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Protect Your Parents From Financial Abuse

Aug 22, 2019

Key Takeaways

  • Be familiar with the signs of elder financial abuse.
  • If your parents manage their own finances, check in from time to time.
  • If your parents become victims, consider freezing their accounts immediately.

 

 

It’s so dreadful, you almost can’t imagine it can happen to one of your loved ones, but financial fraud has become one of the most common crimes targeting elderly individuals.

Consumers Digest estimates Opens in new window that 5 million people fall prey to elder fraud every year, but only one in 25 cases is reported to authorities. This leaves plenty of perpetrators on the prowl. Here are ways you can protect your own family members from such scams.

 

Learn to spot abuse

The first step in protecting your parents or other elderly relatives from fraud is making sure you know what these scams look like. Many scams targeting the elderly use familiar-sounding organization names or services that could relate to a topic your parents face on a regular basis, such as Medicare or health insurance. People executing these types of schemes will mention dummy services – a bone density test, for instance – to gain the elderly person’s information. They might then proceed to bill Medicare and collect payment for this service they didn’t provide. Scams could also focus on investments, prescription drugs or reverse mortgages, to name a few.

Other abusers might target elderly folks at their weakest – for example, when a loved one passes away. These scammers will seek out and attend funerals, pretending the deceased owed them money. Or phone fraudsters will take advantage of an elderly person’s loneliness by conversing with him or her until the victim provides valuable personal information.

One of the best ways to learn the ins and outs of these scams is to attend a senior fraud class at your local nursing home or community organization. The Better Business Bureau, banks and consumer safety organizations host a number of different classes that can provide useful details on specific attacks Opens in new window.

 

Protecting parents who manage their own finances

How you protect your parents depends on how well your mom or dad can manage their finances. If your parents remain in good health, then simply setting up ways to monitor their finances can go a long way.

For instance, many banks have view-only features on credit cards or savings account balances. If your parent has somebody with their best interests in mind and the ability to check in from time to time to view account balances – without having direct access to the account – this can help ensure that no troublingly large withdrawals occur.

Your parents, of course, must agree to a second pair of eyes on their financial accounts. Discussing it with them as a way to ensure their money is safe if they suffer an unexpected health scare can help them understand the need for such oversight.

Also, while your parents are still able, have them decide who will manage their finances if their health fails. Then you can notify their retirement and other accounts of who would gain power of attorney if their health deteriorates – before it does.

 

Protecting parents who don’t manage their own finances

For parents who are already ill, make sure someone – you or another close and competent relative – has power of attorney over their finances. That way you can control the money that goes in and out of their accounts.

But even if you take over their finances, don’t leave them in the dark. Every six months or once a year, discuss with them Opens in new window the strategies you’re utilizing for their retirement accounts, what’s changed and what’s the same. Let them ask questions so they still feel like part of the process.

And, even better: have a trusted third party – such as a financial advisor – manage the account. This adds another safety check for your parents’ money.

 

What to do if your parent becomes a victim

Reacting quickly to incidents of fraud is important, as a scammer may speedily remove funds in order to steal the most he or she can before the account is shut down. If you have access to your parents’ accounts, freeze them immediately.

Talk to the banks about what happened and see if they can help find the culprit. You can also file a police report in order to increase the odds of recovering any losses. Be vigilant: the scammer’s efforts may continue even after you have reported their maleficence.

In situations where your parents have control of their own accounts and you suspect something has happened, you can contact Adult Protective Services (APS) Opens in new window. They have expertise in judging whether an elderly person has become a victim of fraud by an online scammer.

APS can also serve as a resource if you suspect another family member has tried to exploit your parents.

 

What you can do next

Having regular conversations with your parents about their finances may be the best way to protect them in the long term. It also ensures that you remain a prominent presence in their lives, which means they have outlets of interactions beyond the telephone, television or a stranger who is looking to take advantage of them. Having ways to protect them in case they make a mistake can keep their finances safe, but chatting with them regularly will also help cure the boredom and loneliness that can increase their chances of being exploited.

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