Diminished Capacity and Financial Vulnerability - A Big Problem
In the April 27th issue of the Cincinnati Enquirer, there was an opinion/article in the editorial section of the paper. The title was “Beware of the ‘trouble’ phone scam”. It was written in the first person so I assume that the writer experienced this phone call. This particular scam is the grandparents scam where a caller poses as a grandchild, says they are in trouble and in jail and need money to get out. These callers are so convincing. So the grandmother (person who answered the call) was upset but she called her husband to take the call and see what he could find out. He was more collected and asked specific questions to try to determine what this was all about. His radar went up and began to see that this was most probably a scam. The couple were able to get an attorney’s number from their supposed grandson. They called this person and were given the same story. The attorney told them how much money they needed to send ($2500) for him to get their grandson released from jail. It was then that some of the story started to fall apart and the grandfather was alert enough to catch on. When he asked if this was a scam the phone call ended.
As it turns out, this particular couple received a similar call about their granddaughter years earlier. That caller wanted $5000. After this call they felt they needed to spread the word about this scam. They heard of a number of other grandparents who fell victim to these scammers and paid out amounts from $5000 to $10,000.
I am glad that there is now some publicity about the types of scams that are hitting seniors. This particular scam has been around for a few years and it is still working. A friend of mine worked within the aging network and her own mother fell victim to the grandparent scam. So anyone can be targeted. Why are seniors so vulnerable to scams, fraud and exploitation? There are a number of reasons. Older seniors believe they are knowledgeable about the world that they live in. They become very trusting of people and are usually looking out for their best interest. When you strike an emotional chord like having a family member in trouble, all of their threat response filters go down and they just react emotionally in trying to protect their loved one.
There are other brain changes that occur as you get older that make you more vulnerable. Financial skills decline as we get older. It is a higher order thinking process that requires critical thinking skills originating in the prefrontal cortex. As we get older we do start to lose cells in this area of the brain so we aren’t as sharp as we used to be. If we have a neurodegenerative disease like Alzheimer’s, our financial skills are gone. It is the first skill to go in the degenerative process. People with dementia don’t have the ability to determine if they are being scammed or not. The perpetrators are many: special one-of-a-kind offers coming in through the mail; winning the lottery scams; false investment scams, outside people worming their way into these peoples’ lives convincing them to give them money; financial abuse from families. This last form of financial abuse is truly despicable.
So what can a family do? If you live in the same city as your parents, you need to take a vested interest in their ability to handle their finances. This can be tricky because financial autonomy is a sign of independence. You need to go to your parent’s house and see if there is a pile of bills sitting on the desk; or if they continue to pay the same bill over and over; or if they send money to any solicitation that comes through the mail. Mail solicitation is an easier form of fraud to pick up. Requests for money or one-of-a-kind offers that are available for a particular time can decimate a senior’s savings. The mother-in-law of a friend of mine lived in a different city than my friend. In the course of a year she had spent over $100,000 on collectables and requests for charitable contributions. The family came in and started going through all of her mail before she had a chance to send out money. Another friend of mine mentioned that her mother was a victim of the IRS scam. I can’t believe how often I personally hear of someone I know being victimized.
The numbers are escalating: the 85+ age group is the fastest growing demographic of all age groups. Boomers started turning 70 this year. Now we have 10,000 boomers turning 65 everyday and almost as many turning 70 everyday. There is $42 trillion (yes that is a T) in assets in the hands of the boomers and their parents. With financial skills starting to decline as the brain ages and the loss of financial skills with Alzheimer’s disease and other neurodegenerative diseases, there is a serious problem in our midst. In 2015, the total losses due to financial scams, fraud and exploitation of seniors amounted to $36.48 billion. This group has a target on their backs and the frauds and scams are getting more sophisticated everyday.
It is time to circle the wagons around our seniors. We need to personally open communication lines so that they feel safe to talk about any problems they are having. Their worst fear would be to have their independence taken from them. We need to make sure that all of the proper paperwork is in place to protect them and their assets. Financial planners, banks, trust administrators, and attorneys need to understand the signs of diminished capacity so that they can protect their client/customer. The six signs of diminished capacity are:
Memory lapses
Disorganization
Declines in checkbook management
Arithmetic mistakes
Conceptual confusion
Impaired judgment
Never should anyone be able to wipe out the future of a senior. We have to be vigilant that our parents, older relatives, and friends are safe from these predators. It is our moral obligation.