According to Consumer Reports, older Americans lose up to $30 billion a year to elder financial abuse with the misappropriation of money by con artists and thieves who are strangers to them, or by trusted friends or family members. These crimes often go unreported because the victims are ashamed to speak up or are unable to do so because of cognitive deficits.

Earlier this year, the financial services industry took steps to encourage people who are in a position to spot elder financial abuse, including brokers, bankers, and financial advisors, to act on and report what they see.

Effective on February 5, 2018, the Securities Exchange Commission approved the adoption of new FINRA (Financial Exploitation of Specified Adults) Rules to permit financial members to place temporary holds on disbursements of funds or securities from the accounts of specific customers where there is a reasonable belief of financial exploitation of these customers.

A new FINRA rule also requires brokers to ask customers, regardless of age, to provide the name of a trusted contact, such as a family member or friend. The broker could reach out to that person if there is a reason to believe the client is being exploited financially.

Below are some helpful tips to help prevent your aging relative from falling victim to financial abuse:

  1. Recognize the most common targets: Elderly women are targeted more often than men, and the risk of being targeted increases with age. Individuals with disabilities are also at greater risk.
  2. Recognize the most common perpetrators: Those whom the elderly trust the most are often the culprits. Family members who abuse alcohol or drugs, have a mental illness, or feel burdened by their elderly relative tend to abuse at higher rates than those who do not.
  3. Warning signs: Consumer Reports notes the following as warning signs of elder financial abuse: bank statements no longer coming to the home; changes in Power of Attorney or Will documents; changes in attorneys or banks; changes in beneficiaries; large or unexplained bank transfers or withdrawals; missing property; new authorized signers on her accounts; and/or unfamiliar signatures on important documents.
  4. Communicate with your family: Consumer Reports recommends having a family meeting to discuss your elderly relative’s long-term care. Oftentimes, family members will look after an elderly relative and commonly those family members take money as ‘payment’ for their services. Be sure to discuss how caregivers will be compensated, so things are documented and caregivers do not overreach with self-compensation. Work with an attorney to draft a Personal Care Agreement to avoid confusion.
  5. Safeguard valuables: Be sure to list and document your elderly relative’s valuables (along with photographs of these items).

If you have any questions about the above material or wish to speak to an attorney, please contact Pfalzgraf, Beinhauer & Menzies, LLP at (716) 204-1055.

Pfalzgraf, Beinhauer & Menzies, LLP is located at 455 Cayuga Road, Suite 600, Buffalo, New York 14225.