An increasing number of seniors are becoming the target of predatory swindlers who come in two forms: those who convince seniors to make large financial investments based on bogus schemes and those who are family.
Seniors age 65 or older on average lose about $141,000 to financial scammers who convince them to poorly invest money in sham companies. These seniors are also losing hundreds and thousands of dollars to family members, typically adult children, who skim from their elderly, confused parents, according to the nonprofit Investor Protection Trust (IPT).
“Some of those financial scams by strangers can be ones that actually deplete the entire life savings of a senior at the worst possible time in their life,” experts said.
High Scam Rates
According to an IPT survey of nearly 3,000 financial planners, these seniors are lured to “educational” seminars that include free meals. These seminars are, in fact, sales pitches for sham investments. Most of these pitches include false promises of big returns.
The group’s findings determined that more than half of the planners interviewed had worked with an older client who has been victimized. Another 32 percent knew of an older person who was the subject of unfair, deceptive or abusive practices. More startling is the fact that only about 5 percent of victims report the abuse.
Experts say that many seniors are too embarrassed to report the crime, while others are afraid. Some don’t realize they have recourse. Sometimes, because of diminished mental capacity, they don’t even realize they’ve been victimized. About half of adults in their 80s struggle with dementia or a cognitive decline that severely limits financial-management skills. Researchers have found that the first place where diminished cognitive decline has an impact is in dealing with numbers.
That’s where caregivers and physicians have stepped in. In response to the growing problem, IPT and several other nonprofits formed the Elderly Investment Fraud and Financial Exploitation prevention program. So far, it has trained more than 3,000 caregivers and medical professionals to help spot those who are vulnerable because of diminished mental capacity.
In addition, state lawmakers nationwide have put laws in place to protect elderly victims. The federal Department of Health and Human Services has also stepped into the fray, announcing a $5.5 million grant that will be distributed for elderly-abuse prevention programs. The department will work with the Justice Department and the new Consumer Financial Protection Bureau to coordinate efforts to stop the abuse, whether it’s from a stranger or a family member. Experts say there are some red flags that caregivers can watch out for to prevent abuse:
- New or unusual bank transactions — Look for new patterns of transactions, including increased charitable giving and an increase in money transfers.
- Keeping secrets — Scammers often tell seniors to keep the financial deals a secret under the guise of it being an exclusive offer. Also, seniors may be afraid to tell anyone about missing money for fear of getting someone in trouble.
- Suspicious friends, phone calls or letters — If a scammer feels as though a senior is a ripe target, they may try to victimize him or her again.
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].
- Dugas, C. (2012, August 15). Elderly suffer as financial abuse grows. USA Today. Retrieved from http://www.usatoday.com/money/perfi/retirement/story/2012-08-15/financial-scams-seniors/57079122/1
- Ellis, B. (2012, August 22). Senior victims lose average of $140,500 to financial abuses. CNNMoney. Retrieved from http://money.cnn.com/2012/08/22/pf/seniors-financial-abuse/index.html
- Miller, M. (2012, August 23). Senior financial scams often all in the family. Reuters. Retrieved from http://www.reuters.com/article/2012/08/23/us-column-miller-scams-idUSBRE87M0LR20120823