Elder Financial Abuse Scams
How to Spot Elder Financial Abuse Scams
Sadly, the Senior Safe Act, the Elder Justice Prevention and Prosecution Act and the Financial Industry Regulatory Authority (FINRA) do not stop elderly financial scams. Despite these efforts, fraudsters continue to prey on seniors and their families. This crime of elder abuse financial scams must be addressed now.
According to Roger Fouton, a freelance journalist who follows legislative changes, these efforts do little to address the problem. As a result, it is important to educate yourself and your loved ones on how to spot elder financial abuse scams.
Reverse mortgage scams
Reverse mortgages, also known as home equity conversion mortgages (HECM), are loans that allow senior citizens to tap into the equity they’ve built up in their homes. These loans are insured by the Federal Housing Administration and are only available through approved lenders.
The Federal Housing Administration has strict guidelines to protect borrowers. But reverse mortgage scams are still very real and can cost a homeowner their home. To protect yourself, be sure to avoid becoming a victim of a reverse mortgage scam.
Reverse mortgage scams target the most vulnerable senior citizens by preying on their desire to invest. They often try to convince seniors that they can purchase another home using a reverse mortgage without making a down payment.
Once they get the money, however, the scammers disappear with it, leaving the senior with no cash and no equity in their home. In addition, if taxes on the overvalued property are not paid, the senior could face eviction.
The handyman scam
Another common reverse mortgage scam involves a handyman. They convince the homeowner to use their reverse mortgage to pay for expensive home repairs or to avoid foreclosure. These scammers then disappear after taking a nonrefundable payment and never provide any service.
To avoid these elder financial abuse scams, make sure you communicate with trusted family members. It’s a good idea to contact a licensed Home Loan Expert or a real estate attorney. It’s also important that you have a clear understanding of how a reverse mortgage works before you sign up for it. The fees charged by the lending institution are very high too.
Reverse mortgage scams are an emerging problem that affects senior citizens and their families. Fraudsters prey on the fears of financial insecurity and convince senior borrowers to sign a complex loan with the intention of earning a large profit from it.
Instead of getting them a loan that is easy to pay back, they instead use the money from their reverse mortgage to buy a home and then sell it or deed it to the lender. This leaves the senior with a huge debt on their home or worse, no home. The FHA has put in various protections to prevent elder financial scams, but con men are always one step ahead.
Internet phishing – another form of elder scams
Despite the growing number of scammers, older adults remain one of the most lucrative targets. Many of them have accumulated significant assets for decades, yet their reasoning skills are deteriorating due to age and failing health.
As a result, they are particularly vulnerable to telemarketing and mail fraud. To avoid falling victim to an Internet phishing scam, be vigilant. Here are some of the most common characteristics of a phishing scam:
- Pretending to be someone you know or a lawyer or doctor, scammers often pose as family members or even grandparents. They may use high-pressure tactics to gain trust. Some scammers even show up at an elderly victim’s doorstep posing as a “courier.”
- Fake insurance or fake policy information: A phishing ad may ask you to provide personal information to avoid detection. Scammers may send you fake insurance policies with premiums that increase with age.
- Once you’ve purchased a fake insurance policy, you may be required to pay high premiums and face an inflated monthly payment. The insurance company will most likely refuse to renew the policy. Medicare fraud also mimics IRS scams, in that they may call you and ask for personal information in order to “protect” you.
Scammers are everywhere so be alert
The Internet is a hotbed for scammers. Unfortunately, senior citizens don’t keep up with the latest technology, and are a vulnerable target. They may not know how to report a fraud and may be embarrassed. Therefore, if you suspect that an elder has been scammed, try searching for contact information online. One of the major problems is that most seniors are too trusting, and that makes them ripe for fraudsters.
It will help you find out whether or not your concerns are legitimate or not. You’ll find out how to report any frauds involving your senior loved one if you discover them online.
Fraudsters posing as family members
Many elderly victims of elder financial abuse may not know they are being exploited by perpetrators posing as family members. They may not feel comfortable asking for help and fear getting in trouble, and they might also believe that the authorities will not help.
An elder law attorney in San Diego echoed these feelings. He advised that the victim should share their concerns with a trusted family member or friend.
A red flag of financial fraud is an unusual signature on checks or bank statements. A swindler is often able to forge government benefits, such as Social Security or Medicare checks. Older adults often do not receive bank statements, and they may not be aware of their present financial provisions.
Beware of fraudsters posing as a family member
Other warning signs include large withdrawals or mysterious payments, as well as sudden affection from family members they have not seen in years. Fraudsters posing as family members in elder financial abuse scams are often disguised as trusted caregivers.
Elder finance abuse scams are common, and the most common tactics used by perpetrators are based on the characteristics of their target. The fraudsters try to build trust through charisma and a business name that sounds like a well-established organization.
They also try to create the impression that the elder is fortunate to have a family member. The scamsters are also known to make victims commit to decisions without consulting anyone else first.
A common tactic of fraudsters posing as family members is a version of the grandparent scam. The scamster poses as a loved one who needs help. If the “hard luck” story is convincing enough, the elderly person writes a check, and the scammer leaves smiling.
Another common tactic is the phishing scam, in which the criminals pose as government officials and falsely claim that they are updating credit card and bank accounts. Funeral scammers may use an obituary or funeral service obituary to obtain information about the victim and solicit funds from family members.
Fraudsters posing as trusted helpers
Scam artists often pose as trustworthy people, such as friends or relatives. They may also pose as professionals such as doctors, lawyers, accountants, and even paid caregivers. Fraud artists often have money or substance abuse problems.
In addition, they can work at financial institutions and manipulate electronic records. For this reason, it is crucial to protect yourself against these scammers. In addition, you should never give financial information to a stranger, even if it appears legitimate.
The easiest way to protect yourself from elder financial abuse scams is to report any suspicious activity to your local law enforcement. For example, if you receive an email from someone claiming to be a trusted helper, you should report it to the appropriate agency.
In addition, if you receive a phone call from an unknown number, it is important to report it to the authorities. Fraudsters may also send you an email that looks legitimate, but is from an unfamiliar email address.
Using someone else’s identity and financial information is a felony in many states. And elder financial abuse scams are no exception. Many scammers pose as trustworthy helpers and use a senior’s financial information to steal the money they have accumulated.
In many cases, these scammers pose as trustworthy financial advisers or family members. They may take advantage of an elderly person’s trust to collect money and quite often do.
The grandparent scam is alive and well – beware
Another common scam involves a grandparent. The scammer poses as the grandchild of an elderly person and asks for money for an unexpected financial problem.
Usually, the scammer pretends to be a child or a grandchild and asks the senior to wire money to them through Western Union. However, it is important to report such incidents, as most of them go unreported.
A couple of years ago, one of my elderly clients had this scam committed on her. She got a phone call from an alleged grandchild in another state who claimed he had an auto accident in Brazil. Foreign travelers were required to put up a $5,000 deposit with the judge or go to jail until the hearing was held according to his lawyer.
“Don’t tell my parents” he asked, because he had the money in an account at home and would repay her just as soon as he got back home. The easiest way to send the money was through Western Union and this lady sent the money as requested.
Without thinking, she did as he asked. The following morning, she had second thoughts and called me. After hearing her story, I advised her to contact the local FBI office. Unfortunately, there was nothing they could do except file her claim.
Losses from elder financial abuse
Elder financial abuse scams can come in many forms. If you suspect your elderly loved one of being a victim, talk to them about your suspicions and look for warning signs. Report suspicious activity to Adult Protective Services (APS) or the local police.
Moreover, if you suspect someone is abusing the money of your loved one, call the local police to file a report. You should not give out personal information or credit card numbers to anyone, especially if you suspect that the caller is not a trustworthy person.
One of the most common signs of elder financial abuse is social isolation. Most senior citizens are living on a fixed income and are at high risk of financial scams. To protect your loved one from such elder scams, you should start with elder care planning.
With the help of a financial advisor, you can navigate life after retirement and avoid the pitfalls. Losses from elder financial abuse scams are often devastating. Fortunately, there are several simple ways to avoid falling prey to these shady people.
A family member can also be involved
Trusted person abuse is another form of elder financial abuse. When a trusted family member or friend takes over an elder’s finances, they may isolate the elderly person from others. This individual can then make important decisions on behalf of the elder, such as transferring money from a bank account. There have been cases where they sold the elder’s real estate.
Moreover, they can make decisions that were meant for the elder despite their lack of capacity. A power of attorney is a written authorization that grants authority to a trusted person to make financial and medical decisions for the aging person.
AARP reports that 63,500 reports of suspicious activity were made to CFPB in 2013 and 2017 alone. These reports show that these scams cost financial institutions between $2.9 billion and $36.5 billion.
The highest losses were reported by people 80 years and older, followed by those between the ages of 60 and 69. The lowest losses were reported by people aged 50 to 59. But these are not the only ways to protect elderly people from elder scams.
Scams against the elderly are heinous and should be dealt with accordingly. To intentionally steal the life savings from an elderly person, and leaving them destitute deserves the harshest punishment possible. Life imprisonment without parole would be the minimum sentence a judge could impose.
Most states and the US Government have some form of law covering elder financial abuse scams, but they vary considerably. In some states, only civil action applies and in others, it may be a criminal offense. It would be a legal nightmare trying to get all the states and US Government to agree on one law. It might be better to have a very harsh federal law with strong enforcement.