Elder Financial Abuse: How to Identify and Prevent Two Common Financial Scams
Financial Fraudsters Prey on Vulnerable Adults
Elder financial abuse is a problem in Vermont and across the country. Vulnerable adults can fall prey to the scams of strangers and exploitation by family members. There are no reliable statistics for the incidence of elder financial abuse in Vermont, but a 2011 study, conducted by the MetLife Mature Market Institute, notes that “the annual financial loss by victims of elder financial abuse is estimated to be at least $2.9 billion dollars, a 12% increase from the $2.6 billion estimated in 2008.” The study notes that over half of the reports of elder financial abuse are perpetrated by strangers, while about 34% of abusers are reported to be family, friends, and neighbors.
This article will focus on two types of scams that strangers perpetrate in the exploitation of vulnerable adults.
Two Common Financial Scams and How Elders Can Avoid Falling for Them
Fraudsters know how to identify and exploit the vulnerabilities of elders for financial gain. Since vulnerabilities differ, the scams and tactics that criminal use to separate elders from their money can come in a variety of packages. Below are examples of two common scams that illustrate how elders are victimized.
The romance scam is a scam that takes a toll on elders both financially and emotionally. The romance scam fraudster develops an intimate relationship with his victim, usually online. The fraudster cultivates a high level of trust and emotional connection with the victim, a process that can take a month or longer, before asking for money. To do this the criminal devises a complex story, which can be emotionally charged and may require fast action. Some examples are: they may claim that they want to visit the victim but don’t have the money for the air fare; they can’t open an account in a foreign country but need to make a big and urgent payment; they need money to get out of an abusive situation; or they are facing some other financial hardship.
The scam is particularly traumatic for vulnerable elders who are lonely and sometimes alienated from their family and friends. The fraudster gets away with the victim’s money and often dismantles the victims trust. In some cases the feelings of embarrassment and betrayal caused by the scam can leave the elder depressed or even suicidal.
How to avoid being scammed:
To help determine whether a new flame or friend is a fraudster in disguise, your best tool is your curiosity. Here are a few questions to begin with:
- Does the person need money from you for an “emergency”? Such emergencies may include (but are not limited to) being robbed, kidnapped, detained at an airport, charged an unexpected “fee,” etc.
- Does the person need to transfer money through your bank account?
- Does the person’s story make sense? Often the fictitious story is logically flawed.
- Is the person asking you to send money? Most (though not all) fraudsters request money by wire transfer or Western Union. Pre-paid payment cards are also popular.
In this scam, the fraudster pretends to be the victim’s grandchild, a police officer, a lawyer, or another agent on behalf of the grandchild. To contact the grandparent, the criminal calls or emails with news that the grandchild is facing an emergency situation. Examples are: needing to get out of jail, being stranded in a foreign land and needing to purchase a ticket to get home, or wanting to extricate him or herself from any number of situations. The bottom line is the “grandchild” needs money sent immediately. This scam can defraud grandparents of thousands of dollars.
Typical characteristics of the grandparent scam include:
- The request for money is urgent: most scams rely on a sense of urgency and a grandparent scam is no different. When forced to move quickly, you don’t have time to think through your decisions carefully and are more likely to react emotionally rather than rationally.
- The fraudster will often ask you not to tell anyone about the request.
- The person does not sound like the grandchild. In an attempt to explain why their voice or demeanor has changed, the criminal may claim that the accident they were in harmed their voice box or that they are in shock and therefore sound different.
- A request to wire the funds, especially to another country.
How to avoid being scammed:
- Always ask callers to identify themselves by name.
- Test your “grandchild’s” knowledge. If they are your grandchild, they will know the answers to personal questions. Such as when was the last time they visited, or the color of the carpet in living room.
- Ask the person for a phone number so that you can call them back. Then, using a phone number you know, call the relative claiming to be in need to see if you can reach them or call another family member to confirm the situation.
- If the money to be sent is requested to be sent via a wire, be extra suspicious.
- Slow down. There are very few situations when you need to make a rushed decision about sending money.
These are only two examples of the scams that can impact elders. There are numerous scams out there and fraudsters are dreaming up new ones every day. To avoid being scammed, trust your intuition. If something doesn't feel or sound right, ask questions until you can fully understand the situation. Also, avoid reacting emotionally to requests for your money. The tips provided in this article can help to identify fraud and avoid becoming a victim. However, if you or a loved one discovers that you have been scammed, it is important to take action immediately. Click here to find helpline numbers and additional resources online.