Why scammers target older people
There is good reason why scammers and their ilk target older people. According to The Economist, financial management skills are often an early casualty of age-related cognitive change – our financial decision-making abilities peak in our mid-fifties and, regrettably for many of us, it is all downhill from there.
Of course, it is not just that older people are more vulnerable and on average, easier to con. Older people are also wealthier than younger people. If you are going to commit a fraud, an older person is likely to give a better return than a younger one.
The British National Trading Standards organisation says the average age of a victim of a scam is 75 years. These people often live alone and so are easy to "befriend". Elder-abuse is a serious problem and financial elder-abuse is rife.
Even worse, although we may fear the scam phone call from the Philippines, losses come often from within.
Many older people lose their money to family, not to a stranger scamming on the doorstep. The idea of family committing such fraud is difficult to contemplate. But given family dynamics, if there is enough family ill-will or financial desperation, it would be easy enough to perpetrate.
Family also has opportunity. Disabled parents may ask for cheques to be written or give a password to do some telephone banking. That can be a very easy opportunity for a daughter who is up against it financially and who thinks she will only do it once.
Moreover, financial fraud committed by a son or a granddaughter would be much less likely to be reported than gross overcharging from a tradesman. Family fraud is a crime against both nature and the law, which the family member may well get away with.
Family also has opportunity. Disabled parents may ask for cheques to be written or give a password to do some telephone banking. That can be a very easy opportunity for a daughter who is up against it financially and who thinks she will only do it once.
There are also plenty of cases where Enduring Powers of Attorney (EPA) have been used nefariously. EPAs are documents giving people the power to take over finances or make personal care decisions for someone else in the event they become incapacitated. That makes them essential documents to have in case something goes wrong and most older people should have them.
However, they can be a double-edged sword – giving someone the power to manage money and investments requires a lot of care. Usually, an attorney is given power to act generally over all aspects of property and finances and as such, the attorney can do pretty much anything in the name of person who has given the power. That means attorneys can access bank accounts, buy or sell property, pay bills etc.
It has always seemed to me you should appoint two attorneys to manage your finances, and they have to act jointly (i.e. decide on any issue together). This gives some safeguard against fraud. The person appointed as attorney must act in your best interests, but there are plenty of cases where they have not: with EPAs, always remember that trust is the name of this game.
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Written by Martin Hawes. First appeared on Stuff.co.nz.
Martin Hawes is an Authorised Financial Adviser and a disclosure statement is available on request and free of charge, or can be found at www.martinhawes.com. This article is of a general nature and is not personalised financial advice.