When Linda sat down in my office, she was almost in tears.
“In the last two months, my dad has received more than 200 offers to ‘win’ sweepstakes and lotteries—and he’s probably responded to 50 of them! I don’t know how to stop the stream of mail coming in, and I don’t know how to stop him from throwing his money away!”
Unfortunately, Linda’s dad isn’t the only victim.
When it comes to elder abuse, financial fraud is the fastest growing culprit. If it seems like there’s a new scam every day, it’s because there is.
And while it’s easy to get frustrated with mom and dad for falling prey to these scams, a recent study by the American Association of Retired Persons (AARP) tells us why older people are such easy targets for financial fraud.
Unlike younger generations, the over 60 crowd expects honesty in the marketplace.
Even if they do realize they’ve been scammed, they’re less likely to take action—either because they’re embarrassed they’ve been fooled or because they’re less knowledgeable about their rights in today’s complex (and often dishonest) consumer marketplace.
The AARP study also found that, because older people are more likely to be home than their younger neighbors, they are often within easy reach of devious telemarketers and home solicitors.
Stella is a perfect example. After her husband died, Stella decided to stay in her home. Her son Gary lived a few hours drive away, but he took care of her as best he could from a distance. He called multiple times a week, visited when he could get away, and was always there to handle any issues that came up for his mom—especially when it came to her failing health.
Everything seemed in order. Then, one day last summer, the bank called Stella. She was shocked to hear that she was out of money and her checks for her utilities were bouncing. As soon as she called Gary, he knew it was time to get a Power of Attorney and take over his mother’s finances, but it was too little too late.
Once Gary dug into the details, he realized Stella had been the victim of a scam for years.
A “company” that ran a “contest” had been plying her with prizes that had started out small—Sunbeam mixers, toasters, and knife sets—and gotten bigger and bigger over time. Of course, every time the very nice people called to tell her she’d won something new, they offered her the opportunity to pay for the chance to win an even grander prize next time. Stella had been hooked—to the tune of over $100,000.
The AARP’s study highlighted some of the characteristics that make older people vulnerable to fraud, but age-related dementia adds to the problem significantly.
Research has shown that about half of adults in their 80s have either dementia or some level of cognitive impairment without dementia. If these folks are living alone, they’re prime targets for fraud.
But what does all this mean when it comes to your own parents? How do you know when to offer help?
Linda was blown away by the fact that her father who had always been money-wise was writing checks to sweepstakes companies.
Gary had been keeping a close eye on Stella, and he felt she was still capable of “paying a few bills” and managing her own money.
Luckily Linda and Gary stepped in when they did.
Here’s seven steps to help avoid the fraud in the first place:
1. Talk to your parents long before you need to
The earlier you talk about the potential for cognitive decline, the easier it will be to set up a future game plan together.
2. Get a copy of the Durable Power of Attorney (POA)
If you’ve created the document together before any signs of decline, you should already know what to expect. If you haven’t, the POA will indicate if and when you’re able to take the financial reins.
3. Watch for signs of mental decline
If you think your parent may be slipping a little—or a lot—schedule an appointment together to see a neurologist. Not only can the doctor help you both understand what to expect in the short and long term, but he or she can also recommend next steps when it comes to managing finances.
4. Arrange face-to-face visits
If you live far away, ask someone in the area—a close friend, sibling, or neighbor—to check in now and then to see what is going on. If they spot something suspicious, they can let you know before a small issue has time to escalate.
5. Get access to bank account records online
Even if there have been no financial missteps made (yet), ask for permission to look over the expenses and deposits periodically. If something doesn’t add up, start asking questions and follow up.
6. When appropriate, take over the checkbook
As soon as there is any sign of mental decline, get signatory authorization on bank accounts and agree on reasonable spending limits. Give mom an ATM card with a cash-withdrawal limit or give her a monthly allowance of cash.
7. If you need help, work with a financial advisor
Don’t assume that just because mom or dad needs your help that you have the knowledge to make the best decisions. If taking over your parents’ financial lives requires more than basic bill paying, get help from a financial fiduciary.
Watching mom or dad decline is never easy. We all want our parents to be the family guardians they once were.
Of course, it’s even harder for our parents to admit their own failings—especially when it comes to money. But the sooner you address the issue, the sooner you can begin to combat potential fraud.
Take steps today to keep mom’s $100,000 toaster in the hungry hands of even the most convincing “sweepstakes representative.”
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