|Warning signs of elder abuse and fraud
A look at scams that frequently target older adults.
January 24, 2013
According to the National Center on Elder Abuse, between 1 and 2 million Americans age 65 or older have been injured, exploited, or otherwise mistreated by someone on whom they depended for care and protection. Sixty-six percent of elder abuse cases were committed by adult children or spouses.
The ability to identify the types and symptoms of abuse and fraud committed against older adults puts CPAs in a position to provide assistance to the victims.
Victims of fraud and abuse have been shown to have a shorter life expectancy than the nonabused. In addition, victims can suffer from the loss of their dignity, independence, homes, savings, health, and security.
This column looks at what constitutes elder abuse and examines several scams that commonly target older adults.
Warren, 68, gets a call from a woman identifying herself as being “from the bank.” She explains that there has been a computer error at the bank, and she wants to verify Warren’s personal information. Warren gives the caller his date of birth, Social Security number, and bank account numbers. Within days, his accounts are emptied.
Elaine, 89, wakes up in an ambulance; the last thing that she remembers is getting ready to eat dinner. The paperboy had called the police when Elaine’s paper began to pile up. Elaine becomes disoriented and loses consciousness when she does not take her medicine. Her medications cost $440 a month, and her Social Security payment is only $510 a month. Sure, Elaine has some savings, but she feels that she may need that someday.
Warren is a victim of elder abuse; Elaine is a victim of elder neglect. The main types of abuse are physical abuse, sexual abuse, domestic violence, psychological abuse, and financial abuse. Neglect also includes self-neglect.
Theft or misuse of an elder’s money or property by a person in a position of trust with the elder constitutes financial abuse. There are many examples from simple theft to the forging of wills and powers of attorney. Third-party (noncaregiver) abuse is also common. Scams include providing unnecessary or substandard home repairs, selling inappropriate financial products, and identity theft (see www.ftc.gov/idtheft).
Characteristics and keywords of elder fraud sales tactics include:
Telemarketing fraud and senior citizens
Every day, elders receive telephone calls from solicitors who tell them that this is their lucky day. Telemarketing is a huge business in the United States. However, there is no way to tell how much of telemarketing is fraudulent, because often victims are too embarrassed to report their losses to the police. These fraudulent telemarketers are often difficult to catch because they have a fly-by-night style of operation.
Once under investigation, they can shut down easily, change the company’s name, and move to another town or state.
Example of telemarketing fraud investment scam
Many telemarketers may try to engage elders in fraudulent investment schemes. These schemes often offer investors an irresistible and virtually risk-free way to get rich quick.
In one case, a telemarketer tried to get potential investors to buy space for a satellite on a space shuttle. However, the telemarketer had no ties to NASA or any company that dealt with satellites or spaceships. The pitch urged investors to act now and not to let anyone in on the great deal that they are about to receive.
Clients should be reminded that legitimate investment firms rarely if ever operate by telephone, and they will always provide written information and time to think an investment over.
Two common types of door-to-door scams involve offers of home improvement services, such as yard work and paving.
In Virginia, a woman paid a door-to-door yard service worker $26,310 over three months for pruning and planting work in her modest yard. After completing an initial job costing $1,710, the man showed up repeatedly to solicit more work. He made outright demands for work and payment until the terrified homeowner called the police, who promptly arrested the man.
Other types of home improvement scams include services such as roofing and paving. In the case of paving schemes, a contractor may drop by and offer to resurface or reseal a driveway. He may demand money upfront as a deposit and never return, or he may spread something on your driveway that only looks like blacktop, but that will crack in the next rainstorm.
What to do if you suspect abuse
If you suspect that an adult is being abused, call the adult protective services unit of the local department of human services. If the abuse is occurring in an institutional setting, such as a nursing home, call the Long-Term Care Ombudsman Program.
If you feel that the older person is in immediate danger, or you’re not sure who to call, call a police or sheriff’s office, or 911.
You can find the phone number of the adult protective services and your area long-term-care ombudsman from your local area agency on aging. You should find a listing in the yellow pages of your telephone directory under the classification “Senior Citizens’ Services & Organizations.”
Helpful websites include:
|Rate this article 5 (excellent) to 1 (poor). Send your responses here.|
Michael David Schulman, CPA/PFS, is the third-generation owner of Schulman CPA, a tax, accounting, and auditing firm, and the founder of personal financial planning firm Schulman CPA/PFS PC, and Excelsior Advisors LLC, which provides services to older adults.
* The AICPA PFP Section provides information, tools, advocacy, and guidance to CPAs who specialize in providing tax, retirement, estate, risk management, and investment advice to individuals and their closely held entities. All members of the AICPA are eligible to join the PFP section. CPAs who want to demonstrate their expertise in this subject matter can apply to become a PFS credential holder.