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Picture of Christopher A. Hopkins, CFA

Christopher A. Hopkins, CFA

Protecting yourself and your loved ones from elder financial fraud

In 2014, a 90-year-old retired judge received amazing news in a phone call from a man calling himself David Morgan on behalf of “Mega Millions”. William Webster was informed by the caller that he was the lucky winner of a $72 million sweepstakes prize including a new Mercedes Benz. To claim his fabulous prize, he merely needed to wire $50,000 to cover taxes to a bank account specified by the caller.

Scams of this type targeting older Americans are frequent, diabolical, and increasing in intensity.

In a delightfully karmic twist for the ages, David Morgan (AKA Keniel Thomas) proved to be a particularly inept and unlucky scammer. The intended victim, William Webster, was not only a retired Federal judge but the only man ever to have served as Director of both the FBI and the CIA. Webster and his wife contacted the FBI and participated in a sting operation that landed Thomas a 6-year stretch in the pen. Sweet.

But most targets of elder fraud are not former law enforcement officials and too many fall prey to loathsome cretins who target the elderly with a variety of tactics from promises of reward to outright intimidation. According to the FBI, 82,000 Americans over age 60 reported being victimized in 2022 to the tune of $3.1 billion, a stunning 84 percent increase over the previous year. To make matters worse, experts estimate that fewer than 1 in 10 cases are actually reported. The rising threat and potentially devastating consequences require heightened vigilance, both on our own individual behalf and that of aging loved ones.

The US Department of Justice defines elder abuse as an intentional or negligent act by any person that causes harm or serious risk of harm to an older adult, including financial exploitation and fraud. Criminals who exploit older people are especially reprehensible but are also ruthlessly resourceful and their tactics are evolving in sophistication.

To counter the growing threat, the 2017 Elder Abuse Prevention Act created the muti-agency Elder Justice Initiative led by the DOJ and the FBI along with federal, state, and local partners to raise awareness and enhance enforcement efforts. Financial institutions are also stepping up efforts to spot red flags and offering educational resources and tools to older customers and their families. Ultimately, the most effective response to potential elder financial fraud is avoiding the trap in the first place. Here are some actions to consider.

Begin a discussion. Perhaps the hardest step is broaching the subject with a loved one who may resist the suggestion they are in decline. It may help to enlist other family members in the discussion of how to raise the issue in a helpful way. Some experts suggest offering a mutual agreement whereby each party agrees to review the others’ bank statements, for example, or be listed as an authorized contact. Family members may also help convince the parent or relative to simplify their financial position by canceling unused credit cards and banks accounts, establishing automatic bill paying, and reviewing subscriptions.

Name a trusted contact. Brokerage firms are required to ask if you wish to name one or more people whom the institution can call if it cannot contact the customer or detects suspicious activity (optional but highly encouraged). Most banks now offer similar options as well. The trusted contact person cannot transact on your behalf or access your account but can communicate with the bank, broker, or advisor regarding your identity or health status. This is a good idea for all customers regardless of age but especially for older adults.

You can also designate up to 3 people to act as Representative Payees to manage your Social Security benefits in the event of your incapacity. Designated representatives are vetted by the Social Security Administration to step forward and act on your behalf if you cannot.

Get legal documents in order. The best time to decide how to handle your affairs once you become incapacitated is before it happens. Offer to help review or establish (with assistance from an attorney) a durable power of attorney to allow a trusted party to intervene if necessary. POAs can name more than one person, and if there is resistance you might outline certain specific criteria that would cause you to assume control.

Be alert for signs. Family and friends should be on watch for changes that might signal abnormal or suspicious financial behavior like unusually generous gifts especially to strangers, changes in consumption patterns, or evidence of unpaid bills. Be sure to carefully vet caregivers or housekeepers and get to know any new acquaintances or romantic interests. Sadly, elder fraud has been committed by family members as well, so vigilance and transparency are key.

Responding to suspected fraud. If you believe that you or a family member may be the victim of financial abuse, immediately notify the appropriate authorities. For a suspected crime, contact local law enforcement and go to Eldercare.acl.gov to locate and contact your local adult protective services agency. If you’re not sure where to turn, call the National Elder Fraud hotline at (833)-FRAUD-11 or visit ic3.gov/Home/EF. You can also find a wealth of resources at fbi.gov/elderfraud to help identify signs of elder financial abuse and to create a plan ahead of time to thwart it. Or ask a retired FBI Director.

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