A recent CNBC story discusses a growing trend in elder fraud that has caused older Americans to lose approximately $36.5 billion each year to financial scams or abuse according to a 2015 report. State securities regulators have reported a general increase in financial fraud against senior citizens in the past year. Mike Rothman, the Minnesota commissioner of commerce said “This population that’s retiring is one of the wealthiest, if not the wealthiest generation, in terms of their retirement savings, criminals know this as well.”
A study conducted by the North American Securities Administrators Association found that third-party abuse/exploitation, account distributions, and family member, trustee or power of attorney taking advantage account for 76% of the elder fraud cases reported to them. Other types of fraud cases include diminished capacity, combined diminished capacity and third-party abuse, friend, housekeeper or caretaker taking advantage, and excessive withdrawals.
Multiple studies have shown that many elder victims of financial fraud are not suffering from dementia or disabled. A study by the American Journal of Public Health concluded that in a given year 1 in 18 “cognitively intact” older adults is a victim to some kind of financial scam or fraud. Despite the reportedly high numbers of both fraud and monetary value, a co-author of one of the studies believes the numbers are an underestimation because many victims are reluctant to report or share details of the crime.
Rothman believes that the first step is acknowledging that you or a loved one can be a target of this type of fraud. The following steps include knowing the warning signs and creating a good support team that may include trusted advisors or accountants. Often advisors or accountants will be able to spot the potential red flags before a common citizen. Overall, knowing that elder fraud is both prevalent and preventable are keys to ensuring that the senior citizen population are not exposed on an even higher level to financial ruin.
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