By Ryan Leblond
Manager, Fraud Prevention & Investigations, ESL Federal Credit Union
In 2017, 63,500 reports of suspected cases of financial exploitation of older adults were filed with the U.S. Treasury Department, according to a recent report released by the Consumer Financial Protection Bureau. This is a 19 percent increase compared to 2016’s numbers, and 2016’s numbers were more than double 2015’s.
If there was a monetary loss experienced, it averaged $34,200 in 2017, and in 7 percent of the cases, the losses exceeded $100,000. Experiencing such a significant loss can be detrimental to the individual and their family. The effects of these scams often lead to a loss of security, inability to replace lost assets through employment, loss of primary residence, becoming reliant on government assistance, inability to hire an attorney, and the cycle goes on.
With such a rampant increase over the past few years (2018’s totals have not been released yet) and an immense impact on those affected, what can be done to prevent this from happening to you or your loved ones?
Common Strategies by Scammers
The first step is understanding how assets are commonly taken and the types of financial abuse that occur. The six strategies scammers most often use to get funds include:
- Deception
- False pretenses
- Coercion
- Harassment
- Duress
- Threats
Types of Financial Abuse
The most common types of financial abuse include:
- Real estate: Entrusting an agency, or property manager to manage and maintain properties that can result in skimming funds.
- Contractor: Uninvited contractors offering to repair a roof or driveway quick and cheap.
- Mortgage: Convincing the elder to take out a home loan with high rates of interest, penalties, and excessive payments. This may also include instances of reverse mortgage fraud.
- Sweetheart scams: Individuals forming relationships with others in order to receive funds via either borrowing, or asking for a loan and then never paying back.
- Insurance: Equity or liquid assets used to buy expensive insurance products that don’t mature until the individual is well into their 90s or 100s.
- Investment: Pyramid schemes and/or unrealistic returns promises.
- Electronic: Emails seeking login information, passwords, or banking information
- Impersonating a family member: Fraudster poses as a family member (e.g. grandchild) and asks for money to be sent to them because they got themselves into some kind of trouble.
When it comes protecting our loved ones, family members are the #1 resource they have to look out for them. Yes, sometimes this exploitation occurs from family members, but according to the New York State Cost of Financial Exploitation Study, family members are most likely to encourage contacting local authorities (23 percent), with banks and other fiduciaries being the second most common source of referrals (21 percent).
Signs of Financial Exploitation
If you are caring for an older loved one, there are signs to watch out for that should set off alarms about elder financial exploitation occurring and needing to report it:
- Unexplained disappearance of cash or valuable objects
- Termination of vital utilities
- Unpaid bills and liabilities despite adequate income
- Does not understand current finances
- Giving away money
- Appearance of property liens or foreclosures notices
- Checks written to “cash”
Fraud Prevention
To keep abreast of the latest strategies being used by scammers, ESL Federal Credit Union is a member of the Monroe County Enhanced Multidisciplinary Team (E-MDT). This is a cross-functional team tasked to investigate, intervene, and prevent financial exploitation of older adults. It consists of government offices such as Adult Protective Services, Human Services, District Attorney, and Office for the Aging, local law firms, accounting firms, and the Monroe County Sherriff’s and City of Rochester Police Departments.
To prevent fraud, the best defense is awareness and knowing the signs to watch out for. If you ever suspect financial exploitation has taken place, the best course of action is to contact your local authorities and financial institution.
