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Unfortunately, we live during a time when financial scams are everywhere. Criminals target us with wide-ranging schemes through our cell phones, social media, and the mail. The ultimate goal is to steal money from us. We are well beyond the annoying phone calls from telemarketers at the dinner hour. Financial scams are wide – ranging, and the elderly among us are particularly vulnerable.
A scam can involve a simple phone call to trick someone into divulging private information. The private information may be sold and used later to gain access to a bank account or obtain a credit card. A scam may involve an official looking letter that demands a small amount of money for a certified document such as a deed or business record. A scam can be much more sophisticated and involve the development of a close, trusted and/or romantic relationship. It’s important to keep in mind that people close to us may be the perpetrators. In addition to the criminal scams, we should also be on the lookout for financial abuse and exploitation of the vulnerable and elderly.
In this article, I will address two situations that are particularly troublesome and especially for vulnerable adults and the elderly.
First, our clients or one of their loved ones are falling victim to ‘romantic scams’. These are particularly egregious because they involve both emotional and financial exploitation. According to the FBI, a romance scam occurs ‘when a criminal adopts a fake online identity to gain a victim’s affection and trust’ and then creates the ‘illusion of a romantic or close relationship to manipulate and/or steal from the victim.’ Once establishing the relationship, the criminal asks for financial help because there’s an emergency or some immediate need. The help may be in the form of sending gift cards, cash cards or tens of thousands of dollars. There’s often a promise to meet in person at a later date.
Second, a family member, friend, caregiver, or other person may exploit a relationship they have with an elderly person to take money or property. One example is a son or daughter who takes over a parent’s finances, gains access to accounts, and then spends the parent’s money own their own expenses and purchases. Another example is a non-family member who develops the trust of an elderly person and carries out similar actions. The exploitation may involve taking funds out of bank accounts, diverting social security payments or other government benefits, taking personal property, or transferring title to real property.
The elderly are particularly vulnerable to these financial scams and exploitation. Elderly people are more likely to live alone – for example, 50% of women over 75 live alone according to the US Census Bureau. They have more wealth in the form of retirement savings and equity in their homes. According to a 2021 Wall Street Journal article, Americans age 70 and over have 27% of all U.S. wealth. See Eisen, Ben and Tergeson, Anne, “Older Americans Stockpiled a Record $35 Trillion. The Time Has Come to Give It Away.” Wall Street Journal, July 2, 2021.
And the elderly are more likely to answer their phones and presume the phone call / caller is legitimate. Not too long ago, we looked forward to phone calls – they were from friends, loved ones, or concerning something important and legitimate. Criminal scammers know these things, and so they target the elderly.
So, what can we do to protect ourselves and our elderly loved ones from these scams and abuse? First, awareness and communication are very important. Relationships and human connections have shifted from ‘in person’ to ‘online’, and so it’s important that we talk to our elderly loved ones about the risks of communicating online. We must educate ourselves and talk to our elderly loved ones about these scams, how they are carried out, and how they change and develop over time. Find out what our elderly loved ones are posting online and where, who they are talking to, and what they are talking about. Explain that criminals operate online, and so they need to have their defenses up, just as they would walking down a dark street at night.
Second, if we suspect that we or our elderly loved ones are being targeted, stop communications immediately – simply hang up. If there’s a concern that the IRS, a bank, or other institution has a legitimate need, then call the institution directly. A family should create a ‘safe word or phrase’ so that if a caller is pretending to be a family member in crisis, then the caller can be required to divulge the ‘safe word or phrase’ before any action is taken.
Third, put an estate plan in place, including a Power of Attorney (POA) document. An estate plan can be structured to allow family members to step in when needed. A family can establish safeguards against financial scams and abuse and also a framework for ‘assisted decision making’. The POA is critical to accomplish these things. By executing a POA, a person – the ‘principal’ can name a trusted individual to act on that person’s agent for real estate, banking, investment, insurance, and other such matters. The person appointed is held to legal standards and has fiduciary duties to the principal; the person named as ‘POA’ must act on the principal’s behalf, for his/her benefit, and in his/her best interest. The ‘POA’ may more easily monitor bank accounts, financial accounts, and take steps to secure such accounts if a financial scam or abuse is suspected.
Fourth, report financial scams and suspected elder financial abuse to the authorities. If you have been a victim of a scam and suffered a financial loss, then file a report with your local police department. If you have been targeted by a scammer but have not suffered a loss, you may report it to the Federal Trade Commission (FTC) at 877-382-4357 or ftccomplaintassistant.gov. You may also report it to the Minnesota Department of Commerce. Additional steps would be to run a credit report with credit reporting agencies, close out bank accounts, block scammers phone numbers, and change email address and phone number, if necessary.
If you suspect financial or other abuse of a vulnerable adult or elderly person, you should report it to the Minnesota Adult Abuse Reporting Center at 1-844-880-1574. Criminal charges can be brought under the Minnesota Vulnerable Adults Act and other statutes. An order for protection can also be pursued, and in certain cases, a court-appointed guardian and/or conservatorship might be the best course of action.
Any requests for topic suggestions may be sent to rene@breenandperson.com. Although we cannot give you legal advice through the column, we can provide some general information that may be helpful for you to know. Our purpose is to educate and we hope that you can take something new away from this column each time you read it.