Picture this scenario at the bank: A woman walks into her branch with her 25-year-old grandson, and they’re ready to transfer $4,000 or so out of Grandma’s account into his.
Is the grandson running a scam? If so, can the bank do anything to stop it?
“People are literally being robbed every day through scams or financial exploitation from members of their own family,” said Debra Whitman, executive vice president and chief public policy officer at AARP.
The average victim can lose $120,000 to financial exploitation, according to AARP research. Repeated, out-of-the-ordinary cash withdrawals are a big clue to exploitation and scams.
As part of the fight, the AARP launched an online training module for bank and credit union employees who deal with customers on the front lines as a way to prevent financial exploitation. The AARP BankSafe training is available at no cost to the financial institution and can be used as a main source of fraud training or as a supplement to other courses.
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Family members and outsiders target the retirement savings that seniors have built up over the years.
Instances of elder financial abuse can increase during Thanksgiving, Christmas and Hanukkah as more family members and friends are in town. Some may be more than ready to take Grandma to lunch and, oh, make a stop at the bank.
It’s more threatening than robocalls
Financial exploitation is wider in scope than your garden-variety IRS impersonator. Exploitation includes abusing one’s relationship with an older relative or friend to coerce the senior into handing over a large part of a nest egg that’s sitting in a bank account or even transfer property to someone else.
It may start with withdrawing a few hundred dollars from a bank account, then build to repeated requests for money.
Such exploitation may include misusing a power of attorney, denying an elderly person access to his or her own money and withdrawing money out of a senior’s bank account, according to an AARP research report called “The Thief Who Knows You: The Cost of Elder Exploitation Examined.” The Virginia Tech Center for Gerontology worked as a partner on the project.
Most perpetrators are people known to the victim, such as family members, caregivers or other workers in the home.
Financial exploitation takes an especially hard toll on the elderly.
It’s far tougher to recover after losing thousands of dollars to a sweepstakes scam, a romance scam or a dishonest relative if you no longer work.
“If you lose a big chunk of your retirement savings, it’s gone,” Whitman said.
It’s not just the money. Seniors who are ripped off by scammers or loved ones can experience a more rapid decline in health because of the emotional stress associated with being a victim of financial abuse, she said.
What kind of fraud is taking place?
A bank in Georgia reported a case involving a grandson who was cashing a string of checks from his grandfather’s account, according to AARP research. Law enforcement arrested him for allegedly exploiting the grandfather and taking his money to buy drugs.
A credit union in Colorado reported a case in which an older woman was staying in a rundown motel during renovations to her home. Her contractor would regularly bring her into the credit union to take money out to cover labor and supplies – sometimes $20,000 a week, which caused credit union employees to become suspicious. Turns out the contractor was living in the woman’s house – which was confirmed after a credit union employee drove by. The contractor was ripping off the woman.
In Michigan, a credit union stopped the suspicious transfer of savings – less than $10,000 – out of an elderly woman’s account when a bank supervisor intervened and took time to talk with the female customer alone, away from someone she was with at the bank.
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“Unfortunately, a lot of times it is a family member trying to exploit another family member,” said Tamara Bryant, compliance manager for Chief Financial Credit Union, based in Rochester Hills.
Chief Financial Credit Union employees received the AARP training and found it useful for building empathy with older customers and stopping money from leaving accounts when financial exploitation was suspected, Bryant said.
Seniors can be vulnerable to financial abuse, as nearly half of consumers 65 or older manage their own finances – from paying bills to handling investments – entirely on their own, according to research by AIG Life & Retirement.
The overall dollars lost in financial abuse cases tended to be larger when the older adult knew the person involved in the fraud than when a stranger was trying to pull a fast one, according to a report called “Suspicious Activity Reports on Financial Exploitation: Issues and Trends” released in February by the Consumer Financial Protection Bureau.
Based on that report, older adults lost an average of $48,300 when the activity involved a checking or savings account. That data is based on suspicious activity reports filed by financial institutions with regulators. Suspicious activity on average, took place over a four-month period.
Suspicious activity reports for elder financial exploitation quadrupled from 2013 to 2017. In 2017, elder financial exploitation reports totaled 63,500. Such reports may be a small fraction of actual incidents, which may go unreported by victims.
One-third of individuals who lost money were ages 80 and older, according to the report by the federal consumer watchdog agency.
What’s being done to stop the fraud?
Financial advisers and others ask some customers for the name of a trusted person to contact if the adviser suspects the customer is a victim of financial exploitation.
Many consumer watchdogs and others regularly address financial exploitation. Michigan’s Elder Abuse Task Force recommends that concerned family members file a report with law enforcement, the sheriff’s department or Michigan State Police. The Michigan Elder Abuse hotline is 800-242-2873.
You can contact Adult Protective Services in your state.
AARP Fraud Watch Network is at 877-908-3360.
The AARP is promoting an online training effort called BankSafe that focuses on encouraging tellers and other front-line staff to take more direct action when they suspect a case of financial exploitation.
In some cases, that could mean making sure that an older customer is separated from a potential perpetrator, such as the up-to-no-good grandson. The bank employee may take an older customer to another office area where the two can talk more openly if the customer feels threatened.
Tellers are encouraged to ask the customer probing questions when they spot a possible red flag and even mention the situation to a supervisor who may be able to intervene.
AARP’s BankSafe pilot program ran for six months at nearly 500 branches of banks and credit unions in 11 states – Arizona, California, Colorado, Florida, Georgia, Minnesota, Ohio, Oregon, Tennessee, Utah and Vermont.
Nearly $1 million was protected when front-line employees who participated in the BankSafe pilot program intervened to stop fraudsters from draining money out of the accounts of older adults.
In some cases, the bank employee refused or delayed a suspicious transaction, put a hold on the account or explained concerns to the customer.
The average victim was a woman ages 70 to 79 who had less than $20,000 in her bank account, according to the AARP research.
The estimated cost of financial exploitation varies but may be more than $2.9 billion a year, according to estimates provided in a MetLife Mature Market Institute Study released in 2011.