Kunkle, Fredrick
June/July 2016
Elderly parents or
family members with cognitive impairments are especially vulnerable to
financial abuse. Safeguard your loved ones with these strategies.
The telephone seemed to ring all
the time for Robert Podrasky's elderly father. Too late, Podrasky figured out
why: His 85-year-old father was being scammed.
Callers had invited his father to
play a “quasi-legal international lottery,” which required him to transfer
money using Money-Pak reloadable debit cards. After several small transfers,
Podrasky's father hit the jackpot—or so the callers said. They told him he had
won $9 million, but would have to pay taxes on the winnings first.
By the time anyone realized what
was happening, Podrasky's father, a former insurance executive who lives in New
Jersey, had lost $400,000. Law enforcement officials said it would be next to
impossible to track down the perpetrators, who operated from foreign countries.
What was most upsetting was that,
in retrospect, the warning signs were there. “The [bank] teller had a feeling
something was going on,” says Podrasky, who added that he was told that privacy
laws prohibited bank officials from sharing information about their suspicions.
“My dad had no recourse.”
In addition to telephone scams,
con artists also exploit older people's unfamiliarity with social media. In
what some people call the “Hi, Grandma” scam, con artists glean bits of
information from social media accounts and then contact a grandparent. The
scammers pose as grandchildren, saying they've run afoul of local laws in a
foreign country and need bail money right away—and they don't want their
parents to know. In one case, a sympathetic grandmother wired $10,000 to
Mexico, thinking it would spring her granddaughter from jail. The woman was so
embarrassed about the fraud that she never reported it, says Shirley B.
Whitenack, a New Jersey attorney familiar with the details, who is also
president of the National Academy of Elder Law Attorneys.
The types of fraud perpetrated
against the elderly range from these Facebook-like cons to the reallocation of
an older person's money for a caretaker's personal use—and they are all on the
rise.
THE COST OF FRAUD
Financial exploitation of older
Americans is one of the fastest growing forms of elder abuse as the nation
shifts toward an older society, according to Bob Blancato, national coordinator
of the Elder Justice Coalition, a national advocacy group in Washington, DC,
and other experts on aging-related trends. Estimates of fraud-related losses
and costs range from $2.9 billion a year to as high as $35 billion a year, he
says. But the extent of the abuse is unclear. Government statistics on fraud
are hard to find, and those who work with older people say not everyone goes to
the police. “In many cases, it's not reported,” says Whitenack. “There's a lot
of shame, both on the part of the victim and on the part of the relatives of
the victims, because they feel they should have caught it sooner.”
“Everyone is at risk for being
financially exploited as they get older,” says Kathleen M. Quinn, executive
director of the National Adult Protective Services Association. A Baby Boomer
herself, Quinn says older people, in general, can become more vulnerable as the
brain ages and the ability to focus and retain memories declines.
VIOLATION OF TRUST
Blancato says data suggest the
typical victim is a woman between the ages of 75 and 80 who is living alone—a
sizable population, considering that 47 percent of all women 75 or older now
live by themselves, according to the US Census Bureau.
“Somewhere along the line, someone
establishes their trust and then violates that trust,” says Blancato. Typical
victims have other contributing circumstances, such as dementia, that can make
them inviting targets for abuse or vulnerable to simple crimes of opportunity.
A recent study found that people
with mild cognitive impairment may be more susceptible to financial scams,
particularly because of slowing perceptual speed and weakened episodic memory.
The study, conducted by researchers at the Rush University Medical Center's
Memory and Aging Project in Chicago and published in the October 2015 edition
of the Journal of Alzheimer's Disease, noted that even subtle cognitive
decline can make it easier for people to fall prey to such exploitation.
LOSS OF FUNDS
The effects of financial abuse can
be devastating. One study found that 9 percent of proven victims of
exploitation had their savings wiped out and had to rely on Medicaid or move to
a public nursing home. Meanwhile, programs designed to help older Americans
have lost funding. For example, from 2007 to 2012, almost half of state adult
protective services programs had their budgets cut while caseloads continued to
grow, says Quinn.
SIGNS OF CHANGE
Policy makers, businesses, and
advocates for older people or people with cognitive decline are starting to pay
attention, says Beth A. Kallmyer, vice president of constituent services at the
Alzheimer's Association. For example, the Financial Industry Regulatory
Authority (FINRA), a private self-regulatory organization, recently proposed a
set of rules addressing the exploitation of seniors. Among other rules, a firm
could put a temporary hold on the disbursal of funds from an older person's
account if the firm has a reasonable suspicion that a fraud is taking place.
The federal government is also
taking notice. In 2010, Congress passed the Elder Justice Act as part of the
Affordable Care Act to allocate federal resources toward identifying,
documenting, and fighting elder financial abuse. Quinn says a new voluntary
reporting system for states is intended to improve documentation of financial
exploitation. In Washington, DC, the City Council is considering legislation
that would allow the government to take civil or criminal action against people
who use “undue influence” to take advantage of a vulnerable older person.
Private industry has stepped up too. EverSafe, for example, is an online
service that uses technology to monitor a senior's financial accounts for
excessive withdrawals, missed deposits, or changes in spending habits.
Commercial banks have also taken
steps to address the problem. Their employees are often in the best position to
identify signs of a scam, but privacy laws can hinder them from alerting family
members. Banks have to balance privacy concerns with security, says Robert G.
Rowe III, vice president and associate chief counsel of regulatory compliance
at the Center for Regulatory Compliance of the American Bankers Association
(ABA). He says there is no federal standard for the industry on reporting elder
financial abuse.
In general, banks are required to
report irregularities to the Treasury Department if they suspect fraud, says
Rowe. In practice, however, banks mostly focus on transfers that appear related
to money laundering and other such crimes. It's harder to intervene when a
banker believes an elderly customer is being scammed. “You don't want a banker
assessing someone's competence,” he says.
Some banks now offer “protected
accounts” that allow third-party monitoring, Whitenack says. Such accounts
allow an older person to give someone else—a sibling, say, or an adult
child—transparent access to an account, but without the ability to execute
transactions. The ABA singled out the Bank of American Fork, in American Fork,
UT, for its educational programs and “view-only access” accounts that allow a
third party to watch for fraudulent activity without giving them control of
those accounts. “Little by little, you start to see steps in the right
direction,” Blancato says.
9 Ways to Short-Circuit a Scam
THESE EXPERT TIPS can help you protect a parent or
other family member from being exploited. For more information, contact the
Alzheimer's Association at http://bit.ly/Alz-Abuse
or call their helpline at 800-272-3900. Social workers on staff can help. You
can also find helpful advice on the Consumer Financial Protection Bureau's
website at http://bit.ly/FinanceProtection.
1. Discuss the topic. Talk
to your parents or elderly relatives about the risks of financial exploitation,
says Beth A. Kallmyer of the Alzheimer's Association. You might tell your
parents that precisely because you want them to remain independent for as long
as possible, it's wise to put you or another trusted third party on their
accounts or grant other monitoring access. Be sure to set up regular financial
consulting sessions.
2. Look for evidence. When
visiting an older family member or someone who is vulnerable, pay attention to
sweepstakes tickets or promotional envelopes lying around, and, if you are in a
position to do so, determine if any missing checks from their checkbook are not
accounted for, says Kallmyer. If the telephone is ringing more often, that too
could be a sign that an aging parent or relative has been targeted for
financial exploitation.
3. Discourage business over the
telephone. Instruct your parents or elderly relatives to ask callers to
send information about their offers or proposed financial transactions in
writing, says Kallmyer. You could also customize caller ID on your relative's
telephone to block unidentified calls. “Keep in mind, though, that many scam
callers use fake numbers so these services won't pick up on those numbers and
block them,” says Meredith Ponder of the Elder Justice Coalition. “However,
every bit helps. Any calls that can be blocked from scammers reduces the risk.”
4. Talk to the bank.
Consult with your relative's financial institution about steps it can take to
help keep your family member safe. More and more commercial banks allow
third-party monitoring of checking or other accounts.
5. Establish checks and
balances. Involve more than one other person in your parents' or adult
relative's finances. If, for example, two adult children or siblings oversee
transactions, talk to your parents about also appointing a trusted third party
(a local pastor or other religious figure, a childhood friend, a trustworthy
financial advisor or lawyer). No safeguard is foolproof, but having backup for
all accounts and transactions may dissuade or deter unscrupulous behavior.
6. Obtain durable powers of
attorney. Talk to your relative about giving you durable power of attorney
so you can help him manage his finances and look out for fraud. These sworn
agreements govern the types of financial transactions that can be performed on
another person's behalf, says Kathleen A. Quinn of the National Adult
Protective Services Association. A power of attorney can be tailored as broadly
(writing checks, buying or selling property) or as narrowly (handling one real
estate transaction) as is necessary. Unlike a regular power of attorney, a
durable power of attorney survives when its creator is incapacitated.
Agreements can be limited to paying bills or carrying out other financial
transactions while shielding or limiting access to other assets. To safeguard
against someone abusing the power of attorney, an agreement can include
provisions requiring third-party monitors, such as another sibling.
7. Become a co-signer. Ask
your relative to set up joint banking or investment accounts with you as the
co-signer, Kallmyer advises. As a co-signer, you have access to those accounts
and can ensure that no one is taking advantage of your elderly family member,
especially if he or she has dementia or another cognitive ailment. Seeing
overdrafts, double payments, and other problems is often one of the first clues
that someone is having cognitive difficulties. It's not easy because many
people are private about their finances, but broaching the topic tactfully—and
approaching the issue together—can help a person cooperate.
8. Encourage regular contact.
A major risk factor for any kind of elder abuse is isolation, Quinn and other
experts say. Make sure an aging or vulnerable family member has regular contact
with people, perhaps by enrolling in community adult-care programs or social
groups. Quinn recommends making regular visits and hiring an aide to check in
on an aging relative.
9. Hire caregivers through
licensed agencies. If your parents need in-home care, always use a licensed
or certified agency, if possible, says Quinn. No national organization
certifies eldercare aides yet, but some states do. Of course, nothing is
fail-safe, but accredited or certified agencies are generally more accountable.
“You can find out if the agency does background checks, or if they've had any
actions against them,” Quinn says. “If you hire somebody off the Internet, you
have to go with what they tell you, unless you can do your own background
check.” The National Alliance for Caregiving, which does not certify or
accredit agencies, offers various guides to help you find assistance at http://bit.ly/ElderCareAgency.
http://journals.lww.com/neurologynow/Fulltext/2016/12030/Stop_the_Scam__Elderly_parents_or_family_members.17.aspx
