difficulties or other personal issues. However, by appointing a trustworthy individual as POA and for other loved ones to remain active and vigilant, even this form of abuse can be prevented.
In addition to fraud perpetrated by loved ones, outsiders may also try to take advantage of elder adults. Both elder individuals and their loved ones should strive to remain aware of common schemes that criminals utilize to defraud older adults. Let’s take a look at a few examples of elder scams and cybersecurity threats.
- Government Agency/IRS Impersonator Scams: In this scam, individuals pose as government officials or IRS agents, threatening legal action or fines if immediate payment is not made. Impersonator scams are designed to exploit elders' trust in authority figures.
- The Grandparent Scam: Criminals may pretend to be grandchildren (or children) in distress, requesting urgent financial assistance, exploiting elders' love and desire to protect their family members. They may also pose as faculty at a loved ones’ school or medical professionals, requesting payment information for a fraudulent emergency.
- Lottery and Sweepstakes: With this form of fraud, individuals are informed of winning a lottery or sweepstakes—but must pay fees or taxes upfront to claim the prize. This scam preys on an elder adult’s hope for financial gain, and often targets lower income individuals.
- Computer Tech Support: Here, scammers pose as tech support representatives, claiming to fix non-existent computer issues and exploiting their victim’s potential lack of tech knowledge or fear of computer problems.
- Robocalls: Robocalls are automated calls that deceive elders with urgent messages, such as threats of arrest or fines, or even the loss of a car warranty. Additionally, they may claim that a prize was won. Regardless, these calls aim to pressure their victims into providing personal or financial information.
Familiarizing yourself and your loved ones to these popular scams can help stop them before they cause any financial or personal damage.
How to Report Elder Fraud
If you suspect that you or a loved one has become a victim of elder financial abuse, know that you aren’t alone and there are designated steps you can take to stop the fraud.
- Contact Banks and Financial Institutions: Reach out to any financial institutions using a known number (such as one listed on your bank statement or on their website). At CS Bank, you can contact us at 479-253-2265 or contact your local branch directly.
- Contact Your Local Police Department: Your police department or sheriff’s office may be able to assist you, especially if the crime happened locally:
o Eureka Springs, AR Police Department
o Berryville, AR Police Department
o Harrison, AR Police Department
o Holiday Island, AR Police Department
o Cassville, MO Police Department
o Berryville, AR Police Department
o Harrison, AR Police Department
o Holiday Island, AR Police Department
o Cassville, MO Police Department
- Contact Adult Protective Services: These services have resources in place to assist you as you navigate fraud (and other obstacles associated with aging).
o Arkansas: Adult Protective Services - Arkansas Department of Human Services
o Missouri: Abuse, Neglect, and Exploitation of the Elderly and Disabled - Health & Senior Services
o Missouri: Abuse, Neglect, and Exploitation of the Elderly and Disabled - Health & Senior Services
Additionally, if personal information such as bank account details and social security numbers has been disclosed, it's crucial to check credit. You may need to close compromised accounts, keep a close watch on credit reports, and set up fraud alerts and security freezes on your credit. The Consumer Financial Protection Bureau provides a helpful guide to assist you in navigating this process: "What steps should I take if I've fallen victim to identity theft?"
How CS Bank Can Help
At CS Bank, we’re dedicated to keeping our customers safe from elder financial abuse. If you have questions about how to protect yourself or a loved one from bank fraud, need assistance filing a POA with our bank, or simply want to learn more about the topic, contact us today or visit one of our local branch offices in Northwest Arkansas or Southwest Missouri.
When we work together, we can stop the financial abuse of elders!