How to Protect Elderly Credit Union Members Against Fraud

Today, we're bringing you a guest blog post from our friends over at Credit Union Resources. Cheryl Sayers, director of training remote transaction resources at CUR, shares a story of elder fraud and gives tips on how credit unions can help protect elderly members against fraud.

According to the US Census Bureau’s “middle series” projections, the elderly population will more than double between now and the year 2050, to 80 million. Those aged 85 and over are the most rapidly growing elderly age group. Within this age group elderly women outnumber elderly men by 5 to 2. These women are more likely to live alone as they were widowed, separated, divorced or had never married.  

When I first entered the job market I was a teller at a large credit union in Austin, Texas. Working the teller line I had a favorite couple that I came to know very well, Mark and Betty. Mark took care of his wife Betty and they survived on a small income. They were old school people. Mark worked as a trash collector and you could always tell when he had worked his shift. 

When Mark retired nether he or his wife was in good health. Betty had a hard time talking as she had cancer and part of her tongue had been removed. Only a few of the staff could understand her when she came in for assistance. Unfortunately, shortly after Mark retired he passed away. As far as we knew they had no other family. Betty was lost without Mark. We worked with Betty and assisted her in learning to manage her finances. 

One day Betty came in with a younger man accompanying her. She wanted to withdraw a large sum of cash. She said it was for work the man was doing at her home. I inquired about the work and the man was not forth coming with details. I gave an excuse to them about needing approval for the transaction and went to a supervisor. I expressed my concern that Betty could be a victim of fraud by this man. The Vice President was notified and came to talk with Betty. After investigating the arrangement further it was revealed this person was in fact a crook. He was attempting to take money from Betty for house repairs she did not need. The police were notified, and Betty was saved a large financial loss. 

We all know someone that is elderly. They may be a parent, a neighbor, a friend of the family or someone that frequents your office. Tellers are alert and notice when something seems out of the ordinary. Let a supervisor know when something seems suspicious. What training does your staff have to recognize financial crime against an elderly person? Are they provided with steps to take if they suspect fraud has occurred?  

Fraud against the elderly is generally committed by strangers and financial exploitation by relatives and caregivers. 

Fraud by strangers involves deliberately deceiving the victim with the promise of goods, servicesor other benefits that are nonexistent, unnecessary, never intended to be provided or grossly misrepresented. Examples of these are as follows:

Prizes and sweepstakes – This type of fraud involves informing the victim that he or she could win or has already won a “valuable” prize or a great deal of money. The victim is required to send in money to cover taxes, shipping costs or processing fees. The “prize” is never received and the funds sent are unable to be recovered. 

Charity contributions – Playing on some seniors’ desire to help others, offenders solicit donations to nonexistent charities or religious organizations. This can be very common after a natural disaster occurs such as tornadoes, hurricanes and flooding.

Home and automobile repairs – An offender will recommend fraudulent “emergency” home repairs, often requiring an advance deposit. They may then fail to do any work at all, start but not finish the work or do substandard work that requires correction. These most common frauds include roof repairs, driveway resurfacing, waterproofing and pest control. The offenders often are moving among neighborhoods, cities and even states. Auto mechanics also fall in this category as they falsely inform customers that they need certain repairs, or they will bill the victim for services or repairs that were not requested or completed. 

Health, funeral and life insurance – Many seniors/elderly are concerned about having the funds available to pay for needed medical care or a proper burial or to bequeath to loved ones upon death. Unscrupulous salespeople take advantage of these concerns by selling the elderly policies that duplicate existing coverage, do not provide the coverage promised or are altogether bogus.

Telemarketing – Offenders call people at home, using high-pressure tactics to solicit money for fraudulent investments, insurance policies, travel packages, charities and sweepstakes. These telemarketers limit the benefit to the customer and maximize the profit for the telemarketer.

Mail – Fraudulent prize and sweepstakes operations often mail materials to a wide audience, relying on potential victims to “self-select” by returning a postcard or calling to indicate their interest. These mailings often look official, use extensive personalization and include claims of authenticity.

Face-to-face contact – Some frauds involving products and services such as home and auto repairs require face-to-face contact at either the victim’s home or a business. Alternatively, a scammer gains entry to the victim’s home by posing as a utility worker and distracts the victim while an accomplice burglarizes the home.

To be successful these offenders gain the trust and confidence of their victim through their charisma and by using a business name that is similar to that of a well–established organization or by communicating a concern for the elder’s well-being. They make the elder feel they are “lucky” to receive the offer, and offers such as this are rare. They pressure victims to make an immediate decision or commitment to purchase products or services. This effectively limits the opportunity for the elder to consult with others for advice and guidance. Additionally, since the “special” offer is available to only a select few customers, the offenders ask the victims to be discreet. Asking they do not discuss the details of the transaction with any family member, neighbor or other concerned party. The fraud occurs quickly and with little risk of exposure.

Unlike strangers, relatives and caregivers often have a position of trust and an ongoing relationship with the elderly. Financial exploitation of this type occurs when the offender steals, withholds or otherwise misuses their elderly victims’ money, property or valuables for personal advantage or profit. Examples of these are as follows;

• Just taking the elder’s money, property or valuables
• Borrowing money, sometimes repeatedly, and not paying it back
• Denying services or medical care to conserve funds
• Giving away or selling the elder’s possessions without permission
• Signing or cashing pension or social security checks without permission
• Misusing ATM, debit or credit cards or using them without permission
• Doling out the elder’s money to family or friends
• Forcing the elder to part with resources or to sign over property

The offenders in these cases use deceit, coercion, intimidation, emotional abuse or empty promises of lifelong care. They will usually try to isolate the victim from their friends, family and other concerned parties. This prevents others from asking about the elder’s well-being or relationship with the offender. The elder is not able to consult with others on important financial decisions. In some cases the elder is lead to believe that no one else cares about him or her.   

A report by MetLife Mature Institute released in June 2011 found that elder Americans are robbed of $2.9 billion annually. A third of the crimes are committed by family, friends and neighbors. This figure is likely low because it only included published reports of elder crime. 

Many elderly victims do not report fraud because they feel ashamed, or they fear others will think they cannot care for themselves, which may trigger placement in a nursing home or long-term care facility. Many victims of financial exploitation have close ties to the offender and may feel protective. They may want to stop the exploitation and recover their assets, but not want the offender to be punished. A large number of victims even believe that they are partially to blame.

Professionals such as bankers, attorneys, accountants and doctors are also often slow to report suspected abuse. Their brief, episodic interactions with the elderly and their lack of expertise in undue influence and criminal conduct serve as barriers to reporting. Even if they suspect abuse, there often is no specific protocol for reporting it.

MetLife Mature Market published in 2009 found “Bank teller training is among the more effective ways to spot and stop elder abuse.” In a test, tellers correctly identified suspicious transactions 7 out of 10 times, the report said. “All by themselves, alert and well-trained bank tellers could have significant impact on financial abuse, especially if their numbers were to grow,” the report found. 

The first and most important tip is to “Get involved. Report the crime. Stay active and in touch with the older person, staying aware of how they are doing and asking a lot of questions, that’s very important for prevention and early intervention”,  says Sharon Merriman-Nai, co-manager of the National Center on Elder Abuse. Frequently, local police will interpret elder theft as a civil, rather than a criminal matter. This is why it is important to report suspicions to the Adult Protective Services. 

If, you suspect elder financial abuse but aren’t sure or you are reluctant to involve law enforcement here are some resources you can turn to.

The National Academy of Elder Law Attorneys—http://www.naela.org
Texas Adult Protective Services (APS)—http://www.dfps.state.tx.us/adult_protection