Every year over 500,000 elderly people are victims of financial scams, and this abuse costs the elderly population up to $3 billion annually. Elder financial abuse is a tremendous problem and one of the biggest areas of financial fraud in America. It is only going to grow as the American population gets older as all the baby boomers reach retirement.
One of the reasons why senior citizens are targeted is because they usually have more savings than other age groups. Currently, about 70% of the wealth in America is owned by people are 50 years of age or older. These populations have been saving money their whole lives and that is why some people target them for financial exploitation.
Financial abuse of the elderly can include many different types of activities from outright theft of assets to convincing an older person to transfer power of attorney in order to use their savings. Common forms of financial exploitation include: theft, fraud, real estate exploitation, contractor fraud, lottery scams, electronic fraud, and investment and insurance scams.
Similar to other forms of elder abuse, the people most likely to commit financial abuse are family members. Family members have the most access to the elderly and their finances, so they are most likely to take advantage. They can also use the trust that the elderly place in them to help them take control of finances. Family members are more likely to commit financial abuse if they are unemployed, have financial problems, or suffer from substance abuse.
However, family members are not the only ones who commit financial abuse. Financial abuse can be committed by anyone who comes into contact with the elderly and can get access to their savings and assets. Some types of people who may commit financial abuse are:
One of the most dangerous types of financial abuses is the power of attorney scam. These are usually committed by family members, and the abuser may use a recent injury or illness to convince the elderly person to transfer power of attorney to him. These situations are very dangerous to the elderly because once the other person has power of attorney they can do anything they want with the victim’s savings accounts, assets, and property.
In some of these cases, an injured senior will give power of attorney to a relative while they are in the hospital. Once they leave the hospital they discover that their house has been sold or their savings and investments have been transferred to someone else.
After this happens, the victim may feel depressed, betrayed, and powerless; however, the victim should contact a lawyer immediately. An attorney can help revoke the power of attorney as well as demand that the assets and savings be returned. A person who is entrusted with power of attorney has a fiduciary responsibility to act in the best interests of the principal. If he is not acting in those interests, a court will return all the stolen property and possibly even issue punitive damages.
Another common form of financial abuse is perpetrated by investment brokers. Some investment brokers will call elderly people and promise high yield returns on their investments if they transfer control to the broker. The broker will then make investments that raise their own commissions, but are not in the best interests of the elderly.
For example, a broker may transfer large portions of savings into annuities that won’t pay the elderly while they are still living. In addition, brokers who feel like the elderly have little financial knowledge may make excessive transfers and transactions in order to charge higher commission fees from the elderly client.
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