Elder Fraud: 5 Ways to Protect the Ones You Love

Today is World Elder Abuse Awareness Day - but fraudsters are gunning for the elderly every day

by Liz Lasher

June 15, 2020

Did you know that today is World Elder Abuse Awareness Day? In addition to being a passionate defender in the fight against child identity fraud, I am also an ardent supporter of elders’ financial well-being. With this year’s theme of “Access to Justice: Legal, Social and Economic Services for Older Victims of Sexual, Physical and Financial Crimes,” a rise in COVID-related elder fraud schemes provides a perfect reason to put financial protections into place for beloved family members.

Based on my experience as the family fiduciary of my grandmother’s finances, here’s a quick list of action items to get you started.

Tip 1: Be Proactive

The best time to assist older people with the financial affairs isn’t when they fall ill, or otherwise decline physically or mentally. It’s long before. As grandparents or parents get older, there should be a family conversation that includes them in developing a plan.

Who will be given power of attorney? This task should be executed legally, including filing paperwork, in the correct jurisdiction.
Where are the family member’s financial accounts? If it’s not possible to get this list, the elder’s mail and previous tax returns will be very helpful.
Who will manage the family member’s accounts? Sometimes it is prudent to assign more than one person to this task, for accountability and to reduce finger-pointing if a bad investment decision is made.
Should the elder’s accounts be jointly held with the family member managing them? This streamlines administrative tasks.
Schedule regular financial check-ins with the elder and other family member of the financial team to make sure you remain on the same page.

2. Activate Alerts

Keep an eye on the elder’s accounts to receive alerts from banking and investment firms’ apps, to apprise you instantly on unexpected or large transfers, or if a balance falls below certain levels.

3. Freeze Credit

If the elder will not be applying for new credit cards or loans, consider a credit freeze. It’s the same process I explained in this recent post. This will also help prevent others who may gain access to the elder’s credit cards from requesting credit line increases.

4. Be on the Lookout for Scams

Elderly people are typically considered to be among the more vulnerable segments of the population, and fraudsters exploit this. Educate yourself on how criminals specifically target the elderly, and teach your loved one what elder fraud scams are and how to avoid them.

Since today’s elders are not digital natives, this will probably include your taking the opportunity to show them what phishing text messages look like. Play a voicemail message from a travel-award scam, if you get one. Make fraud discussions a regular occurrence since many pop up quickly, such as in the wake of COVIC-19.

5. Block Solicitations

Register your elder’s phone numbers on donotcall.gov (or your nation’s version of it) to reduce the number of solicitations. Help your elder understand how to be skeptical of unfamiliar callers who do get through.

The good news is that you can start protecting your beloved elders today. The Consumer Financial Protection Bureau (CFPB) just released the Elder Fraud Prevention and Response Networks Development Guide, an online resource to help communities form collaborative networks to better prevent and respond to elder financial abuse. The Guide offers useful planning tools, templates, and exercises. There are similar guides in other countries, such as this one from the charity Age UK.

Any questions? Follow my multi-generational efforts to fight fraud and DM me on Twitter @LizFightsFraud.

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This is largely because they have trade lines that have been open longer, which leads to higher scores (assuming the trade lines are in good standing and all other things equal). The most credit savvy among you will remember that length of credit history accounts for roughly 15% of the overall <a href="http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx" target="_blank">FICO® Score calculation</a>. But for younger consumers, it isn’t too helpful to say, “just wait until you are 50 years old, and that will fix things!” Thus, I decided to dive deeper with our analysis, including looking at the credit behavioural characteristics of younger consumers with high FICO® Scores. In this analysis, I looked at credit characteristics for the two highest score bands, 750-799 and 800-850, which have about 16% and 23% of the population, respectively. I further broke this down by looking at the characteristics of the youngest 15% in each group, which occurs at age 29 for the 750-799 group and 43 for the 800-850. We used FICO® Score 9 for our analysis, and examined typical variables of the categories that go into the make-up of the score. <a href="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png"><img class="alignnone size-full wp-image-29367" src="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png" alt="fico-score-high-achiever-table" width="715" height="747" /></a> Since there’s a lot to dissect in this chart, I’ll highlight a few findings that struck me: <ul> <li>Credit history. Higher scores are undoubtedly associated with a longer time on file. What’s striking is the higher average time on file for the 800+ group, both overall and for revolving accounts (the most common trade line). Clearly, it helps to start credit use early in life – but that’s not the sole determining factor for high scoring. The younger cohorts in both the 800+ and 750-799 groups have time on file medians significantly less than their older counterparts.</li> <li>New credit. High credit scorers do, in fact, pursue new credit. We see little variation in months since last trade line opening and last inquiry among all groups observed.</li> <li>Pay on time. As you might expect, the further in the past the delinquency, the higher the score – and that’s if a delinquency ever happened. 95% of the 800+ people and 72% of the 750-799 group have never been delinquent, which is a striking contrast to the 57% for the total population. The percentages for the younger groups are even higher, especially so for the 750-799ers. Collection items are also scarce for these high scorers. While 23% of the national population have collection items greater than $99, the figures are only 0.5% for the 800+ group and 3% for the 750-799 group. It is clear that, in conjunction with starting a credit file early, paying on time is a key trait of the FICO® Score high achiever.</li> <li>Balance and utilization. Finally, we look at how credit is being used, focusing on revolving product use. (Since most people only have one mortgage or one auto loan, variation in instalment product figures is minimal and driven by payment history, which is near perfect for high scorers, as we’ve seen.) FICO® Score high achievers tend to have more open revolving accounts. While the % active trades and utilization are generally lower, by no means do high scorers avoid the use of credit products. What drives the difference here is the amount of available revolving credit utilized. The 800+ group is roughly 1/4 of the national median, both in total and on their highest utilized card; they also have lower balances and more cards. The 750-799 group is more active and higher utilized, but still only at 2/3 of the national figures. The young 750-799 group compensate with lower revolving balances and, as a result, lower utilization, which is in line with what we see for the 800+ group.</li> <li>Benchmarks. I’d like to point out that while this study provides good benchmarks of the typical credit traits of the FICO® Score high achiever, individual credit profiles will vary widely. And keep in mind that when we sort groups of consumers as a whole by different behaviours, some results may look superficially odd. For example, the 800+ band has a longer median average open account time (128 months) than average revolving months on file (140 months).</li> </ul> So, what do we conclude? A huge takeaway is that high scorers don’t have too much in the way of serious delinquencies and negative public record data. In most respects, the young 800+ people are like their peer group. They really only differ markedly in their shorter credit history and higher non-mortgage balance, both of which are a function of life stage. Our results show that you don’t have to be a credit product hermit; these high scorers have more credit cards. The takeaway is to start credit activity early and maintain well-managed and moderate usage. In many ways, the young 750-799 people are more interesting because their age profile is much younger. Their credit characteristics differ more from their peer group, particularly in terms of length of credit history. They compensate by having almost pristine credit records and lower balances. Ultimately, 39% of US consumers are FICO® Score high achievers, which they accomplish by following common-sense credit practices. It ain’t rocket science!

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