“My father can no longer balance his checkbook.” “I think a caregiver may be stealing from my mother.” “My aunt insists she has won the Nigerian lottery; she just needs to send money for legal fees.”
These are the types of stories we hear when people find out about the work on elder financial health being done at the Federal Reserve Bank of Philadelphia. Maybe you, too, have a comparable tale of cognitive impairment, money, and abuse.
For all too many, the best plans go awry because of the growing problems of elder fraud and financial abuse.
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The parts of the brain that help regulate our behavior, devise plans, and make good decisions can become impaired over time. This deterioration weakens our ability to manage day-to-day finances and investment decisions, and makes us prime targets for financial abuse and too-good-to-be-true scams.
With 10,000 baby boomers retiring every day, there is an urgent need to reflect on the growing problems of elder financial fraud and abuse, and what can be done about them.
Guarding against elder financial fraud is not just one person’s, one family’s, or one industry’s responsibility. Instead, we as a society must take a holistic approach to protecting our most vulnerable citizens.
Research shows that banks with the proper policies, controls, and monitoring tools can help older clients before things get out of hand. The following are questions older adults can ask to determine how savvy their bank is in detecting and preventing elder fraud and financial abuse. If the answers to these questions are not satisfactory, consider switching to a new institution that can better meet your needs.
Has your bank trained staff on how to recognize the signs of elder financial exploitation?
Effective training programs identify red flags, provide examples of known scams, and explain what actions employees should take once suspicious activity is detected.
What technology is your bank using to detect unusual transactions?
While artificial intelligence (AI) and data analytics are useful tools to detect all types of fraud, AI has not been widely implemented. Your bank may already be using it, but if not, consider letting bank management know that this type of risk mitigation may be valuable for ensuring your continued banking relationship.
Does your bank offer tools to help clients detect suspicious account activity?
Banks can equip account holders and their financial caregivers with mobile messaging alerts and read-only account access. Having a second set of eyes reviewing account activity can be especially helpful when an account holder has displayed some form of cognitive impairment.
Does your bank keep emergency contact information on file for older clients?
Sometimes a bank is unable to dissuade an older client from being scammed. If the bank has a trusted contact on record for the elder’s account, it may be able to notify them about the situation. People with elevated risks for cognitive impairment may wish to preauthorize this type of outreach.
Does your bank have policies to detect and prevent power of attorney (POA) abuse?
All too often, trusted loved ones may be the ones exploiting their elders. Bank staff should be trained to recognize potential POA abuse.
Finally, does the bank report suspected financial abuse to the proper authorities?
Early intervention is critical for preventing elder fraud and exploitation. Ask your bank about its reporting policy and encourage it to be aggressive in alerting authorities to any suspicious activity so the activity may be investigated.
The stories we hear about seniors losing thousands of dollars or being betrayed by a loved one are heartbreaking. But with a collaborative approach, especially among medical, legal, and financial professionals, we can try to stop many of these sad tales from becoming financial tragedies.
Jeanne Rentezelas and Larry Santucci are, respectively, general counsel and senior research fellow at the Federal Reserve Bank of Philadelphia.