How to Protect Your Aging Parents From Financial Scams
Worrying about your parents getting taken in by financial scams may not be the first concern that comes to mind as they approach their senior years -- but keeping an eye out for such scams should definitely be high on that list. According to new research by True Link Financial, seniors lose nearly $37 billion a year due to financial abuse. The three major classes of that abuse are:
- $17 billion lost to exploitation. Technically legal but deceptive financial practices based on confusing language and unwarranted social pressures targeted at seniors that bilk them out of their money via incredibly poor deals.
- $13 billion lost to fraud. Explicitly illegal scams like the "grandparent scam," where someone calls pretending to be the grandchild asking for money to get out of a jam.
- $7 billion lost to caregiver abuse. Money lost to people whom seniors trust to take care of them and their needs.
Why is such financial abuse more prevalent among seniors? For one thing, as we age, our senses start to dull. Hearing is particularly affected, with about half of those older than 75 finding it difficult to hear. That's one reason the "grandparent scam" is so successful. As your sense of hearing diminishes, it gets hard to distinguish voices on the phone, which makes it easier for fraudsters with just a little bit of research to impersonate grandkids and scam grandparents out of money.
Another reason seniors are so susceptible to financial scams is that our ability to pay attention and concentrate also tends to wane as we age. That makes it easier for scammers to exploit seniors with deceptive practices based on confusing language. It gets harder as we age to hold all the pieces of a presentation together, so if it sounds good and is delivered nicely, it's harder to understand the parts that may make it a bad deal. That makes seniors more susceptible to exploitation through awful, though technically legal, deals.
How Can You Tell If It's Happening to Your Parents?
Unfortunately, people don't often catch the signs that their parents are susceptible to scams until someone has already taken advantage of them. While these scams might not always be preventable, here are some things you can look out for:
- Past-due bill notices. If your parents start missing payments, it suggests that either their memory might be slipping or their finances are getting stretched too thin. Either way, it's a sign you should consider stepping up your vigilance of their financial situation, as they could be more susceptible to getting taken advantage of due to financial worry or memory loss.
- Sudden changes in purchase behavior. Even if they're still covering their costs, if they start buying things that are out of character for them, you might want to step in and help get things under control. Strange purchase behavior is a sign that your parents are becoming more susceptible to sales pitches -- and at greater risk of getting taken advantage of.
- Calls and junk mail offering sweepstakes and prizes (with some investment required). If your parents get lots of junk mail and phone calls offering them easy money or "winnings" if they send in fees or prepay taxes, then it's very likely they've been scammed before. Scam victims often wind up on a "suckers list," and their names and contact information get out to many such scammers, each looking for a cut of their money.
- A sudden interest in reverse mortgages or other ways to raise cash. If your parents start considering a reverse mortgage, it's likely a sign that either their finances have become very tight or they're already under the influence of a scammer looking to make a huge score. Either way, you'll want to step in and understand the underlying issue to help them get back on track.
If your parents are already showing signs of dementia or other serious mental decline, you may need to petition a court to name you their conservator. That will get you the authority to take over their finances for them. Still, that can be an expensive and time-consuming process, so it's better to take steps in advance of that need.
To avoid those headaches, talk to your parents while they're still mentally sound and ask them to set you up as a durable power of attorney. With this legal document, you get the authority to manage their finances before their mental state declines, and because it's durable, the authority stays with you even as they decline.
You can also offer to help your parents manage their finances in today's digital age with online access to their bank accounts. If they're willing to let you see their accounts, you can monitor their activity and check for strange purchases, sudden declines in balances, or other indications of a potential scam.
Another great idea is to help them sign up for the National Do Not Call Registry to opt out of telemarketer calls. Not only does that cut down on legitimate telemarketer calls, but it makes it easy to tell which calls are scams. Honest telemarketers will respect the list (with the exception of calls from nonprofits and noncommercial entities, which are exempted), but criminals won't -- which makes it easier to identify those calls as scams.
It Can Be Tough to Step In -- but It's Worth It
If your parents are at risk of or are already actively being scammed, it can be embarrassing as well as expensive for them. And stepping in to help them may be one of the toughest things you'll ever have to do as their child. However, such scams can also put your entire family at financial risk, depending on what personally identifying information your parents might reveal to the scammers.
As tough as it might be, know that everything you do to help your parents avoid such situations assures their senior years are as comfortable as they can be. Helping them avoid or recover from scams may very well be one of the most important gifts you can give them.
Chuck Saletta is a Motley Fool contributing writer. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.