Financial fraud against the elderly is a booming and unsavory industry in the U.S.
Every year, scammers siphon billions of dollars out of retirement accounts and other assets of older Americans.
In part one of this series, I covered ways for people in their 50s and 60s to safeguard their own accounts and assets. In this installment, I offer strategies for helping an elderly family member stay safe.
—Ask your loved one if they have a financial support system in place. A power of attorney is important, among essential documents, but even more important is helping your family members get to a point where they can bring in someone they trust to be named on accounts, as a manager or extra pair of eyes. If you’re the adult kid and can’t see your way clear to having that conversation because of anticipated blowback, consider the potential cost of not having the conversation(s) and of your loved one being taken advantage of. Start the conversation and be patient. Be respectful. And be clear: You are taking steps in your own life to make sure you are protected and now only want to help them with the same.
—Encourage them to add an extra pair of eyes on their financial accounts. Banks and brokerages will allow for statements to be sent to another person. That can be you or a trusted adviser. The idea here is to have a chance to catch any suspicious transactions early on.
—Explain the call-back phone scam protection move. One of the most common ways criminals rip off the elderly is to call them and pretend they are from the IRS or Social Security office. The fraudsters even manage to rig caller IDs so the readout says IRS, Social Security or the name of a bank or credit card issuer they have an account with.
Have a talk about how they should never give any financial information — no account numbers, no Social Security numbers, no credit card info — to anyone who calls them.
They should instead say they will call back the office themselves and hang up. Then, they should contact you, or whomever their trusted financial friend is, and ask for help. A quick online search will give you the official contact number for any government office. If the call was about a credit card, call the customer care number on the back of their card. Same goes with bank and investment accounts: Contact customer service directly.
It’s also worth sharing that the IRS never contacts people by phone. Never. All correspondence is by mail. Any call that purports to be someone from the IRS is fraud.
—Automate all their incoming payments. Social Security is direct deposit, so that’s taken care of, but also confirm that any other income payments — pensions or annual retirement plan required minimum distributions — are also coming to them as direct deposits and not paper checks.
—Encourage giving up snail-mail statements. Having investment statements around the house raises the risk of anyone in their home — a caregiver, a housekeeper, etc. — having access to key information. If your loved one enjoys being online, you might find this is an easy conversation. Or, if you visit regularly, offer to help them set up e-statements with the understanding you will help them log on and review their information.
—Try to impress on them that late-night TV and call-in radio infomercials are no place to get sound financial advice. Our emotional vulnerability can be heightened as we age, to say nothing of how natural cognitive decline (not just dementia or Alzheimer’s) can make it harder to think clearly. Fear-mongering (The world is coming to an end, buy precious metals!) is a favorite way fraudsters connect with the elderly.
The come-ons don’t even need to be criminal. Example: Late-night ads for reverse equity mortgages that suggest them as ways to pay off credit card bills or travel more, or just have more money to spend today. There can indeed be instances where a reverse mortgage may make terrific sense, but there are costs and risks that those ads don’t mention, as they only want to play to the emotional appeal of having more money. The federal government has had to periodically revise its reverse mortgage program — FHA-insured reverse mortgages dominate the market — explicitly to better protect unwary consumers.
This advice isn’t about suggesting they tune out. At best, what you can hope for is that you have an open communication line with a parent or anyone elderly you are looking after. Create a relationship where they are comfortable talking to you about something they saw. That’s when you can jump in and provide some supportive guidance.
———
For more personal finance news, go to Rate.com/research/news
———
©2020 Rate.com News
Distributed by Tribune Content Agency, LLC.