Money Watch: Elder Financial Exploitation

Dec 14, 2023 | Personal Finance

Technology has been a huge benefit to people across the world, but it has also led to a dramatic increase in the scope and size of Elder Financial Exploitation (“EFE”). The Financial Crimes Enforcement Network (“FinCEN) defines EFE as the “illegal or improper use of an older adult’s funds, property or assets”.

These crimes are carried out by both people that a victim knows, including family members, as well as by people they don’t know, professional criminals. The scope of this article is going to deal with the latter, namely crimes committed by professional criminals. A recent study by AARP estimated that victims of EFE lose $28.3 billion annually. Many of these crimes go unreported either because of shame or embarrassment. Some of the more common scams are Social Security Scams, Tech Support Scams, IRS Scams, Gift Card Scams, Romance Scams, and Grandparent Scams.

Social Security Scams:

Scammers will call you and trick you into giving them your social security number or even some form of payment and threaten the victim by saying their benefits may be suspended. They may even demand immediate payment to avoid arrest or threaten legal action. Social Security will never call you unless you call them first for a phone appointment and if you do owe Social Security money for something it will be requested in writing.

Tech Support Scams:

This is done with either a fishing email that if you click on it will grant scammers access to your computer or they pose as a computer tech from a well-known company and convince the victim to grant them remote access to your computer. Once they have this there are a myriad of things they can do ranging from identity theft to credit card theft, bank account theft to fraudulently charging you for “fixing” the issues with the computer.

IRS Scams:

The IRS will never call you or email you about a balance due. Even if the email looks official it is not. The IRS only corresponds in the mail.

Gift Card Scams:

This is a low-level crime where the perpetrators pretend they are your electric or gas company and your service will be shut off unless you make an immediate payment with gift cards or money orders that you need to get immediately. The utility companies don’t ever request gift cards or money orders.

The scary thing about this crime is the criminal will ask to come to your house to retrieve the payment. Utility companies will never come to your house demanding payment.

Romance Scams:

Criminals pose as a romantic interest on a dating site or social media platform. These perpetrators can prey on someone who is lonely and lure them in with attention and praise. The easiest defense to this one is to not ever give anyone money whom you have never met in person. Although you may feel you know or even love someone who you have only known online, in truth, if the person is making no effort to actually meet you in real life, chances are they are not who they say they are. I have seen reports where people give ½ their life savings or more to someone whom they have never even met.

Grandparent Scams:

Criminals pose as a child or grandchild in immediate financial need. More recently criminals have been using voice-altering software where they can actually sound like the person they are impersonating. Checking with the parents (if it is a grandchild asking for help) or insisting that the child FaceTime you are the easiest ways to counter this scam.

Recognizing and Steering Clear of Scammers

Many of the scams listed above happen via phone calls and scammers can make the victim’s caller ID look like it is the Social Security Administration or the IRS. They will also very often say the payments have to be made immediately. If the person is threatening and says it is ultra time sensitive be on guard. Most problems don’t have to be dealt with in the next 30-60 minutes. Victims of these scams feel embarrassed, humiliated, violated, and can even suffer declines in physical and mental health due to the emotional distress caused. The FBI offers five things not to do to avoid these kinds of fraud:

  1. Don’t click on unsolicited computer pop-ups, or links or attachments in text messages and emails.
  2. Don’t contact the phone number provided in a pop-up, text, or email telling you to call a number for “assistance.”
  3. Don’t download software upon the request of an unknown individual who contacted you.
  4. Don’t let an unknown person who contacted you have control of your computer.
  5. Don’t send money via wire transfer to foreign accounts, cryptocurrency gifts, or prepaid cards at the behest of someone you don’t know.

Respectfully Submitted
CRA Investment Committee

Matthew Reynolds, CPA, CFP®
Robert T. Martin, CFA, CFP®
Jeffrey Hilliard, CFP®, CRPC®
Phillip Tompkins, CFP ®
Thomas Reynolds, CPA
Gordon Shearer, Jr., CFP®
Joseph McCaffrey, CFP®

This article is for informational and educational purposes only and should not be relied upon as the basis for an investment decision. Consult your financial adviser, as well as your tax and/or legal advisers, regarding your personal circumstances before making investment decisions.

Subscribe to our Accounting, Tax and Business Insights Newsletter

Email Address:
Name(Required)
Privacy(Required)
This field is for validation purposes and should be left unchanged.
Roth IRA Conversion

Roth IRA Conversion

During the pandemic, the value of many traditional IRAs dropped with the decline in the stock markets, so it may be time to consider a Roth IRA conversion. Lower income in the conversion year could also be a factor in this decision, since the conversion amount could...

read more
Highlights of The Inflation Reduction Act of 2022

Highlights of The Inflation Reduction Act of 2022

President Biden signed this bill into law on August 16.  Here are some of the more interesting provisions.  For more information about any of these items, please contact us. Revenue Provisions Corporate Alternative Minimum tax of 15% which applies only to large...

read more
Past Market Declines

Past Market Declines

A war in Ukraine, inflation the highest it’s been in decades, ongoing supply chain constraints, and financial markets selling off for the first 6 months of the year has led to consumer confidence being the lowest ever recorded. As financial advisors, we are often...

read more
New Jersey Tax Updates: The Fall 2022 Edition

New Jersey Tax Updates: The Fall 2022 Edition

Sales Tax Holiday As we are approaching “back-to-school”, many states have enacted sales tax holidays.  As New Jersey is one of the states, this means sales & use tax on certain retail purchases of computers, school supplies, and sport or recreation equipment are...

read more