Participant/Resource Guide
Welcome to Money Smart for Older Adults!
With over 50 million Americans aged 62 and older1, Older Adults are prime targets for financial exploitation both by persons they know and trust and by strangers. Financial exploitation has been called “the crime of the 21st century” with one study suggesting that older Americans lost at least $2.9 billion to financial exploitation by a broad spectrum of perpetrators in 2010. 2
A key factor in some cases of elder financial exploitation is mild cognitive impairment which can diminish an older adult’s ability to make sound financial decisions.
This epidemic is under the radar. The cases tend to be very complex and can be difficult to investigate and prosecute. Elders who lose their life savings usually have little or no opportunity to regain what they have lost. Elder financial abuse can result in the loss of the ability to live independently; decline in health; broken trust, and fractured families.
Awareness and prevention is the first step. Planning ahead for financial wellbeing and the possibility of diminished financial capacity is critical. Reporting and early intervention that results in loss prevention is imperative.
Money Smart for Older Adults is designed to provide you with information and tips to help
prevent common frauds, scams and other types of elder financial exploitation in your
community. Please share this information as appropriate.
1 2010 Census: 57 million are 60 and over; 40 million aged 65 and over.
2 The MetLife Study of Elder Financial Abuse: Crimes of Occasion, Desperation, and Predation against America’s Elders (New York, NY: MetLife, June 2011).
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Acknowledgements
The FDIC and CFPB wish to thank the following agencies for contributing to the information covered in this course:
• US Department of Health and Human Services’ Administration for Community
Living/Administration on Aging – Senior Medicare Patrol
• Federal Trade Commission
• Securities and Exchange Commission
• Social Security Administration
• Financial Industry Regulatory Authority, Inc.
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Table of Contents
Glossary ....................................................................................................................................... 45
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Participant/Resource Guide
Checking In
Welcome
Welcome to Money Smart for Older Adults! By taking this course, you’ll learn important points to consider in planning for a more secure financial future, including how to guard against identity theft and other forms of financial exploitation, how to prepare financially for unexpected life events, and what to have ready in case disaster strikes.
Objectives
After completing this module, you will be better able to:
• Recognize and reduce the risk of elder financial exploitation
• Guard against identity theft
• Plan for possible loss of your ability to manage your finances
• Prepare financially for disasters
• Find other helpful resources for managing your money and reporting financial
exploitation
Participant Materials
The Participant/Resource Guide contains:
• Information and activities to help you learn the material
• Tools and instructions to complete the activities
• A glossary of the terms used in this module
• Resources for information on managing your money and reporting financial exploitation
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Getting Started
Let’s start by establishing an understanding of elder financial exploitation. Financial
exploitation is a form of elder abuse. Elder abuse can take many forms, alone or in combination, including physical, psychological, emotional, or sexual abuse, neglect, abandonment, and self-neglect.
What is elder financial exploitation?
As defined by the Older Americans Act:
Financial exploitation is the fraudulent or otherwise illegal, unauthorized, or improper actions by a caregiver, fiduciary, or other individual in which the resources of an older person are used by another for personal profit or gain; or actions that result in depriving an older person of the benefits, resources, belongings, or assets to which they are entitled.
Elder financial exploitation is the theft of money, property or belongings.
Who is at risk for elder financial exploitation?
Anyone can be the victim of financial exploitation. Financial exploitation crosses all social, educational, and economic boundaries.
Why are older adults at risk of financial exploitation?
The following circumstances or conditions, especially in combination, can make an older adult more vulnerable to financial exploitation.
Older adults may:
• Have regular income and accumulated assets
• Be trusting and polite
• Be lonely and socially isolated
• Be vulnerable due to grief from the loss of a spouse, family member, friend, or pet
• Be reluctant to report exploitation by a family member, caregiver, or someone they
depend on
• Be dependent on support from a family member or caregiver to remain independent
• Be receiving care from a person with substance abuse, gambling or financial problems, or mental health issues
• Fear retaliation by the exploiter
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Participant/Resource Guide
• Be unfamiliar with managing financial matters
• Be unprepared for retirement and the potential loss of financial decision-making capacity
• Have cognitive impairments that affect financial decision-making and judgment
• Be dependent on a family member, caregiver or another person who may pressure them
for money or control of their finances.
What are some examples of financial exploitation?
• Exploitation by an agent under Power of Attorney or person in a fiduciary relationship
(see glossary for definition of fiduciary)
• Theft of money or property, often by a caregiver or in-home helper
• Investment fraud and scams, including deceptive “free-lunch seminars” selling
unnecessary or fraudulent financial services or products
• Lottery and sweepstakes scams
• Scams by telemarketers, mail offers or door-to-door salespersons
• Computer and Internet scams
• Identity theft
• Reverse mortgage fraud
• Contractor fraud and home improvement scams
Who are the abusers?
Perpetrators of financial exploitation can be:
• Family members and caregivers
• Friends, neighbors or acquaintances
• Persons with Power of Attorney or the legal authority to access or manage your money
• Telephone and mail scammers
• Financial advisers
• Internet scammers
• Home repair contractors
• Medicare scam operators
• Other persons known or unknown to the older adult
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Participant/Resource Guide
Why do you think older adults don’t report financial exploitation?
• Shame and embarrassment ̶ Many people are ashamed to admit that they have been financially exploited.
• Loyalty ̶ Reluctance to report a family member, caregiver or other person who may treat them well in other ways.
• Fear of retaliation, not being believed or losing their independence by being declared incompetent and moved into a “nursing home.”
• Dependence on the abuser for care or assistance.
• Denial ̶ Some victims are unwilling or unable to acknowledge that financial exploitation is happening to them.
• Self-blame – Abuse can erode an older person’s self-esteem, and some victims may believe they deserve or have caused the abuse.
• Lack of awareness – Some victims are unaware that they are being exploited, or don’t know to whom they can report financial exploitation.
What should you do if you or someone you know becomes a victim of financial
exploitation or another form of elder abuse?
In most cases, you would contact Adult Protective Services, generally a part of your county or state department of social services. You can find contact information at www.eldercare.gov, a
public service provided by the U.S. Administration on Aging, or by calling 1-800-677-1116.
For cases of identity theft, contact your local police and the Federal Trade Commission (FTC).
If the loss involves funds held in a financial institution, such as a bank or credit union, report the problem to the institution immediately.
If you have concerns with an FDIC-supervised financial institution, go to
www2.fdic.gov/starsmail/index.asp
You will find more information at the end of this guide. Of course, if the person is in danger or you believe a crime has been committed, call 911 for immediate help.
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Participant/Resource Guide
Common Types of Older Adult Financial Exploitation
This module doesn’t cover all types of elder financial exploitation in depth however it does discuss the key points and give some general guidelines you can use to help you identify fraud, scams and other types of financial exploitation and tips to help you prevent it from happening.
This guide also provides a list of resources that you can consult as the need arises.
Power of Attorney (POA) or Fiduciary Abuse
A person who is named to manage your money or property is a fiduciary. He or she has a duty to manage your money and property for your benefit however he or she may abuse that power.
The person you appoint as your fiduciary should be trustworthy and honest. Your fiduciary can removed if they do not fulfill their obligations or duties. Fiduciaries can be sued and may be ordered to repay money. If elder financial exploitation is reported to the police or Adult Protective Service, the fiduciary could be investigated. If the fiduciary is convicted of stealing your assets, he or she can go to jail.
One way some older adults prepare for the possibility of diminished financial decision-making capacity is by making a power of attorney for finances and designating someone they trust to handle their financial decisions if they no longer can.
Creating a POA is a private way to appoint a substitute decision maker and is relatively
inexpensive. If you don’t appoint a POA before your decision-making ability declines, a family member or friend might have to go to court to have a guardian appointed – and that process can be lengthy, expensive, and very public.
A POA does involve some risk. It gives someone else – your agent – a great deal of authority over your finances without regular oversight. POA abuse can take many forms:
• Your agent might pressure you for authority that you do not want to grant.
• Your agent may spend your money on him or herself rather than for your benefit.
• Your agent might do things you didn’t authorize him or her to do – for example, make
gifts or change beneficiaries on insurance policies or retirement plans.
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Different types of POAs
Some states allow for different types of POAs. Generally, a Power of Attorney goes into effect as soon as it is signed unless the document specifies a different arrangement. That means that even if you are capable of making decisions, your representative can immediately act on your behalf.
A “Durable” Power of Attorney remains effective even if the maker loses the capacity to make financial decisions.
There are different types of powers of attorney and ways to customize this document to fit your needs and preferences. Talk to an attorney for help in making a POA that is appropriate for your circumstances.
What are some ways to minimize the risk of POA abuse?
• Trust, but verify. Only appoint someone you really trust and make sure they know your
wishes and preferences. You can require in your POA that your agent regularly report to
another person on the financial transactions he or she makes on your behalf.
• Avoid appointing a person who has substance abuse, gambling problems, or who
mismanages money.
• Tell friends, family members, and financial advisers about your POA so they can look out for you.
• Ask your bank about their POA procedures. The bank may have its own form you are
required to complete (although a POA that is valid under your state’s law should be
accepted by financial service providers).
• Remember that POA designations are not written in stone – you can change them. If you
decide that your agent isn’t the best person to handle your finances, you can revoke
(cancel) your POA. Notify your financial institution if you do this.
• Avoid appointing hired caregivers or other paid helpers as your agent under Power of
Attorney.
• Beware of someone who wants to help you out by handling your finances and be your
new “best friend.” If an offer of help seems too good to be true, it probably is.
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Plan ahead! A durable power of attorney is a very important tool in planning for financial incapacity due to Alzheimer’s disease, another form of dementia, or other health problems. It is advisable to consult with an attorney when preparing a power of attorney, trust or any legal document giving someone else authority over your finances.
If you or a loved one is a victim of financial exploitation by a fiduciary, take action immediately and make a report to Adult Protective Services or your local law enforcement agency.
Abuse by Caregivers and In-Home Helpers
Family members and caregivers are common perpetrators of elder financial exploitation.
You can take steps to guard against financial exploitation if you or your loved one needs
someone to help at home.
• Secure your valuables such as jewelry and other property.
• Secure your private financial documents including checks, financial statements and credit cards. Consider a locked file cabinet.
• Require receipts for purchases made by helpers.
• Monitor bank accounts and telephone bills – Ask for help from a third party, if needed, and consider an automatic bill pay system. Consider setting up transaction alerts that are monitored by a family member or other third party.
• Do not let hired caregivers or helpers open your mail, pay your bills, or manage your
finances.
• Never promise money or assets to someone when you die in exchange for care provided
now.
• Never lend employe