Older people have long been a target of con artists. Yet a lesser known but perhaps far more prevalent problem is beginning to gain attention - fleecing of the elderly by family members or caregivers.
Seniors being defrauded by people they trust "is a hidden problem that is growing rapidly as the nation's population ages," said Jan Walsh, a Certified Financial Planner who specializes in retirement planning at the National Endowment for Financial Education in Denver.
The National Center for Elder Abuse in Washington, D.C., reports that financial exploitation accounts for about 12 percent of all reported elder abuse cases. And that's just the tip of the iceberg, experts say, since abuse cases often go unreported because the victims are ashamed or embarrassed. Sadly, the abuser is often a close relative.
When victims don't report a crime, it can be hard to detect. In many cases of fraud against the elderly, banks are in a unique position to spot the problem. For that reason, in some states, banks are enlisting in the fight to protect older customers against fraud or theft.
In a model project in Massachusetts, for example, the state office of elder affairs, together with the state attorney general and office of consumer affairs, is teaching bank employees how to recognize and report financial exploitation of elderly customers.
The state secretary of elder affairs, Franklin P. Ollivierre, said the Massachusetts plan was already widely used throughout the state and had been replicated on a smaller scale in New York, Kentucky, California, and Washington. He hopes the Bank Reporting Project eventually will be used nationwide.
In the program, bank employees are taught to look out for banking activity that is inconsistent with a customer's usual habits. For example, warning signals should go up when there are large withdrawals from a previously inactive account or withdrawals or transfers from a recently opened joint account.
Suspicious signatures on checks or documents such as credit card applications should also serve as a red flag to bank employees.
When a senior's account show frequent withdrawals from automatic teller machines (ATMs), especially if the person is physically frail and has not previously used an ATM, that's another sign that someone should investigate.
The Bank Reporting Project cautions bank employees to be on the lookout for elderly customers accompanied by another person who seems to coerce them into making withdrawals or who does not allow them to speak for themselves.
Elderly customers who appear nervous, give implausible explanations of why they need the money or seem confused about missing funds may be victims of fraud, theft or extortion.
Financial crimes against the elderly can take many forms.
Title to a home or other assets may be transferred to the abuser and then sold; funds from checking, savings or investment accounts may be withdrawn without authorization; wills may be changed as a result of intimidation. Loans may be taken out and the funds are given to the abuser, or benefit checks from pensions or Social Security may be signed over to the abuser who cashes them.
"Often the abuser is someone who becomes the agent of an elderly person through a power of attorney and then transfers assets for his or her personal use," said planner Jan Walsh, who serves as an adviser to the National Council on Aging.
To reduce the risk of financial abuse, Walsh suggests these precautions:
Limit powers of attorney. A power of attorney - a legal document authorizing a person to perform certain legal or financial actions on someone else's behalf - is often used to steal a person's financial assets. Before making out a power of attorney, make sure the agent is someone who can be trusted. Limit the agent's authority and consider requiring an annual report of income and expenses to an outside party such as a lawyer or financial planner.