Elder financial abuse takes many forms, and it's essential that people know how to recognize and avoid it. This guide covers what financial abuse is, why it happens and how older adults can protect themselves.
Did You Know: June is World Elder Abuse Awareness Month. For more information about ways to get involved, visit UN.org.
Table of Contents[>] Click the links below to jump to each section.
- What is Financial Abuse?
- Why Does It Happen?
- Red Flags and Warning Signs
- Types of Scams
- Tips for Avoiding Financial Abuse
- Additional Resources
What is Financial Abuse?
Elder financial abuse is any activity that uses deceitful, fraudulent or otherwise illegal tactics to take money or resources from an older person. Although often underreported, elder financial abuse is a big problem in the United States.
A 2015 study estimated that older Americans lose $36 billion each year as a result of financial exploitation, criminal fraud and caregiver abuse.
Why Does It Happen?
Seniors are often seen as easy targets to many perpetrators of elder financial abuse. Perpetrators will use any means available take money from older people — and their efforts are working. It is estimated that approximately 37% of all seniors are affected by financial abuse every five years.
Accounting for more than 46% of all losses, financial exploitation is the largest source of elder financial abuse in the United States. Financial exploitation involves using misleading language or confusing scenarios to trick seniors into voluntarily giving up their money. Some examples include getting seniors to pay high prices for magazine subscriptions or charging them unnecessarily high monthly bills for nursing home services.
Unlike financial exploitation, criminal fraud uses explicitly illegal tactics to swindle people out of money. Scams and identity theft are examples of criminal fraud, which accounts for 35% of elder financial abuse.
Caregiver abuse occurs when someone in a trusted relationship, such as a family member or an at-home caregiver, steals from an unsuspecting senior. The perpetrators of caregiver abuse exploit their relationships with their victims, making this form of abuse particularly distressing and difficult to identify.
Perpetrators of all types of elder financial abuse take advantage of seniors’ insecurities about memory loss and long-term financial stability by convincing them to pay fake overdue bills or sign on to phony investment schemes. In other cases, perpetrators exploit some seniors’ slow adoption of the internet to confuse them online. With billions of dollars on the line each year, perpetrators are getting more and more creative in their attempts to swindle people out of money.
It is nearly impossible to learn every trick used by perpetrators, but you can always be on the lookout for red flags that can alert you to possible abuse.
Red Flags and Warning Signs
The best way to protect yourself from financial abuse is to spot a scam before you become a victim. Be on your guard for offers and requests for money from people you don’t know. Scammers will sometimes claim to know you or address an email to you personally, but unless you are absolutely sure of the sender, do your research before offering up any money or information.
Scammers will often come up with creative ways to ask for your personal information. If something or someone asks you for your personal information (especially financial information), it should raise a red flag that you may be dealing with scammers. Additionally, take note of overly pushy sales tactics, whether they come from over the phone or an in-person exchange. If someone is trying to sell you something real, they shouldn’t have a reason to rush you or make you feel uncomfortable.
When dealing with insurance or investments, anyone trying to sell you something should have a sales license. Ask for this information before completing any purchase. No matter how good the offer sounds, if the salesperson does not have a license, you shouldn’t be doing business with them.
Take note of how people are asking for money. Money wire transfers (through a company like MoneyGram or Western Union) are a common tool used by scammers to get away with fraud because they can be hard to trace and can often be collected without identification. Be on your guard for potential financial abuse if anyone asks you to send money this way.
At home, be on the lookout for missing valuables or important documentation, and verify your bank statements frequently. Over 90% of all reported elder abuse is committed by family members, and sometimes the most effective perpetrators are the ones closest to you.
Types of Scams
Financial abuse comes in many forms, and it is important to stay on your guard for all types of suspicious behaviors, but some types of scams are more common than others. Below are some of the top scams used to target seniors.
Medicare and Medicaid Scams
Scammers steal billions of dollars from the government each year by making fraudulent claims to Medicare and Medicaid and pocketing the money once they are approved. Perpetrators may pose as a Medicare representative or a health care provider in a makeshift mobile clinic to persuade seniors into giving out their personal information. Once they have it, perpetrators use the information to bill Medicare or Medicaid for bogus services and prescriptions.
Grandparent scams are particularly devious and distasteful due to the fact that they exploit people's emotions to swindle them out of money. The premise is simple: a scammer calls an older adult pretending to be a grandchild in need of money for an unexpected problem, such as overdue rent, expensive car repairs or a medical emergency. Once the perpetrator has the victim convinced, he or she will typically ask for a money transfer through Western Union or MoneyGram, which are hard to trace and easy to collect without identification.
Telemarketing fraud is another common tactic used to target seniors, likely because older adults are more comfortable buying things over the phone than other generations. Some examples of telemarketing fraud involve perpetrators posing as fake charities or offering exclusive investment opportunities.
Email and Internet Fraud
Scammers will also exploit some seniors’ lack of familiarity with the internet through email and internet scams. Pop-up browser windows can simulate credible notices, like a notification to update your virus scanning software. These scams can also come in the form of an email that mimics a legitimate source, such as the IRS. Clicking on these prompts or entering information can open your computer up to viruses or put you at risk for having your personal and financial information stolen.
Seniors shopping for drugs online may come across websites for pharmacies based outside of the United States that offer pricey medications at lower costs. Be wary of these sites, however, as a large portion of medications coming from outside of the U.S. are counterfeit. Drugs from obscure foreign sources are also likely not tested and regulated like most drugs entering the U.S.
Investments and Financial Advisors
Scammers have long targeted seniors’ retirement funds and savings by offering bogus investment offers. While some offers are meant to sound as believable as possible, some scams target people’s imaginations with exotic stories of Nigerian princes seeking help to claim an inheritance. Whatever the offer, do your research and follow your gut. If it seems too good to be true, it probably is.
This scamming tactic is a similar to some of the others, except instead of a health care provider, grandchild or financial advisor, perpetrators will pose as a fake charity seeking donations. This scam is most common after natural disasters, but could happen any time.
Funeral and Obituary Scams
Some funeral homes and other funeral-related businesses take advantage of their victims’ grieving state to overcharge them for services or convince them to buy products they don’t need. Some scammers will also use obituaries to find the names of deceased and call family members to try and collect fake outstanding debts.
Tips for Avoiding Financial Abuse
There are steps you can take to protect yourself from financial abuse. Here are 9 tips for keeping your money safe from scammers as you age:
- Avoid social isolation
Spending time outside of the home with other people can lower the risk of elder abuse from family members and caregivers. Maintaining social circles can help keep your mind alert and decrease the risk of depression. If you have trouble leaving the home because of transportation or mobility issues, try this Eldercare Locator to find organizations to help you stay active in the community.
- Never give information to unsolicited callers
Do not give your banking, Medicare or Social Security information over the phone to anyone that calls you unannounced. It is good practice never to give out your information over the phone unless you were the one who initiated the call. If you are interested in something someone is selling, ask them to send you an offer in writing and take down the salesperson’s name, job information, address and business license number before you make a final decision.
- Lock up your valuables
Caregiver abuse accounts for more than 18% of all elder financial abuse in the United States. In these cases, the perpetrator is someone close to you, such as a friend, family member or paid caregiver. If someone other than you or your spouse has access to your home, it is a good idea to put valuable and personal items (such as jewelry, credit cards, banking information or legal documents) in a locked storage container for safe keeping.
- Practice safe habits online
Just as you should never give your information to callers that you do not personally know, you should never enter your personal information or passwords into a website or email that you did not seek out yourself. Check out these tips to avoid phishing scams to help protect yourself on the web.
- Stay away from glossy guarantees
One common warning sign for potential investment fraud is a guarantee that a venture will perform well. Scammers try to lure people in with the promise of a return on their investments, but all legitimate investments carry some kind of risk. If someone is trying to sell you an investment that cannot fail, walk away.
- Shred financial documents and use direct deposit
Put all of your receipts and bank statements in the shredder once you are done with them to avoid having your information stolen. To eliminate the risk of checks being stolen while still in the mailbox, set up direct deposit and keep your payments paperless.
- Keep an eye on your monthly subscriptions
Tricking seniors into signing up for costly monthly subscriptions is a common tactic for financial exploitation. Look at your bank statements every month with a trusted advisor to ensure you are being charged fairly and only for what you need.
- Make financial decisions with a team or trusted advisor
If you have a financial advisor or a team of trusted caregivers that help you manage your finances, talk to them before you make any large purchases or investment decisions. They can help you verify the legitimacy of an offer or check for scamming red flags that you may have missed.
- Do your research and be skeptical Approaching sales pitches with a healthy amount of skepticism will help you notice red flags before it is too late. Step away from offers and do your research before giving anybody your money. Take your time, and steer clear of any salesperson who is making you feel rushed or pressured.
- State Elder Abuse Hotlines - If you suspect that you or a loved one has been a victim of elder abuse, exploitation or neglect, you can report the abuse to your state using one of these hotlines.
- National Center on Elder Abuse - This government website contains informational resources for understanding elder abuse and getting help when instances of abuse are suspected.
- National Adult Protective Services Association - Seek help and support when dealing with cases of abuse and neglect from this social services program provided by state and local governments.
- National Council on Aging - Find resources and read articles about maintaining financial security and lowering your fraud risks.
- AARP Fraud Watch Network - AARP’s Fraud Watch Network stays up-to-date with information on the latest scams targeting seniors. Sign up for watchdog alerts and be notified when new fraud attempts are detected. You can also find helpful articles on how to protect yourself and loved ones against financial abuse.
- Ageless Alliance: United Against Elder Abuse - A nonprofit organization that focuses on education and community outreach to raise awareness and prevent instances of elder abuse.
- The National Consumer Voice For Quality Long-Term Care - The NCVQLC produced dozens of fact sheets for recipients of long-term care. Find relevant information and resources for all things care-related from this consumer advocacy group.
- True Link Report on Elder Financial Abuse - Get recent (2015) figures on elder financial abuse in the United States from this comprehensive report.
For more information on a wide range of senior issues, read through some of our guides below.
- 10 Medicare Mistakes You Could Be Making
- Safety Awareness
- The Future of Senior Hunger in America
- How to Pay for Nursing Home Care
- 13 Online Safety and Technology Tips
NCOA: https://www.ncoa.org/economic-security/money-management/scams-security/protection-from-scams/, https://www.ncoa.org/economic-security/money-management/scams-security/top-10-scams-targeting-seniors/
Consumer Finance: http://files.consumerfinance.gov/f/201306_cfpb_msoa-participant-guide.pdf
USA Today: https://www.usatoday.com/story/money/personalfinance/2017/01/11/eight-ways-protect-yourself-against-elder-financial-abuse/94809930/