Elder fraud: Avoiding common elderly scams and preventive steps to take

Any of us can fall victim to fraudulent schemes and scams, but the reality is that older people are common targets. New technologies and platforms have allowed fraudsters to become more sophisticated and made it harder for seniors to navigate the exchange of information online. It’s estimated that financial fraud affecting older adults over age 60 totaled a whopping $3.1 billion per year in 2022.

“The increasing reliance on technology among those who are elderly and vulnerable introduces even more avenues to be targeted,” says Sarah Darr, senior vice president and head of financial planning at U.S. Bank. “It’s especially important for those individuals to be more vigilant or ask family members for help.”

Sometimes an older adult may not want to proactively ask for help in their financial matters, viewing it as a loss of independence. Fortunately, for adult children or caregivers of seniors, there are collaborative steps you can take together to help prevent elder fraud. Let’s examine common types of elder scams and how you can safeguard your loved one against this form of abuse.

Common types of elderly scams

According to the National Council on Aging, some of the most common types of elder fraud include:

• Imposter scams. Someone may impersonate the IRS and claim the elderly person owes taxes.
• Fake prizes, sweepstakes and lottery scams. An elderly person may receive notice of having won a contest or sweepstakes but is then asked to pay money to collect their prize.
• Robocall scams. Someone may call claiming the person’s car warranty is expiring and must pay to renew it or start a call with “Can you hear me?” and use the older person’s “yes” answer to authorize charges on items using a stolen credit card.
• The grandparent scam. Someone may claim to be a grandchild or calling on behalf of a grandchild who needs money to get out of trouble.
• Investment scams. Elders may be tricked into investing in cryptocurrency, fraudulent companies or have their financial holdings transferred to others without consent.

One of the biggest tactics for committing all types of fraud is through using information shared online. Perpetrators can use information obtained through digital channels or tap into existing data from companies with which someone already holds legitimate online accounts.

“It’s important to be aware that information shared online is not as private as people might think,” says Darr. “It actually might put individuals at greater risk, as predators can illegally obtain data access to commit fraud.”

Having conversations about how to safely use new technologies or platforms—and what information to safeguard—is a great start to saving someone you love from elder fraud.

Convincing an elderly parent of the need for oversight

Family members with good intentions should talk to elderly family members or friends about the benefits of having at least one more set of eyes to help them keep tabs on their finances. It can be especially important if cognitive abilities become an issue for the person being approached.

Since there can be unfortunate situations where family members or close friends are the ones taking advantage of an elderly person, Darr recommends multiple people monitor financial activities for an elderly person who may be susceptible to such exploitation.

“It’s important to acknowledge that you want the elderly individual to continue to live freely and conduct their own affairs, and that you think it would be helpful if you and/or another trusted person stepped alongside to provide support,” says Darr. “Be open about sophisticated scammers that are looking to take advantage of those who have been diligent in building wealth and saving it. Express your desire to help protect the wealth they’ve worked hard to accumulate.”

Help assure them that your interest is that all involved parties agree on a strategy to manage money going forward, and that you plan to continue to work toward their benefit.

7 Steps to help older family members safeguard their financial lives

Now that you know what to watch for and how to discuss elder fraud with a loved one, below are steps to hlep prevent elderly fraud:

1. Name a financial power of attorney or successor trustee to make financial decisions if the time comes when they’re unable to do so.
2. Authorize a trusted contact who can be reached by banks, investment firms and other financial institutions if suspicious activity is detected. The designated individual can be given “view-only” access to the account to provide additional oversight.
3. Remind them to never share passwords to online accounts or other sensitive information such as Social Security number over the phone or online.
4. Advise older family members to consult with a trusted attorney, advisor or other family member before signing documents.
5. Build a relationship with a banker who can recognize unusual activity that may occur in accounts held by elderly customers.
6. Remind elderly family members that it’s okay to say “no” to a financial product or a new investment relationship – there is rarely any need to rush such decisions.
7. Contact the National Elder Fraud Hotline to report suspected elder fraud.

Professional guidance can be critical

While it’s not possible to eliminate the risk of fraud, being aware of how elder fraud happens and ways to prevent it is a solid start. It can also be beneficial to develop a relationship with a banker and financial advisor to help monitor financial activity; this provides another level of asset protection for an elderly person who may be susceptible to fraudulent activities.

Learn how we can help you or an older loved one put a plan in place to help mitigate the risk of fraud.