Financial abuse of elderly citizens is one of the most common, yet under-reported, crimes in the United States. While many older adults have the mental acuity to protect their assets, the combination of cognitive decline and financial wealth make some other seniors easy prey for financial crime.
In 2024, there were more than 147,000 victims of elder fraud who lost an average of $83,000. The total amount of losses for the year was $4.8 billion, a 43% increase in losses from 2023.1 Worse, true losses may be difficult to calculate since many incidents go unrecognized or unreported.
The best prevention for you and your older loved ones is being aware of forms of financial abuse and knowing what preventive steps you can take.
A Wide Variety of Crimes
With elder financial abuse, fraudsters exploit certain vulnerabilities of the elderly, including cognitive impairment and lack of familiarity with technology, to collect their personal and financial information to perpetrate fraud. Financial abuse against the elderly covers many types of fraud such as unauthorized use of a senior’s property, mismanagement of their income for a personal benefit or persuading a senior to sign a fraudulent document.
Other scams include deceitful investment offers, rip-offs by contractors and intentional bad advice from disreputable advisors.
While every case of abuse will be different, there are typical red flags for the various types of scams. For example, since many seniors are dependent on others, often the abuser is someone close to him or her. Deceitful family members and caregivers are in a good position to access the victim's assets illegally without being noticed. They may also coerce, deceive or psychologically manipulate the victim under the guise of being helpful.
“A lot of times the person who's committing the fraud is a natural object of the senior person's generosity,'' says Thomas Mierswa, Executive Director in Morgan Stanley’s Legal and Compliance Division. “It is often difficult to determine that a fraud has taken place.''
Cases like these can be challenging to address because investigators must deal with a relationship in which the victim is emotionally attached to the offender. In many instances, the victim chooses not to report the fraud.
Confidence Scams Against Seniors
Elderly people can also be duped into new romantic or platonic relationships with unscrupulous people who seek to obtain money. In 2024, these types of scams resulted in more than $389 million in losses to adults over 60 years of age.1 According to Mierswa, seniors who live alone are particularly exposed, especially those who frequent social media. These seniors may come to place excessive trust in their new virtual companion, with whom there is no actual in-person connection. This vulnerability can come from loneliness, which can arise when a senior lives alone and has limited contact with the outside world.
Common confidence scams also include: impersonation scams where scammers pose as government officials (e.g., from the IRS, Social Security Administration) to demand payment for fake debts or fees. Notably, imposter and impersonation scams were the most reported cause of consumer fraud in 2024 leading to $2.95 billion in losses, according to the Federal Trade Commission (FTC).2
It’s also important to watch out for investment scams where scammers offer fake investment opportunities with guaranteed high returns. These often involve cryptocurrency, gold bars or other complex financial instruments.
Internet access has fueled senior financial fraud. Seniors who aren’t savvy with e-mails or social media can sometime fall prey to notifications of overseas lottery wins, unexpected inheritances abroad or even “ransom requests” about allegedly kidnapped younger relatives who may be away on a semester abroad program.
First Line of Defense for Elder Financial Abuse
Trusted family and friends are the first line of defense for detecting elder financial abuse. It is important for senior clients to prepare and include individuals they trust in their financial affairs. Coordinate with your loved ones so you can regularly check their account statements and access information online to review any transactions.
Because many crimes are carried out through wire transfers, withdrawals and electronic payments, cash management personnel can act as front-line watchdogs in exploitation cases. A major step to combating senior financial abuse is being aware of the flow of money. This is where the relationship between account holder and Financial Advisor and his or her team becomes key.
Morgan Stanley staff can help family members with the difficult task of detecting warning signs that could point to exploitation such as abrupt changes in a will, the sudden appearance of previously uninvolved relatives, or unusual account activity. A senior client breaking his or her habits of withdrawals and transfers can also raise suspicion.
“We do not expect our employees to formally diagnose client behaviors, but they are trained to identify red flags or unusual activity in client accounts and escalate to appropriate groups to investigate,'' says Rocco Procopio, Head of Field Compliance at Morgan Stanley.
At Morgan Stanley, a Financial Advisor can raise a suspicious situation to Risk, Compliance, or Fraud Operations and ultimately to the Legal Department. When a case is determined to constitute a deceptive or abusive act, Risk and Legal will act to stop the financially exploitative activity and try to protect the client's assets. When appropriate, Adult Protective Services may be alerted and the matter may be reported to law enforcement.
Designating a Trusted Contact to Prevent Abuse
With scams on the rise, protecting your assets and personal information remains our top priority. One way to protect yourself or your loved ones’ accounts from fraud and financial scams is to add a trusted contact. A trusted contact is a person you designate to be contacted if we are unable to reach you or if there are concerns regarding your well-being or potential financial exploitation. It is important to note that a trusted contact does not have permission to access account details, make decisions or perform any actions on your behalf. This individual serves as an additional layer of defense in case issues arise.
Elder financial abuse can impact financial security, fracture families and lead to a potential loss of trust. Friends, relatives and professionals of senior clients can help to address this scourge. The best prevention may lie in being familiar with the habits of potential victims and taking action when suspicious activity occurs.
