Founded in 2011, the Consumer Financial Protection Bureau (CFPB) was created as a result of the financial institutions selling mortgages that were overly complicated for borrowers, eventually becoming one of the leading causes of the financial recession in 2007/2008.
The Obama Administration reacted in 2009 by proposing to stand up a new financial agency "to focus directly on consumers, rather than on bank safety and soundness or on monetary policy."
Since its creation, in 2017 the CFPB reported incidents involving fraud on senior citizens have amounted to $1.7B, averaging to $34,200 per older adult in the U.S. This report reflects attempts to steal their money, investments, or assets for either overseas or from family members.
This type of exploitation is defined by the National Center on Elder Abuse (NCEA) as the "illegal or improper use of an elder's funds, property, or assets". In the same year, 58% of reported Suspicious Activity Reports derived from Money Services Businesses while Depository Institutions, such as banks and credit unions, only made up 35%. "One third of the individuals who lost money were ages 80 and older" according to CFPB.gov.
Note: To Read the Full Report, Click Here
This may be happening to your parents or grandparents and here are some ways to help protect them.
See Also: MONEY SMART for Older Adults Resource Guide
Recognize that your elders may not have the mental capacity to properly manage their finances. It is critical to review transactions and whom they are giving money too. If you suspect fraud, report it immediately to mitigate further financial exploitation.
2. Watch for Scams
I remember getting a call for a suspected IRS agent who could barely speak English. Fortunately, I had seen the Youtube videos of actions from the pretend IRS trying to steal money, but I also know that the IRS will never ask for money over the phone and will always send a letter of notification. Also, they do not have the authority to put you in prison. That job is for law enforcement agencies.
Common scams to be on the outlook for include identity theft, charity scams, sweepstakes for homeowners, veterans, and senior citizens, debt collection scams. To read more on each of these, go to MONEY SMART for Older Adults Resource Guide.
3. Report Suspicious Activities
According to CFPB, older adults may not report financial exploitation due to shame and embarrassment, denial, or self-blame. Comfort your elder and help him or her understand the importance to report such incidents to stop the perpetrator from committing further acts. Another factor may be his or her lack of awareness on such financial scams occurring.
If such incidents do occur, it is highly recommended that you report it to the Adult Protective Services, eldercare.acl.gov or 1-800-677-1116. If the elder is in immediate danger, then call 911.
If you know that his or her identity has been stolen, contact your local law enforcement authorities and report it to the Federal Trade Commission (FTC), identitytheft.gov or 1-877-438-4338.
AFFILIATE ADVERTISING4. Obtain a Power of Attorney
Such events may call for your elder to obtain a Power of Attorney (POA). When appointing a person for a POA, "avoid appointing a person who mismanages their own money or has problems with substance abuse or gambling." Also, you should not appoint a hired caregiver or other paid workers to be under the POA.
AFFILIATE ADVERTISING5. Check Credit Report RegularlyWhile you can obtain a free credit report annually from annualcreditreport.com, I recommend checking it quarterly if you suspect irregular financial occurrences may be happening. Check with your local bank to see if they offer a free service. Some credit card companies will offer regular credit checks for free.