Don’t make this $42,000 mistake

Personal finance

All older Americans, regardless of income, are at risk of financial abuse.

Various studies estimate that seniors in the U.S. are scammed out of anywhere from $3 billion to $37 billion a year.

Between 2013 and 2017, those over age 70 lost an average of $41,800 to elder financial exploitation, according to an analysis by the U.S. Consumer Financial Protection Bureau.

The losses are even higher when the scammer is a friend or relative.

DTP | Getty Images

Seniors scammed by strangers lost an average of $17,000, while those who were ripped off by someone they know lost an average of $50,200, the bureau found.

Earlier this year, the Department of Justice announced the largest crackdown on elder fraud in U.S. history. More than 200 defendants were charged with victimizing in excess of 2 million older adults, who lost more than $750 billion to elder fraud schemes.

And still, elder abuse is vastly under-reported; only 1 in 44 cases of financial abuse ever comes to light, according to National Adult Protective Services Association, or NAPSA.

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On the upside, there are ways to protect yourself, or someone you love, from financial abuse with a series of checks and balances, according to Jennifer VanderVeen, the president of the National Academy of Elder Law Attorneys.

Designate a power of attorney. Advisors, accountants and other financial professionals can often be among the first to spot potential red flags, such as large withdrawals or, conversely, a series of small ones.

A power of attorney takes that a step further by giving someone else authority in financial matters.

Close to half of seniors aged 65 or older oversee their own finances, which makes them vulnerable to thieves, according to the survey from AIG.

Photographer | Collection | Getty Images

“One of reasons seniors are so vulnerable is that they are incredibly private about their financial matters and reluctant to give their children any information,” VanderVeen said.

“If no one is looking at the finances, they may not realize they’ve been scammed for months.”

Set up separate accounts. “If Mom or Dad is willing, leave them with a certain amount of money in checking and then put the rest in a separate account that requires dual signatures,” VanderVeen advised.

“You want them to be able to pay bills and have fun, but you don’t want to have someone be able to completely wipe them out.”

You can also limit funds in accounts open to caregivers and set up alerts to warn of credit card charges and bank withdrawals.

One of reasons seniors are so vulnerable is that they are incredibly private about their financial matters and reluctant to give their children any information.

Jennifer VanderVeen

president of the National Academy of Elder Law Attorneys

Look for red flags. Alarmingly, most types of financial abuse come from someone the person knows, not a stranger.

The sudden appearance of a family member who has been absent or multiple requests to change account ownership could be indications of attempted exploitation.

If there are signs of wrongdoing, call your bank immediately or contact Adult Protection Services and file a report with the local police department. There may even be a county prosecutor specifically assigned to handle cases of elder abuse.

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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

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