It's not always easy facing the reality of aging parents or relatives who may need assistance. One important way to show you care is to protect them from financial scammers that prey on older people. According to one estimate, seniors collectively lose up to $30 billion a year to elder financial abuse.1 While this abuse often comes from total strangers, it can also come from friends and family members.
How can you help combat this? Here are several ways to spot financial abuse and protect your parents or relatives and their financial futures.
7 Signs of Elder Financial Abuse
Warning signs may include: 2
- Unusual activity in their bank accounts, such as large or unexplained withdrawals
- Withdrawals from an inactive account
- A newly opened joint account
- New credit card balances
- Bank and credit card statements sent somewhere other than your parents’ home
- Suspicious signatures
- Liquidating a Certificate of Deposit or savings account without worrying about penalties
Ways to Protect Your Parents
Tip #1: Get Online Access or Receive Duplicate Statements
Almost all "money-related" accounts, whether related to savings and investments, or bills and credit, allow online access or duplicate monthly statements. Ask for permission to have access. Your parents or relatives may not want to share this information or admit that they need help. It may help to mention that this is about protecting them. Once a month, briefly review the accounts for any irregularities.
Tip #2: Automate Their Bills or Deposits
Help them pay their bills by automating the process with direct debits from their checking account. Automated bill payment can help keep things organized while lessening the chance that they will fall victim to a scam.
Similarly, you can automate deposits into their checking account, as they may have funds coming in from various sources, such as social security, pensions, annuities, etc.
Tip #3: Have Necessary Legal Documents Accessible
Are your parents’ or relatives' legal documents in an accessible location? Our Just in Case guide is a great way to get organized.
At a minimum you should have a copy of the following:
- Healthcare Powers of Attorney
- Financial Powers of Attorney
- HIPAA Release Forms
Tip #4: Consolidate Their Finances
Do they really need multiple checking or brokerage accounts? Consolidate your parents’ or relatives' finances when possible. Practice caution when consolidating and transferring funds to make sure that you don’t incur any penalties.
Tip #5: Encourage Credit Card Use Over Cash
If your parents or relatives send cash to a scammer, it's much more difficult to trace than if they paid with a credit card. If they were to make a purchase with a card, the credit card company may be able to:
- Protect against identity theft
- Allow past transactions to be reviewed
- Reimburse any money that was stolen
If you establish a system of checks and balances by utilizing the above tips, your parents or relatives will have an additional layer of protection against fraud. And you'll have additional peace of mind.
Take a proactive approach instead of waiting until they become victims of financial abuse.