SHERPA Tips: Navigating Financial Exploitation Risks for Seniors

The Growing Threat

Talking about money with your aging parent or loved one can be difficult, but it’s increasingly important. Senior financial exploitation is rising at an alarming rate, and awareness is your first line of defense.

According to a recent report from the ABA Banking Journal, elder financial exploitation has more than doubled globally since the COVID-19 pandemic.¹ The FBI’s Internet Crime Complaint Center (IC3) reported that Americans over 60 lost nearly $3.1 billion to fraud in 2022 alone, a 62% increase from 2021.²

This crisis affects seniors across all socioeconomic backgrounds and geographic locations. The average victim loses approximately $34,200, but in many cases, losses can exceed $100,000—often representing a lifetime of savings with limited opportunity for recovery.³

Scammers target older adults believing they have substantial savings, creating devastating consequences that leave victims financially vulnerable. Many victims experience not only financial hardship but also deteriorating physical health, increased depression, and loss of independence following exploitation.⁴

Understanding Financial Exploitation

Financial exploitation typically falls into two categories:

Exploitation: Usually involves someone the senior knows, such as a family member or caregiver who misuses their position of trust

Fraud: Typically perpetrated by strangers through methods like telemarketing, investment schemes, or online scams

Common Scams and Exploitation Patterns

Financial Exploitation by Trusted Individuals

Unlike fraud by strangers, exploitation often involves people the senior already knows and trusts. Common examples include:

• Misuse of Power of Attorney: A family member or trusted individual granted financial authority begins making transactions that benefit themselves rather than the senior, such as transferring property, changing beneficiary designations, or making unexplained withdrawals.⁵
• Caregiver Exploitation: Caregivers may gradually gain control over finances by offering to “help” with bills and banking, eventually taking over accounts completely. Some might steal cash, medications, or valuables or add excessive charges for services never provided.
• Family Financial Pressures: Adult children or relatives facing financial problems may pressure vulnerable seniors for “loans” never repaid or convince them to co-sign for financial obligations without intention of making payments.

Government Impersonations

Scammers pose as representatives from agencies like the IRS, Social Security Administration, or Medicare. They create fear by claiming unpaid taxes or benefit termination unless the victim provides personal information or payment.

Sweepstakes and Lottery Scams

Con artists inform seniors they’ve won a prize or lottery, then request “taxes” or “processing fees” to claim the fictional winnings. Once money is sent, the scammer disappears.

Robocalls and Phone Scams

The “Can you hear me?” scam is widespread. When the older person answers “yes,” the scammer records their voice and uses this “voice signature” to authorize fraudulent charges.

Pig Butchering Scams

This newer trend, named for the practice of “fattening up” victims before “slaughtering” them financially, has become increasingly prevalent. Scammers build relationships with victims over weeks or months through dating apps, social media, or wrong-number texts before introducing investment opportunities. They often create fake investment platforms showing fictitious profits to encourage more significant investments. By the time victims attempt to withdraw funds, the scammers and money have vanished.

Romance Scams

Fraudsters create fake profiles on dating sites or social media to establish emotional connections with seniors. After developing trust, they invent emergencies or investment opportunities requiring financial assistance. These scams caused over $1 billion in reported losses in 2022, with victims over 70 losing an average of $9,000.⁶

Tech Support Fraud

Scammers claim to be from well-known technology companies, alerting seniors to fictitious computer problems. They gain remote access to devices, steal personal information, or charge for unnecessary “repairs.” In 2022, over 19,000 tech support fraud complaints were filed with the FBI.⁷

Why Financial Exploitation Often Goes Unreported

Many seniors don’t report financial crimes because of:

• Shame or embarrassment – “How did I let this happen?”
• Self-blame – Feeling responsible for being victimized
• Fear of retaliation – Concerns about family relationships (like access to grandchildren)
• Lack of awareness – Not realizing the situation constitutes a crime

Warning Signs to Watch For

Look for these potential indicators of financial exploitation:

• Unexpected changes in banking habits or account balances
• Unusual withdrawals or transfers
• New “best friends” who show excessive interest in finances
• Missing belongings or valuables
• Unpaid bills despite adequate income
• Suspicious signatures on documents
• Isolation from family and friends

Taking Action

If you suspect elder financial abuse:

1. Contact your state’s Adult Protective Services (APS) agency. Find your local APS office at https://eldercare.acl.gov
2. Report incidents to your local police department, especially when fraud is involved
3. For suspected investment fraud, contact your state’s securities regulator through the North American Securities Administrators Association (NASAA)
4. File a complaint with the Federal Trade Commission (FTC) at ReportFraud.ftc.gov
5. Download “MONEY SMART for Older Adults,” a resource guide from the FDIC

Prevention Tips

• Maintain open communication about finances with aging loved ones
• Help monitor accounts for unusual activity
• Encourage skepticism about unsolicited offers
• Suggest registration with the National Do Not Call Registry
• Discuss common scams to increase awareness
• Consider secure money management tools designed for seniors

National Resources

• National Elder Fraud Hotline: 1-833-372-8311
• AARP Fraud Resource Center: www.aarp.org/money/scams-fraud
• Consumer Financial Protection Bureau: www.consumerfinance.gov/olderamericans
• National Center on Elder Abuse: https://ncea.acl.gov
• FBI’s Internet Crime Complaint Center: www.ic3.gov
• Eldercare Locator: 1-800-677-1116 or https://eldercare.acl.gov
• U.S. Securities and Exchange Commission: www.investor.gov
• Senior Medicare Patrol: www.smpresource.org

Source: ABA Banking Journal Report

Please note:
This article is provided for informational purposes only and does not constitute legal advice. The information contained herein is not intended to be a substitute for professional legal counsel. Every situation is unique, and state laws vary. Healthcare providers and organizations should consult with their legal departments or qualified attorneys for specific guidance. This blog’s authors, publishers, and distributors assume no liability for actions taken based on this information.

References

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