As Baby Boomers continue to enter their senior years in large numbers, law enforcement officials and CPAs expect to see more instances of elder financial abuse.
The elderly are particularly vulnerable to financial scams, said Corey Bloom, CPA (Canada), CFF, Eastern Canada leader of forensic and investigative services for the accounting and consulting firm MNP in Montreal.
Bloom and co-presenter Howard Silverstone, CPA/CFF, director of Forensic Resolutions Inc. of Westmont, N.J., discussed elder financial abuse in a session Wednesday at the AICPA’s Forensic and Valuation Services conference in Las Vegas.
“We want to give a bigger picture of how prevalent these crimes are,” Bloom said prior to the conference.
Scams targeting the elderly come in several forms, according to Bloom and Silverstone. Among the most common are:
- Grandparent schemes: Someone posing as a grandchild calls and asks for money to get out of a jam. “Grandparents are getting onto Facebook and no one is helping them with their privacy settings so their life is an open book,” said Silverstone. Social media accounts often provide enough personal details that scammers can use them to sound credible to the older person.
- Sweepstakes and lottery: This is a fairly common scam, but people still fall for it. A call, letter, or email informs the person that he or she has won a sweepstakes or lottery, but to claim the winnings, the person must first pay taxes or fees or other expenses.
- Phishing: A senior citizen receives an email saying that he or she has a refund coming from the IRS, but to process the refund, he or she must provide banking details. These emails look convincing. “In the past, they were full of mistakes and misspellings, but now they look better. They may even have a logo,” Bloom said. Remind clients that “the IRS will never ask you for this information by email,” she added.
- Prescription drugs: This telemarketing scam targets seniors who may be concerned about the high cost of prescription drugs, particularly toward the end of the year as many fall into the Medicare “doughnut hole,” where all drugs must be paid for out of pocket. These scams promise to procure cheaper drugs, often saying they’re imported from Canada. “Then, not only are people losing money, but there’s a health risk too if they’re not taking the right drug,” Silverstone said.
Bloom and Silverstone cite several reasons why older people are particularly vulnerable to falling victim to financial scams.
First, they may not be financially savvy or technologically astute. For every grandmother that texts and tweets like a teenager, there are several others who are not sure how new technology and social media work, said Silverstone. Next, the scams have become more sophisticated and involve better use of technology. Also, this generation of retirees has built up significant sums of retirement funds due to the prevalence of defined contribution accounts that shifted the responsibility for retirement to the individual. These are tempting pools of assets for fraudsters.
The conditions create a perfect storm for fraud. “You have people with more disposable income who are living longer and they’re not able to keep up with technology,” Silverstone said.
What’s more, the fraud might go undetected for a long time, complicating efforts to apprehend the fraudsters.
“When people do fall victim to scams, they might be embarrassed by it and they don’t come forward,” Bloom explained. “If they did, more people would know about it and we could possibly prevent it from happening to someone else.”
Spotting elderly financial abuse requires the same skills that CPAs apply to ferreting out fraud with their corporate clients. Bloom and Silverstone laid out ways that CPAs can help their clients and the parents of their clients avoid falling victim to financial fraud.
- Get the word out: Fraudsters rely on secrecy to continue perpetuating their crimes, said Silverstone. Publicizing common scams can put them on the radar of older people and their families. “One of the best things we can do is become aware of these scams,” Bloom said.
- Guard personal information: Explain to clients and their parents that they should never give out personal financial information such as their Social Security numbers or banking details to anyone who calls or emails them.
- Watch for red flags: Are bills piling up unpaid? Is the person wearing ratty clothing and driving a beaten-up car? “These are things that would point to the fact that they’ve run out of money,” said Silverstone.
Another warning sign is a change in power-of-attorney designation. Caregivers and others known to an older person might manipulate him or her to give them power of attorney and, thus, free rein over the older person’s finances. “These crimes are often carried out by caregivers, and there’s rarely due diligence on the caregivers,” Silverstone said.
Though it’s unlikely that elder financial abuse will abate anytime soon, you can help your clients and their parents by educating them about the warning signs.
Ilana Polyak is a Massachusetts-based freelance writer. To comment on this article, email senior editor Jeff Drew.