There are many ways that the pandemic is affecting people, from senior isolation to an increase in domestic violence to economic stress caused by job loss and business closures. These conditions also increase the risk of financial abuse. While financial abuse affects the most vulnerable people, it can affect anyone, so it’s important to know the signs.
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One situation to look for is if a caregiver, acquaintance, family member or new partner asks a lot of questions about your financial situation, such as the balances and location of accounts, the timing of incoming paychecks from your employer or Social Security, and the value of your property and household effects. They steer the conversation back to these topics even when you dodge the question or change the subject.
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If an individual makes increasingly critical comments about your financial decision-making and competence in managing your bills and investments. There might also be demeaning statements about your intelligence, judgement, language fluency, and familiarity with technology.
Another warning sign: someone offers to “help you” by putting you on a budget or monitoring your spending. This can take the form of offering to write checks for you, “taking charge” of your credit cards, asking for account passwords or giving you an “allowance” rather than full access to your own funds.
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When a person suggests setting up joint bank accounts or becoming an additional signer on your credit card accounts, it can be the first step to draining your funds. While they might claim that these actions help them to help you, they start to withdraw funds or use the cards for their own expenses. This might begin with small expenditures that become increasingly larger.
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Someone redirects your mail to a new address or changes your password access to accounts so that you don’t receive your bank and credit card statements. This action can be framed in terms of their desire to prevent you from spending too much, but it has the effect of keeping you in the dark about your financial circumstances. If accounts become overdrawn or bills go unpaid, your credit rating becomes affected.
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Think twice before agreeing to a loan. In this case of financial abuse, someone asks to borrow money but does not repay their debt or someone may suggest that they move in and “help you save money” on the mortgage or rent, then they stop contributing to the household expenses. If you ask for repayment of the loan or the promised rent money, they avoid the conversation or become manipulatively tearful, defensive or aggressive.
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Be aware when someone is using your financial resources to cover their expenses. Visits might be timed for days when you receive checks. Family members might ask for an “early inheritance” or an acquaintance expects to be compensated for visiting you. The demands can escalate to threats, theft of cash or property, or withholding needed money, medicine, food, or physical care.
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One warning sign of financial abuse is when an individual uses your credit information to open credit card accounts, make large purchases, or obtain loans. This can involve asking you to co-sign applications or actual forgery of your signature. These loans often go into collection, jeopardizing your credit rating.
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If someone asks you to invest in their business or offers you an exciting opportunity to “get in on the ground floor” of some financial opportunity, proceed with caution. There is a reason why these opportunities are not attractive to other investors. These schemes typically benefit the abuser, either directly or indirectly, while they prove to be poor investments for you.
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If a person pressures you into signing over property deeds or giving them power of attorney in financial transactions, be wary and seek help. They may also push you to change your estate plans giving them a greater share of your assets or making themselves sole heir. While some states have laws identifying caregivers as “prohibited transferees” (named beneficiaries in a will), there are still ways to circumvent these legal protections.
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While exact measures are difficult to obtain, researchers estimate that elder abuse affects between 3.5% and 20% of elder adults, and results in seniors losing up to $36.5 billion annually. Older adults are at high risk for financial abuse due to having a lifetime of savings they are likely to manage on their own, and may be isolated, particularly after losing a spouse or partner. They are also likely to experience physical and cognitive changes that increase the reliance on others for services and care.
If you are concerned about an older family member or friend, look for this important clue. According to David Bahnsen, founder and managing partner of The Bahnsen Group, the most common indicator of elder financial abuse is a significant change in long standing financial practices.
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Behavioral changes that are red flags can include altered banking patterns (such as frequent withdrawals, sudden use of ATM cards, transfers of funds, overdrawing accounts, and setting up new joint accounts), changes in the use of credit such as increased card balances opening new card accounts, and investment decisions that appear unusual. This can include terminating investments without regard to penalties or high risk investments. Also question any time an elder brings friends to the bank to designate them as power of attorney or for financial transactions.
Increased isolation from family, friends, neighbors and others might imply that a person is avoiding questions about their circumstances. Fearful, depressed or anxious moods might be due to feeling endangered or intimidated by an abuser.
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A change in grooming or hygiene might mean that a senior is unable to afford personal care services. Financial exploitation was first suspected when Ms. Brooke Astor, the wealthy New York socialite, was seen by her friends in a disoriented, disheveled and poorly dressed state despite having millions of dollars.
There are benign circumstances in which an older or disabled adult chooses to set up a joint bank or credit card account with a trusted relative or adult child, co-sign loans, and shares copies of financial documents with others. In these cases, the chosen trusted party is often a family member who lives close by, is known to others in the community, and who has a history of being reliable and trustworthy.
There are also times when changes in financial behavior, mood, social patterns, and appearance may signal the onset of dementia or other cognitive and psychological disorders. These circumstances require careful observation and appropriate intervention from family members, physicians, and other support services.
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