Globally, cybercrime has grown (based on conservative estimates) to an over $1.5 trillion annual business. ¹To put that number into some sort of context, if cybercrime were a nation, it would be the world’s 13th largest economy — right between Korea and Australia.
Not surprisingly, the most susceptible victims of financial fraud tend to be seniors. According to a 2019 study conducted by the Consumer Fraud Protection Bureau, elder financial fraud losses in the U.S. may be as high as $36.5 billion a year, with those age 70 – 79 being the hardest hit. However, while much of this growing epidemic can be attributed to anonymous scammers and hackers, a greater threat is often posed by those much closer to home.
Although the internet is certainly a prime hunting ground for financial scam artists, according to the National Adult Protective Services Association (NAPSA), close to 90% of the financial abuse that seniors in the U.S. experience is perpetrated either by family members or other close, trusted confidantes. And this is especially true for those who are suffering from declining physical and/or mental health.
Only 1 out of every 44 cases of elder financial abuse is ever reported to the authorities
Seniors and their adult children should always be on the lookout for the warning signs of financial abuse. These can range from unexplained account withdrawals (either a single large transaction or regular periodic smaller withdrawals) and insufficient funds notifications to sudden activity on a previously unused debit card or the recent appearance of a new credit card account. In cases of extreme abuse there could be forged signatures, new “joint” accounts, and even a new will or powers of attorney that suddenly appear — especially in cases where the senior is suffering from cognitive decline.
Take steps to reduce the chance of fraud In addition to keeping a close eye out for any unusual activity or unauthorized withdrawals from bank and investment accounts, seniors and their adult children should take the following precautions:
- Pay attention to any new friends/acquaintances who might suddenly come into the picture, and be vigilant in keeping any valuable possessions out of general sight.
- Install and regularly update security software on any electronic devices, and only download software from trusted websites.
- Don’t assume all emails are necessarily coming from the indicated sender. Before clicking any links or opening email attachments, double check the actual email address of the sender, and be wary of poor grammar or misspelled words. When in doubt and when the email is unsolicited, call the sender first and verify.
- Don’t provide any personal information to an unknown caller over the telephone. Often scammers will call and claim your account has been compromised, your computer software needs an upgrade, you have been reported to the IRS, a relative needs funds, etc., and ask you to provide account numbers or your social security number over the telephone. If you don’t know the caller personally, hang up and call your provider directly and ask if there is any problem.
- Use “strong” usernames and passwords for online activities, and never share them. Consider (for a small annual fee) investing in one of the leading password management solutions to take the hassle out of remembering passwords.
- Review your credit report for any suspicious activity at least once every quarter to catch any potential fraud early — before it has the opportunity to inflict serious financial damage.
The best prevention of all, however, is to create and maintain a strong support system consisting of one or two close relatives along with a trusted financial advisor who’s committed to always acting in your best interest as a fiduciary.
Think you or a loved one may be a victim?
If you’re concerned that one of your financial accounts (or private information such as your social security number) may have been compromised, time is of the essence. Don’t delay in implementing the following steps:
- Contact one of the major credit reporting agencies (they will notify the other agencies) and ask them to insert a “90-day fraud alert” on your report. This requires them to verify with you by phone any credit requests in your name during that time.
Equifax Fraud Department; 1-800-525-6285; www.equifax.com
Experian Fraud Department; 1-888-397-3742; www.experian.com
TransUnion Fraud Department; 1-800-680-7289; www.transunion.com
- Call or email your BLBB advisor (and other financial institutions) and request that additional security measures be added to all of your accounts. There is an option on the BLBB portal to enact dual-factor authentication. This is another layer of security used by many financial institutions. Basically, a separate and unique code is sent to your registered email or cell phone each time you want to sign into the portal.
- Each subsequent month, request a free credit report which your fraud alert notification entitles you to. Carefully review it for suspicious activity. Work with your credit card companies to reverse any fraudulent charges/activities and file a police report if major fraud has taken place.
Most importantly, if you’re a senior who feels as though you might be the victim of financial abuse — whether by a friend, a family member, or a professional caregiver — don’t be afraid to speak up and report it. In addition to the credit agencies, you should also report suspected abuse to your local Adult Protective Services department and your state attorney general’s office. It’s a far more common occurrence than you might think, and by no means something you should be embarrassed by.
Similarly, if you’re an adult child who is caring for an elderly parent or relative, you shouldn’t feel awkward about asking financial questions or offering to help out in managing their finances. The reason so much financial abuse of elders goes unreported is because those close to them don’t want to act on their suspicions without irrefutable evidence. Communication is key: the more this occurs, the far less likely it becomes that significant financial abuse will have an opportunity to take root.
¹Bromium & McGuire, “The Web of Profit” Report, April 2018 The ideas provided herein are for educational purposes only.
BLB&B Advisors recommends you consult an attorney, accountant, tax professional, or other appropriate industry professional prior to implementing any of the ideas contained in this material.