By now most of us have heard about Bernie Madoff and the billions of dollars he swindled from people all over the country. But we may not be aware that this type of fraud, on a much smaller scale, is happening around us all the time. And the people who are most often the victims of these crimes are the elderly.
About 7.3 million older Americans, or one out of every five people over 65 have already been swindled according to an Investor Protection Trust Survey released in June. Recent research from behavior economist David Laibson shows that people tend to make poorer financial decisions as they get older.
But some states have taken steps to help seniors avoid these scams. 23 states including California, Connecticut and Pennsylvania have enlisted Doctors and other medical professionals to be the watchdogs in the fight against elder fraud. Working through the Investment Protection Trust, state regulators are alerting medical professionals to specific red flags that help identify older Americans who may be more vulnerable to investment fraud abuse.
In routine visits with their patients these doctors are trained to ask such questions as “Who manages your money day to day” or “Do you regret any financial decisions you made recently?” Other questions include, “Is anyone pressuring you to give them money?” or ” Has anyone asked you to change your will or your power of attorney?”
More than half of the 67 doctors who were involved in a pilot study in Texas discovered that their patients had been approached with phony financial offers. Financial Planners should also become vigilant in their interactions with their older clients. When I was a practicing financial adviser I learned that one of my older retired doctor clients, in the early stages of Alzheimer’s disease, had been contacted by scam artists all over the country. They told him he had won a lottery and he needed to give them his bank account numbers so they could wire him the money. His wife had to finally get an unlisted phone humber so they would leave him alone.
Elderly parents often will not share these occurrences with their adult children because they don’t want to be viewed as incompetent or gullible. Therefore it is important that their children discuss these problems with the parents’ doctors and ask them to use the questions I have listed above.
I didn’t realize how much elderly people were prayed upon by scam artists until I met with one of my elderly clients recently. He is a retired physician who was a very bright, savvy individual but is now beginning to lose some of his mental sharpness. I met with him and his wife at their home. His wife informed me that he had been receiving 8-10 calls a day from various scammers claiming that he had just won the lottery. They told him that all he needed to do was pass on his bank account information to them and the award would be transferred to his account. More than once his wife encountered him reading his bank account information over the phone to a total stranger.
When I met with my mom at her retirement community (she’s 88) I just happened to take a peek at her mail. 4 out of 5 pieces she received were from organizations requesting money for one reason or another. One was an organization claiming that she was part of the group that had been short changed by social security. They were raising money to approach congress and change the laws to get her money back. It included a very official looking certificate sent by a very reputable sounding senior’s organization.
I recently read a very good book entitled “The Boomer Burden” by Julie Hall, The Estate Lady (www.theestatelady.com). Her job is to help adult children clean out the homes of their parents when they pass away or move into a retirement community. She cited many shocking incidents of children, friends and family members taking advantage of elderly people. She stated that 50 percent of elderly Americans are victims of financial exploitation. The average age of a victim of financial exploitation is 78!
Julie makes specific recommendations in her book to help adult children protect their parents from fraud.
1. Register your parents telephone numbers with the National do Not Call Registry (www.donotcall.gov/)
2. Discuss with them the list of common frauds ( described in her book) and ask them to contact you if they suspect that anyone is trying to defraud them.
3. Ask your parents to contact you if anyone offers to buy their possessions.
4. Make sure a family member personally visits your parents on a weekly basis.
5. Reduce your parents junk mail for a small fee by going to either of these websites; www.stopthejunkmail.com or www.greendimes.com
Julie points out that an excellent source of information on the many financial scams that your parents may face is the National Center on Elder Abuse. (www.elderabusecenter.org)
Probably the single best piece of advise I can provide is for you to stay in touch with your parents. Be available when they get calls from doubtful people and visits from scam artists who want to do home repairs or claim to be a bank examiner. Communicate with them and know what’s going on in their lives.