Financial Exploitation in Aging: What to Know & What to Do

Here’s an upsetting situation that comes up a lot, and may have come up for you: is someone financially taking advantage of Mom or Dad?

It’s a pretty legitimate concern to have. To begin with, most people know that there are plenty of “scammers” out there, phoning or mailing older adults with deceptive information designed to hoodwink them out of some of their savings.

But there’s actually another form of exploitation that may be more common, and is often harder for families to address.

That would be exploitation perpetrated by a someone the older person knows and has a personal relationship with.

Sometimes the person suspected of exploitation is relatively new to the older person’s life, such as a new romantic interest, friend, or paid caregiver.

In other cases, family members become concerned that someone in the family – such as one of the older person’s children – is beginning to take financial advantage of things.

Exploitation in the context of personal relationships is often especially tricky for families to address. The older person may be quite attached to – or otherwise feel dependent on – the person that others perceive as suspicious or problematic. Or there may be concerns about stirring up family dramas and conflicts, by voicing concerns about a sibling or another relative.

People are often unsure of what exactly constitutes illegal activity, and what can be done if they are concerned about financial exploitation.

So in this article, I’ll cover the key things you should know, so that you can better evaluate and address a worrisome situation, should one arise.

Specifically, in this article I’ll explain:

• Key terms to know, related to the financial exploitation of older adults
• Some common examples of financial abuse
• How to know if an older person is at risk, or otherwise particularly vulnerable to exploitation
• What to do, if you suspect financial exploitation of an older adult
• How to reduce the risk of being financially exploited

I’ll also share a list of additional resources and references at the end.

Key terms to know

The financial exploitation of older adults is also known as “financial abuse.” It is considered a type of elder abuse. It may occur simultaneously with other forms of abuse, such as neglect, emotional abuse, or physical abuse.

It’s important to know that although there is some federal involvement in addressing elder abuse, the definition of what exactly constitutes elder abuse or financial abuse is mainly determined by state law. (Find your relevant local statutes here: State Elder Abuse Statutes.)

Still, here are some useful general definitions:

Definition of Elder Abuse (per the CDC): “Elder abuse is an intentional act, or failure to act, by a caregiver or another person in a relationship involving an expectation of trust that causes or creates a risk of harm to an older adult.”

Definition of Financial Abuse or Exploitation (per the CDC): “The illegal, unauthorized, or improper use of an older individual’s resources by a caregiver or other person in a trusting relationship, for the benefit of someone other than the older individual.

This includes depriving an older person of rightful access to, information about, or use of, personal benefits, resources, belongings, or assets.

Examples include forgery, misuse or theft of money or possessions; use of coercion or deception to surrender finances or property; or improper use of guardianship or power of attorney.”

State laws include criminal law statues and civil law statues. Financial abuse is often addressed in both types of statutes. Criminal activity can be investigated by law enforcement, but illegal activity that falls under civil statutes generally isn’t.

The role of “undue influence”

Another term that is important to understand is “undue influence.” Basically, we are all influenced by people we have relationships with, and this can affect the way we choose to spend our money or share our assets.

But was this influence “undue,” or otherwise “improper”? Families or others sometimes worry that an older person has been inappropriately pressured or manipulated, or perhaps taken advantage of due to memory problems or a dependent situation.

Such “inappropriate” influence can be called “undue influence.” It’s an important concept to understand for two reasons.

First of all, it’s through such manipulative interpersonal dynamics that perpetrators are often able to commit financial abuse. Second, it’s a term that is often used in state laws related to elder abuse, or sometimes to statutes related to guardianship issues.

Here is a general definition, followed by California’s definition (which was just revised in 2014):

Definition of Undue Influence (per the American Bar Association & National Center on Law and Elder Rights): “When people use their role and power to exploit the trust, dependency, and fear of others. They use this power to deceptively gain control over the decision making of the second person.”

Definition of Undue Influence (per California State Law): “Excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity.”

California’s statute goes on to specify four criteria which should be considered when determining whether a result was produced by undue influence. These include:

• The victim’s vulnerability,
• The factors that created authority or power for the influencer (e.g. being a necessary care provider),
• The actions or tactics used by the influencer (which might include controlling access to others or to life necessities),
• The “equity of the result” (e.g. economic consequences to the victim, divergence from the victim’s prior intent, etc).

To summarize: financial exploitation is a subset of elder abuse, and basically means inappropriately using an older person’s financial resources, for the benefit of someone other than the older person.

Such exploitation is often – but not always — facilitated by the perpetrator using “undue influence,” in which they create some kind of manipulative dynamic that allows them to take advantage of the older person.

Examples of financial abuse

Unfortunately, there many different ways to financially exploit an older adult. It’s not possible to list them all, so instead, I’ll share two common categories to keep in mind, along with some examples.

One way to think about financial abuse is to categorize perpetrators as “predators” versus “opportunists.”

“Predators” are individuals who purposefully seek out vulnerable older adults (or sometimes any adult), with the intent to defraud them or otherwise financially exploit them. Examples of this kind of financial abuse include:

• Telemarketing or other forms of phone scams
• Lottery scams
• Homeowner/reverse mortgage scams
• Email/phishing scams
• Imposter scams, in which someone impersonates a grandchild or other relative and says they urgently need money wired to get out of trouble

The perpetrators of predatory financial abuse do sometimes work for several days — or longer — to establish a relationship with a vulnerable older person. This New Yorker article describes the way one 89-year old woman was persuaded to send large sums of money to a scammer, after he spent a week telephoning her and led her to believe he’d become a “friend.”

For more on common predatory scams affecting older adults, see Top 5 Financial Scams Targeting Seniors, from the National Council on Aging.

Whereas “predators” are purposefully out to defraud or exploit others, “opportunists” are those who end up financially exploiting an older person because…well, the opportunity arose, usually due to a relationship between the older person and the one who ends up exploiting the situation. Examples of this type of financial abuse might include:

• Using an older parent’s ATM card without their permission
• Forging or misusing an older person’s checks
• Using the authority granted by a power of attorney to use the older person’s funds for one’s own needs
• Pressuring an older parent into paying expenses for oneself or for someone else

Such “opportunistic” abuse can be committed by family members, paid in-home care providers, or even trusted people outside the home, such as financial advisors or spiritual advisors.

Financial abuse is also sometimes committed by newer friends or romantic interests, who may take advantage of a lonely older person’s generosity or interest in maintaining the relationship. Some such new romantic interests appear to be “predators” who actually seek out vulnerable targets, whereas others seem to be “opportunists.” (Of course, suspicion or resentment of an older person’s new relationship does not always mean that abuse or even manipulative situations are occurring.)

The difficulty, of course, with these examples is that plenty of common situations may fall into gray areas.

If an adult child is living with and perhaps assisting an older parent, and the parent seems appreciative and wants to give that child extra money, is that exploitation? Or just a natural expression of appreciation?

If an older woman gets re-married late in life and agrees to send large sums of money to her new husband’s adult child, is that exploitation? Or just her exercising her autonomy and right to give money to whomever she chooses?

If your older father has made your sister, who lives near him, a joint owner on his bank account, and your sister starts using money from that account to cover what she says are her expenses in assisting your father, is that legit?

It’s easy to see how different people may have different perspectives on such a situation. Although in some cases it may seem quite clear that what happened is financial abuse of an older person, other situations will be murkier and will be challenging to sort out.

How to know if someone is at risk

One of the biggest risk factors for financial abuse is having some form of cognitive impairment, whether mild or more substantial such as Alzheimer’s disease or a related dementia.

Obviously, having problems with memory or other aspects of thinking makes one more vulnerable to deceit and misuse of one’s funds.

That said, it’s critical to realize that even “mentally sharp” older adults can easily fall prey to financial exploitation. That’s because plenty of factors other than memory play a role in making an older person vulnerable.

Here are some of the key factors that increase the risk of exploitation:

• Loneliness. Lonely older adults more likely to be receptive to the overtures of a financial predator. They may also be more susceptible to manipulation by a family member or opportunist.
• Isolation. When older adults are isolated, there may be fewer family or friends around to notice a suspicious situation and intervene. Isolated older adults are also often lonely.
• Poor physical health and needing assistance with daily tasks. This is associated with being dependent on others, and such dependency can create the opportunity for exploitation.
• Age-associated brain changes make people more trusting as they get older. Research has shown that as people age, they tend to become more optimistic and more trusting. This can help older adults become happier as they get older, but may well be part of why many of them can be financially exploited by scams.
• Cognitive impairment. Again, this is not necessary for financial exploitation to happen, but it can certainly facilitate it. Also, if an older person previously completed a durable power of attorney (POA) document, the agent of an impaired person can easily abuse the POA and mismanage funds for their own benefit.

Although one might assume that it’s mainly wealthy older adults that get financially abused, one research study found that poverty was associated with financial exploitation too.

In short, financial exploitation can happen to almost any older adult, but being lonely, isolated, and/or dependent on others makes an older person especially vulnerable. Cognitive impairment also increases the risk of financial exploitation.

What to do, if you suspect the financial exploitation of an older adult

If you suspect that your older parent — or another older person — is being financially exploited, it’s important to take action.

According to the National Adult Protective Services Association, signs of potential financial abuse include:

• Termination of vital utilities such as telephone, water, electricity / gas, or garbage
• Unpaid bills and liabilities despite adequate income
• Oversight of finances surrendered to others without explanation or consent
• Transferring assets to new “friends” assisting with finances
• Checks written to “Cash”
• Does not understand his/her current finances, offers improbable explanations
• Unexplained disappearance of cash, valuable objects, financial statements
• Unexplained or unauthorized changes to wills or other estate documents
• Giving-away money or spending promiscuously
• Appearance of property liens or foreclosure notices

In general, any and all forms of elder abuse — including financial abuse — should be reported to your local Adult Protective Services (APS) office. (More on APS below.) You can use the Eldercare locator online to find your local APS office.

But there are also other actions you can consider taking. Exactly what to do will depend somewhat on the circumstances, the evidence you have found so far, the older person’s relationship with the perpetrator, and your relationship with the older person.

Here are some steps to consider taking:

• Talk to the older person. Before telling an older person what to do or not do — or otherwise swooping in to help — it’s always a good idea to try to talk and get a sense of how they see the situation. This helps older adults feel heard and understood, which may then make it easier for them to accept your assistance, if it becomes necessary.
• Gather more information or evidence as to what is occurring. To the best of your ability, try to make sure you have information to confirm your concerns or suspicions. Talk to other family members as well, if possible, so that the family can coordinate their efforts to investigate and intervene.
• Contact the older person’s financial institution. They may or may not be able to divulge details to you, but newer rules are making it easier for them to refuse or stop disbursements if there is suspicion of financial abuse. Congress also passed a “Senior Safe Act” in 2018, to empower financial professionals to act.
• Contact your local Adult Protective Services (APS) office. APS offices are designed to help investigate allegations of abuse. For more on how APS helps and what happens when a report is made, see here: Fact Sheet: Adult Protective Services.
• Contact law enforcement. This is especially important if you suspect fraud, theft, scams, or other criminal activity. Your local police department or sheriff’s office is generally a good place to start. Your local APS office should also be able to tell you which law enforcement agency to contact with your specific concerns.

The US Department of Justice’s Elder Justice Initiative also maintains a handy “Report Abuse” page, which includes an interactive “roadmap” questionnaire to help you identify specific authorities to which you can report financial abuse: Find Help or Report Abuse.

Most states also require individuals in certain positions to report suspected elder abuse, including financial exploitation. Health providers are often mandated reporters, and in some states, financial professionals are as well.

Of course, you are likely to be facing one or more of the following challenges:

• The older person may resist your concern or attempts to intervene, feeling that you are infringing on her autonomy or implying that he isn’t capable of taking care of his finances.
  • Try to be as supportive and respectful as possible, as you express concerns. Use better communication approaches, such as using “I” messages and making sure the older person feels heard and understood.
• If you don’t have an active power of attorney or another way to access the older person’s financial information, it can be hard to determine what is going on, and intervene to stop problematic disbursements.
  • You should still express your concerns to the older person’s bank or financial institution. As noted above, new rules are being implemented to enable financial professionals to intervene or at least place holds on disbursements, when financial exploitation is suspected.
  • In a few states, financial professionals are mandated to report suspected financial abuse. Check your local elder abuse statutes (or Google) to find out who is a mandated reporter in your state.
• The suspected perpetrator may be restricting access to the older person, by refusing to let others talk to the older person on the phone, or visit.
  • If you really are concerned about financial exploitation or other elder abuse, you should call Adult Protective Services so that they can investigate. They will not disclose the name of the reporting party to the older person or suspected perpetrator.
  • If you’re not quite ready to call APS, try voicing your concerns to other individuals who may still have access to the older person, such a health provider or a clergy member. They might be able to encourage more communication to resolve conflicts. Your concern might also prompt them to look into a worrisome situation.
  • For more assistance, consider contacting a civil elder law attorney.

In short, if you suspect that an older person is being financially exploited, what’s most important is to do something.

Be as respectful as possible of the older person’s feelings and autonomy, but do try to find out more, try to delay any spending if possible, and report your concerns to the appropriate authorities.

In general, Adult Protective Services (APS) is the key social service agency to call, when you suspect financial abuse or any other kind of elder abuse. That said, APS offices are locally operated, so different agencies may take slightly different approaches to investigating concerns.

If you are not sure whether certain activity constitutes financial elder abuse, check your local state statutes, and/or consult an attorney.

How to reduce the risk of financial exploitation in aging

As is often the case, when it comes to financial exploitation, an ounce of prevention is worth a pound of cure.

The challenge, however, is that taking steps to reduce the chance of exploitation often requires older adults to do two things that most find difficult.

1. Realize that they are at risk. This is tough because most of us have trouble imagining a time when we might become vulnerable, gullible, or cognitively impaired. It can be distressing to think about, plus the known age-associated tendency towards optimism makes it even harder to imagine such situation.
2. Consider giving up some privacy and autonomy. Basically, to reduce the risk of financial exploitation, you have to be willing to do things like letting others periodically review your financial activity, and under some circumstances, overriding what you are trying to do.

Understandably, many people are reluctant to give others the ability to review their decisions and intervene in their autonomy.

Still, such sacrifices are probably necessary, to significantly reduce one’s risk. And if done carefully and thoughtfully, it should be possible to still help an older person maintain some privacy, dignity, and autonomy.

Here are a few specific steps to consider, to reduce the risk of financial exploitation:

• Simplify your finances, so that there are fewer accounts to oversee or regularly review.
• Authorize each of your financial institutions to contact 1-2 trusted individuals (such as an adult child or one’s agent designated in a durable power of attorney), in case of suspicious financial activity.
• Develop some method of allowing your trusted individuals to review your financial activity. Options include:
  • Giving them online access to your accounts, so that they log in and review as needed.
  • Scheduling regular reviews of your assets and spending. This can be a good way to keep your financial power of attorney agent in the loop, so that he or she is well-prepared to step in should you become ill or disabled.
• Learn about common ways that older adults are scammed by strangers, such as lottery scams, imposter scams, and other common predatory attempts. Be careful about establishing phone or email communications with strangers, especially if they bring up anything financial.
• Draft your financial power of attorney (POA) document in a way that reduces the risk of abuse. A 2018 issue brief from the American Bar Association describes some options, which include:
  • Require periodic accounting to a third party.
  • Require a second signature for large transactions.
  • Grant the power to revoke to a trusted third party.

Professionals such as one’s financial advisor or an attorney (preferably one experienced with age-related legal issues) can also help advise as to the best way to protect oneself and thoughtfully empower others to intervene if it seems warranted.

Last but not least, I would recommend embarking on a series of “planning ahead just in case” conversations with one’s family or close friends.

Just as we recommend that older adults talk to family about what kind of medical care they would want, if too ill to decide, we should also encourage people to talk about how their family could intervene, if they get worried about potential financial exploitation.

Helpful Resources 

Here are some of the resources I found especially helpful, in researching this article:

• US Department of Justice Elder Justice Initiative: Financial Exploitation
  • Good site with a roadmap feature to guide you to the right agency to report certain types of exploitation to, links to state-specific elder abuse statutes, and more.
• National Adult Protective Services Association: Elder Financial Exploitation
  • Includes a useful list of common forms of exploitation, whether by scams, strangers, or trusted individuals
• National Center on Elder Abuse: State Resource List
  • This site provides links to state-specific resources to address financial abuse and other forms of elder abuse.
• Recognize and Report Elder Financial Abuse
  • This helpful page lists a number of common scams and frauds, along with specific authorities to contact for certain situations.
• National Center on Law and Elder Rights. This site is more geared towards supporting legal professionals. These three resources are more technical but I found them very useful:
  • Legal Basics: Elder Financial Exploitation
  • Elder Abuse: The Impact of Undue Influence
  • Drafting Advance Planning Documents to Reduce the Risk of Abuse or Exploitation

I also learned a lot from interviewing attorney Candace Heisler, JD, who is a nationally recognized expert on the prosecution of elder abuse. Listen to the podcast episode here:

070 – Interview: Addressing & Preventing Financial Exploitation in Aging

Remember, financial exploitation is common and can happen even to older adults who are “mentally sharp.”

So if you’re concerned about possible financial abuse, please take action, either by investigating further or by taking one of the other steps I describe above. If ever in doubt, Adult Protective Services can help you think through your next steps.

And don’t forget: if you’re an older adult, take sensible steps to reduce the risk of financial abuse. Your aging brain will optimistically think it can’t happen to you. But it could, because it happens to lots of older people!

So, be proactive and take steps to allow others to help if it becomes necessary. This will make things easier for your family, should a concerning situation arise, and can help protect your money so that it does what it should do, which is be there for YOU.

Have you taken steps to prevent financial exploitation, or otherwise had any experience with this issue? I’d love to hear from you below.