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Seniors Most Often Defrauded by Family and Friends

By Erwin J. Shustak, Esq. of Shustak Reynolds & Partners, P.C. posted on Wednesday, May 30, 2018.

For a number of reasons, seniors are some of the most likely victims of financial and securities fraud.  First, given their age and the fact that many senior lives alone, seniors tend to be more trusting than younger people.  Seniors also tend to have significant amounts of liquid cash and are ripe for the targeting by fraudsters.  Finally, many seniors make their own decisions about financial matters and do not often have the benefit of a trusted friend or adviser to let them know when they may be venturing into the world of scams, frauds and scamsters.

A recent study, however, indicates that the elderly who most often are the victims of financial fraud, often are victims of frauds perpetuated by family and close friends.  Wells Fargo, which has a significant department that focuses on the needs of the elderly, recently released a report indicating that two-thirds of financial crimes against the elderly are committed by those who are closest to the victims, typically family and close friends.

According to the Wells Fargo study, nearly one in five Americans age 65 or older have been injured by elder financial abuse, and almost $36.5 billion (that’s with a B) is lost to financial exploitation of seniors by fraudsters, financial exploitation, and caregiver fraud.  According to the survey, typical types of financial abuse of seniors include using their ATM cards and stealing checks to withdraw money from the victims’ bank accounts.  Abuse by in-home caregivers can also range from keeping change when buying groceries, to falsifying time records and spending substantial time on the phone and internet doing personal and other business work.

There are plenty of scams to trick the elderly into giving up personal information, money or property, including “government scams”, “granny scams”, prize and lottery winnings scams and sweetheart scams.

In government scams, fraudsters pose as government officials requiring their elderly victims to wire cash or use pre-paid debit or gift cards to pay bogus IRS tax bills.  Or they may provide sham Medicare services at makeshift mobile clinics to bill insurance companies for unneeded and unnecessary procedures.

Playing on the emotions of elderly grandparents and parents, some fraudsters use emotion to falsely portray themselves as family members in trouble who need an immediate transfer of funds to return home from vacation, for example, telling the elderly that all their money was stolen or lost.  In prize and sweepstakes fraud, the victim will receive a fake telemarketing call and be told he or she just won the lottery but must first pay taxes on the jackpot before claiming the prize - the prize that does not exist.  And in sweetheart fraud, elders are conned into trusting a new “friend” they just met in person or through social media, with the false promise of love and companionship.  The “romantic” new friend then swindles the victim out of money or property before disappearing.

Truly concerned family members need to realize that the elderly are high targets for financial fraud and ensure the elderly family member is properly advised against these and increasingly creative ways to part the elderly with their life savings.

Shustak Reynolds & Partners, P.C. focuses its practice on securities and financial services law and complex business disputes. We represent many broker-dealers, registered representatives, investment advisors, investors and businesses. For more information, contact Erwin J. Shustak, Managing Partner [email protected], or call 800.496.5900 ext. 109.

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