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How to prevent elder financial abuse

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It seemed like a glorious dream come to life. Sharon Marchisello's elderly mother-in-law had received numerous letters congratulating her on her remarkable good fortune.

"She would receive 13 to 14 pieces of mail every day, telling her that she had won, or might win, some big cash prize," recalled Marchisello, a writer who lives in Atlanta.

Naturally, there were some wrinkles. Some of the letters requested payment for what they labeled "processing fees." "Some of the more sinister ones had a box to check on the return form, authorizing them to debit her checking account each month," added Marchisello.

Sadly, it all added up to an enormous scam. Marchisello estimated her mother-in-law ultimately spent several thousand dollars over the course of a year or two without ever seeing a single penny in so-called winnings.

"Our solution was to take away her checkbook and automate all her bills. It wasn't an easy task. At first she found an old checkbook and started writing checks on that; another time, she called the bank and ordered more checks," said Marchisello. "Eventually, she accepted it. It could have been much worse if we had not intervened."

Marchisello's family had to respond after the fact. But there are ways to protect older loved ones from financial predators and prevent the financial damage.

'Rampant' and 'lethal'

At a recent federal hearing, Kathleen Quinn, executive director of the National Adult Protective Services Association, labeled elder financial abuse "rampant, largely invisible, expensive and lethal."

Underscoring Quinn's description is a recent study by True Link Financial, which markets products and services designed to address elder financial abuse, that estimated the problem costs more than $36 billion every year.

And those figures may actually be somewhat low. According to law enforcement officials and health care advocates, elder financial abuse crime frequently goes unreported, often because victims are too embarrassed to admit they've been bilked or simply don't know how to get help.

"Seniors make easy targets for financial abuse because older generations expect that people will be honest with them out in the marketplace," said Olmstead, Ohio, certified financial planner Les Szarka. "They also are less likely to take action when swindled and tend to be less knowledgeable about their rights in an increasingly complex world."

What to watch for

One of the first steps to help protect an older loved one from elder financial abuse is to become familiar with some of the more common types of scams. As was the case with Marchisello's mother-in-law, schemes involving purported lottery winnings — inevitably with some sort of mandated payment attached — is one such trick. Others include:

Telemarketing 

Often this type of scam involves the elder making a purchase over the phone or making a donation to a charity," said Richard Newman, an elder law attorney in Bucks County, Pennsylvania.

Medicare and health insurance fraud

A con artist poses as a Medicare or health insurance representative and requests personal or payment information for a fake bill.

Internet fraud

Legitimate-looking emails that ask for a payment or personal financial information.

Other scams can be particularly bold. Beverly Hills psychotherapist Fran Walfish said her 84-year-old mother once received a phone call from someone posing as her teenage grandson. He said he had been on a school trip, had been kidnapped and that she needed to come up with a $7,000 ransom.

"Panicking, my mother followed the would-be captors' instructions to transfer the large sum from her bank into a foreign country account," said Walfish. "After doing this, my mother got up the courage to tell her grown adult children. We immediately contacted the identified grandson to determine he was safe and the story was bogus. Then, we contacted the police department who informed us that this is common practice targeting the senior population. They often make random calls looking for vulnerable people who will bite."

What to do

Proactive education is critical to identifying and heading off potential elder financial scams. Start with using a phone's caller identification systems.

"Don't answer phone calls from numbers you don't recognize," said Seattle certified financial planner Dana Twight. "That can help avoid spoofing and telemarketers."

If a call seems both legitimate and appealing, ask if the organization is licensed.

"Every state has minimal licensing requirements for sale of financial products and insurance," said certified financial planner Gary Watts, in Walnut Creek, California. "Also, ask if you can meet at their office. This can be helpful to verify a salesperson's firm affiliation and can give consumers a sense of the office or agency's professionalism and style. Although many legitimate salespersons and advisers offer to meet clients in their home, I personally would not want a stranger in a senior's home unless they have been fully vetted."

Don't go it alone. If someone who reaches out to you agrees to a meeting, ask if you can bring along a trusted adviser, added Watts. If the solicitor balks, end things right there.

Paper trails are another potential weak point. To that end, shred important documents, statements and financial records before throwing them out. If you have frequent visitors, don't leave checks or important documents in plain sight where they're easily accessible.

"Protect your mail," added Howard Tischler, founder of EverSafe, a financial protection services company. "Incoming or outgoing mail left in an unsecured mailbox is an opportunity for fraud."

If you suspect you've been targeted for some sort of scam, don't be shy about taking quick action. In addition to contacting the police, let bank, brokerage or any other financial officials with whom you have a relationship know what may be going on. Often, they can intervene before a thief can access the money or, at the very least, limit the damage.

Other resources:

The Eldercare Locator (800-677-1116) directs callers to local programs and services that help prevent financial elder abuse.

Adult Protective Services (APS) — APS is the government-affiliated agency that investigates reports of elder financial abuse and offers assistance to victims.

The National Center on Elder Abuse.

AARP Fraud Watch Network — A site for tips, advice and resources to protect yourself.

Although it may be a sensitive topic, adult children or other relatives can try to become directly involved in an elder relative's finances. It doesn't have to be absolute control. It can be reviewing credit card and bank statements together: "Get your name added to accounts or bill pay systems as needed," said Twight.