By David W. Russell, CFP®, Sr. Vice President/Trust Officer
A few weeks ago I received an email from a client. The email was addressed to me and was from my client’s email address. The content of the email is reproduced below:
How are you doing…..please I need you to send a transfer to a client for me …. I can”t call you at the moment …. Let me know the details you will need for this transfer…..I will call you once i am done with my meetings
Your thoughts…thank you,
(client’s first name)
I am accustomed to getting email requests for funds from clients, including this client, but the tone of this message was suspect, so I called my client to verify if she had sent the email (Our internal policy is to verbally verify all such requests). She had not. Once we knew that the email was fraudulent, we contacted the Attorney General’s office, but without much else to go on, they were not much help. In subsequent emails, the sender provided a valid out of state bank account, payee name, and two social security numbers, one of which was my client’s. We alerted the out of state bank that one of their customer accounts had been hacked, and we alerted our clients that their identity had been compromised so that they could take appropriate actions. You see the senders hoped that we would be foolish enough to send our client’s funds to a valid bank account that they had access to so that once the funds were there, they could transfer the funds out to themselves. Thankfully, it never happened.
According to the I.D. Theft Resource Center and other sources, we learn that 10% of Americans have had their identities stolen, and on average, each of those individuals lost around $5,000. The cost to businesses worldwide adds up to a staggering $221 billion each year.
Without endorsing any particular service, we encourage everyone to register for some form of identity theft protection service. A current chart of identity theft protection services and their costs and ratings can be found here. In this day and age, you can’t be too careful.
Last week, the Investor Protection Trust (IPT) released the results of a survey regarding the growing problem of elder financial abuse. Available online at http://www.investorprotection.org, the new IPT survey was conducted during the first 10 days of June 2012. Those surveyed include state securities regulators (76), financial planners (77 ), medical professionals (24), caregiver/social workers (93), APS workers (172), educators (56) and others (264, including other law enforcement officials and legal experts).
The vast majority of these experts (96 percent) say the problem of elderly investment fraud/financial exploitation in the U.S. is “very serious” (70 percent) or “somewhat serious (26 percent).
Other Key Findings
According to the experts, the top three reasons why elderly investment frauds go unreported are: “shame on the part of victims” (86 percent); “the ability of con artists to string victims along until it is too late” (80 percent); and “failure of adult children to spot the problem and intervene” (70 percent).
96 percent of respondents say that “potential problems with mental comprehension make seniors more vulnerable” to financial swindles “very often” or “quite often.”
80 percent of respondents say that their experience is “very” or “somewhat” consistent with “a 2008 study (that) found that about 35 percent of the 25 million people over age 71 in the U.S. either have mild cognitive impairment or Alzheimer’s disease, making them especially vulnerable to financial exploitation, including investment fraud.
While elder fraud is terrible in all its forms, the sad fact is that 85-90% of all elder financial abuse is perpetrated by a family member. Family members are already in a trusted position and will sometimes use this position to take advantage of the vulnerability of an elderly relative.
It is critical that all family members as well as the medical and professional communities work together to protect the dignity and resources of this great generation.
David Russell is Senior Vice President of Pinnacle Trust, and author of the book, What You Need to Know: The Adult Child’s Guide to Being a Financial Caregiver. He frequently speaks to public and professional organizations on the topic of elder financial abuse. To book him for your organization, call 601-957-0323.