elder fraud

Your Broker has Tools to Help Prevent Elder Fraud

Jan 27, 2020

The financial industry has reported that senior financial exploitation is estimated to cost savers almost $3 billion per year and that 1 in 44 cases is actually reported. Additionally, recent scientific studies have shown that financial decision making is often one of the first cognitive functions to decline  The U.S. Consumer Financial Protection Bureau reports that during the period between 2013 and 2017, seniors (over age 70) lost an average of $41,000 due to elder financial exploitation  That same report found that average losses are even higher when the scammer is a friend or relative. Seniors targeted by strangers lost an average of $17,000, while those scammed by someone they know lost an average of $50,200.The brokerage industry has put some safeguards into place to protect elders or mentally incapacitated customers from financial exploitation. The Financial Industry Regulatory Authority (FINRA) allows broker-dealers to put a hold of up to 15 days on the disbursement of funds from seniors’ accounts if they believe that an individual is being financially exploited. Another recent attempt to prevent elder abuse is “trust contact” forms. Firms are now required to ask their retail clients to provide the name and trusted contact and provide information for a person who can be contacted in the event of suspected financial exploitation. https://www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-bulletin-finras-new-account-protection The 2018 Senior Safe Act protects brokers and their firms from liability when reporting possible exploitation to the authorities. This federal law protects covered investment professionals from liability where that person reports on the potential exploitation of a senior (defined as not younger than 65 years) to a covered agency. The immunity established by the Senior Safe Act is provided on the condition that (1) certain employees receive training on how to identify and report exploitative activity against seniors before making a report, and (2) reports of suspected exploitation are made “in good faith” and “with reasonable care.”   To help advisors detect elder financial abuse, the Securities Industry and Financial Markets Association (“SIFMA”) released a senior investor protection tool kit that helps financial professionals detect the signs of undue influence, power of attorney abuse, and other fraud.  These regulatory protections are helpful to prevent and detect fraud, but there are additional steps elder investors can make to protect themselves and their loved ones.   Create a durable power of attorney. A durable power of attorney allows the investor to assign someone to oversee their finances in the event they’re incapacitated. Create a revocable trust. A revocable trust can be established so that in the event of incapacity a co-trustee can help pay bills and protect assets. Discuss responsibilities with family. While it may be difficult, it is helpful to have discussions with relatives so that they are well aware of what accounts exist and who will be responsible in case of incapacity. If a trusted contact is designated, tell that person and let them know what bills they will be required to take care of. You might also consider having a trusted relative receive duplicate statements online or via email so they know what is happening in the account. You also can help your elderly relative or friend protect themselves […]

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