Scamming the elderly is a multibillion-dollar industry. And adult children are often prevented from stopping it by the privacy laws intended to protect the victims.
The Justice Department and law enforcement partners recently announced the largest coordinated sweep of elder fraud cases in history. The cases involved more than 250 defendants from around the globe who victimized more than a million Americans, most of whom were elderly, according to a release.
According to the Justice Department, there were a variety of fraud schemes ranging from mass mailing, telemarketing and investment frauds to individual incidences of identity theft and theft by guardians. Many cases also involved transnational criminal organizations that defrauded hundreds of thousands of elderly victims, while others involved a single relative or fiduciary who took advantage of an individual victim, the Justice Department noted.
So how might you protect yourself and your loved ones from falling victim to elder fraud? Are there opportunities for individuals to safeguard their finances from financial predators?
You too could become a victim. According to recent research, there is no single reliable predictor of fraud victimization. “More financially literate and educated adults are not necessarily immune to financial fraud,” wrote the authors of “Exploring the Risks and Consequences of Elder Fraud Victimization: Evidence from the Health and Retirement Study.” “In fact, we identified few readily-identifiable factors associated with financial victimization in the older population.”
Talk with family members
Adults should engage family members in a conversation about financial goals/retirement objectives early in the life course — while they are their late 60s and early 70s — before there are changes in processing and decision making, says Marti DeLiema, a postdoctoral scholar at the Stanford Center on Longevity in the Financial Security Division and co-author of the research paper.
“Adult children should be familiar and comfortable with their parents’ financial goals so that they are prepared to take over if the older people cannot make financial decisions independently,” she says. “These conversations should involve multiple family members so that no single person is in charge of all the decision making.”
In short, there needs to be checks and balances on fiduciary powers.
Name joint agents
Instead of giving one person power of attorney, DeLiema says older adults should consider naming joint agents. “Both agents must agree on financial actions which makes exploitation more difficult,” she says.
Leave your money in your 401(k)
Even after retiring, DeLiema says older adults should keep their money invested in their former employer’s 401(k) or 403(b) plan. For one, it reduces liquidity; there’s less money for scammers to get their hands on. Plus, she says, “it is a great option because large employers generally operate these funds on a cost basis rather than a for-profit basis which keeps fees low.”
What’s more, DeLiema says employers, as plan sponsors, must operate under fiduciary standards. That means “that they are legally required to act in the interest of their plan participants and their beneficiaries,” she says. “Some high-priced, predatory brokers encourage retirees to roll over their 401(k) or 403(b) funds into a higher-cost fund that they manage, sometimes by promising to beat the investment returns offered by the employer-sponsored plan.”
Although these investment opportunities aren’t necessarily fraudulent, DeLiema says “retirees shouldn’t trust overblown claims by advisers who say they can outdo employer-sponsored plans, as these statements are typically too good to be true.”
Opt out of credit card solicitations
DeLiema also recommends opting out of credit card solicitation marketing lists run by the major credit reporting bureaus. You can do this by calling 1-888-567-8688 or by visiting www.optoutprescreen.com. You can also remove names and addresses from mailing lists at http://www.dmachoice.org.
Check the security features on your financial accounts
Always activate security features on your financial accounts. This means, says DeLiema, selecting to receive fraud alerts and using two-step authentication to access the accounts online. “Turning on notifications like receiving text messages anytime withdrawals exceed a certain amount can keep accountholders informed and ready to run interference if fraud occurs,” she says.
DeLiema also says those looking to invest in a new plan or open a new account should look for firms that offer these added security features.
“It’s a good idea to sign up for electronic delivery of statements and opt-out of receiving paper statements in the mail, as these materials can be intercepted by financial predators and identity thieves,” she says.
File a complaint
Elder fraud complaints may be filed with the Federal Trade Commission at www.ftccomplaintassistant.gov or at 1-877-382-4357. The Justice Department provides a variety of resources relating to elder fraud victimization through its Office of Victims of Crime, which can be reached at www.ovc.gov.
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General fraud-safety tips
►Never send money in advance to claim a sweepstakes, prize or lottery winnings.
►Hang up if you don’t recognize the caller
►Keep track of when you last paid to renew a membership or made a donation. Don’t be fooled into thinking it’s time to donate or renew again.
►Learn to spot a counterfeit check. Just because “the funds are available” doesn’t mean that the check has cleared. That can take weeks.
►Throw away promotional mail.
►Don’t “confirm” or “verify” personal information with callers.
►Don’t send or wire money to people you have never met in person.
Robert Powell contributes regularly to USA TODAY, TheStreet, and The Wall Street Journal. Got questions about money? Email Bob at [email protected]
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