Special to the Financial Independence Hub
The older we get the more important it becomes to look after not only our own financial situation but that of our parents as well. No matter what they’ve saved and tucked away for retirement, those funds may be at risk due to cognitive declines as they age.
The Huffington Post reports that over $36 billion is scammed in senior fraud and financial abuse every year. This is only the tip of the iceberg when it comes to these types of elderly scams: law enforcement officials estimate that only about eight per cent of crimes are reported ever year.
CNBC reports that women are also twice as likely as men to become a victim of fraud. They are considered easier targets, especially if they are in their 80s and living alone.
While knowledge goes a long way towards combatting these scams, obviously it’s not going far enough. Here are five ways to help protect your loved ones from scams, frauds, and financial ruin in their naive older years:
1.) Know the scams
The first line of defense is to know more about the common scams. This will help you anticipate and expect certain fraudulent activity, give you an edge heading them off from the first contact.
One popular scam is for a criminal to pretend to be a family member in need, usually from a foreign country. The American Association of Retired Persons, (AARP), notes that in 2012 “more than 25,500 older Americans reported sending $110 million to scammers posing as family members and claiming an injury or arrest in a foreign country.”
In addition to posing as a family member in need, scammers can tempt seniors with sweepstakes prizes, deals on expensive vacation rentals, financial investment schemes, new discount programs for prescription drugs, and even pretend to be governmental organizations and institutions themselves: like the Internal Revenue Service (IRS), Social Security, and Medicare.
Scammers use these covers either to get money directly or to procure an older adult’s personal and private information for future use. These requests for money or data can come in the form phone calls, letters, or emails. Cyber-scammers, more often than not, are actually located in a foreign country, which makes them particularly difficult to catch, but it does happen! A call center in India was recently found to have defrauded over $1.2 million dollars from their victims by pretending to be the IRS and convincing people they owed money in fees and penalties for financial crimes.
2.) Monitor finances and hire help
If you have an extra set of eyes or ears in an older person’s home you can keep snooping to a minimum while also monitoring finances. When you either live together or visit frequently you can have conversations about the types of scams they should expect. You can also keep an eye on their bank statements and mail. When you’re in the home you can monitor strange calls and help them avoid scams.
If you have an in-home care provider that assists with housework and other errands a few days a week these professionals can become allies and assist in keeping a lookout for potential elderly fraud. They can become the first line of defense and alert you to any suspicious calls, letters, visits, or trips.
3.) Explain why the offer is a scam
If your parent or loved one becomes a potential victim, try not to insult their intelligence or tell them what to do. Instead, try to open up a discussion as to why the situation they are involved in is not sounding authentic. Help them understand the subtleties and warning signs so that they can not only avoid one particular fraud but others as well.
Choose a day and time when they are in a calm and pain-free mood. Make sure they are receptive to a difficult and meaningful conversation and are both well-rested and well-fed. If they are experiencing pain or discomfort, wait for another opportunity to broach this important subject so that you know you will have their full attention.
You may have to explain that it’s not possible for them to win a contest they didn’t enter and that they shouldn’t have to pay any fees to collect their contest or lottery winnings. It’s also important to remind elders that financial institutions and government agencies never ask for personal information over the phone. This is because the government already has all that personal information on file.
4.) Avoid blame and shame
No matter what happens, it’s important to help older adults keep their autonomy, dignity, and respect. You need to remind them often to not trust strangers, just like they likely taught you when you were little.
If they do get scammed, or seem to be getting caught up in something that seems too good to be true, remind them that strangers who are asking for money to trying to get access to their personal information should not be trusted.
5.) Share their experiences
Despite your best efforts, it’s possible that a loved one will still get caught up in a scam. If they do become a victim, ask them to share their experience so they can help other older adults avoid similar situations.
Remind them that law enforcement is working on catching the criminals. Tell them that any information they can share will help protect others from suffering a similar scam. Your loved ones may be more willing to open up and talk about the scam in more detail if the request is framed in a helping and non-threatening way.
Remember, if the scam gets this far they are already embarrassed enough, help them regain their dignity by empowering them to assist other potential victims.
With some planning and difficult conversations, keeping older adults safe from financial scams can be done with the compassionate understanding that keeps adults feeling autonomous, yet protected.
Barney Whistance is a Finance and Economics blogger interested in the global economic climate. Apart from majoring in Finance, he is a Chartered Accountancy Student and planning to complete his Ph.D. in Finance before he turns 30. For more updates follow him on Twitter @barneywhistanc1