There have been reports that so-called “elder abuse” in a financial context is on the rise, costing elderly Americans an estimated $36 billion last year alone. By one estimate, roughly one in three older Americans has been scammed in the past five years—what an official at the Institute on Aging calls “an elder financial abuse epidemic.” Sadly, only one in 44 elder abuse cases are ever reported—the victimizers regard stealing from older Americans as a low-risk crime.
There is now a whole dark infrastructure of schemes to fool people in the early stages of dementia into parting with their money, including investment scams aimed at people with marginal retirement assets who want to boost their income, and pop-up messages on websites that trick the victim into downloading a virus that sends personal information to the scammers. Seniors are often targeted by fraudulent telemarketing calls, including solicitations for nonexistent charities or a frantic phone call saying that a beloved relative is stranded and needs money wired to him.
The newspapers offer lurid stories of how scammers convince seniors that they have won a big sweepstakes contest; all they have to do is pay duties and taxes in order to get the payout. $25,000 later, the scammers have stopped answering the emails, and of course the sweepstakes payout never arrives. In other cases, a scammer would get hold of seniors’ personal information, forge their names and open fraudulent bank accounts, siphoning retirement dollars until there was nothing left.
In a financial context, a broker might suddenly appear in the picture and start high-commission trading in unsuitable investments or talk the victim into taking out a loan on the home in order to increase the commission that could be generated. (This, of course, is called ‘churning,’ and it is not always clear when trading crosses the line to become an illegal activity—especially if the broker has gotten the customer to sign a document he or she may not understand.)
Many times, the abuse is an inside job; a caretaker or new ‘friend’ will appear on the scene and convince a retiree to give them power of attorney control over the finances, change their will or ‘help them out’ with increasing payment amounts. It is not uncommon for family members to be the perpetrators. In a recent case, the children of a wealthy widow joined a brokerage firm, took control of their mother’s investment account, and set about churning it to turn her money into their commissions. The mother had to go to court to get back control of her own (diminished) finances....