Protecting Elders From Financial Abuse

Jun 7, 2024

Financial abuse of older citizens is one of the most common crimes in the U.S. But there are ways to protect you or your loved ones from scams like these.

Key Takeaways

  • The elderly are often targeted by financial scammers because they may be less familiar with new technology or the latest scams.
  • Trusted family and friends, as well as Financial Advisors, can play a crucial role in detecting financial scams and monitoring unusual account activity.
  • Appointing a Trusted Contact can help you alert your Financial Advisor in case financial or wellbeing concerns.

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 seniors easy prey for financial crime.


In 2023, there were more than 100,000 victims of elder fraud who lost an average of $34,000 each. The total amount of losses for the year was $3.4 billion, an 11% increase from 2022.1 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, and persuading a senior to sign a fraudulent document.


Other scams include deceitful investment offers, rip-offs by contractors, cybersecurity scams, romance scams, impersonation scams, and intentional bad advice from disreputable advisors.


While every case of abuse will be different, there are common red flags for the various types of scams. For example, since many seniors are dependent on others, often the abuser may be someone close to him or her. Deceitful family members and caregivers may be in a position to access the victim's assets improperly 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 is 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 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

One common form of elder fraud involves confidence/romance scams. Elderly people can be duped into new romantic or platonic relationships by unscrupulous people who seek to obtain money. In 2023, these types of scams alone resulted in over $357 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 in-person connection. This vulnerability can come from loneliness, which can arise when a senior’s primary contact with the outside world is through their home caregiver.


Internet access has fueled senior financial fraud. Seniors who aren’t savvy with e-mails can fall prey to notifications of overseas lottery wins, unexpected inheritances from abroad, or even “ransom requests” about allegedly kidnapped younger relatives, who often are away on a college 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. Consider coordinating 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 their 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 “friends”, or unusual account activity. A senior client breaking his or her habits of withdrawals and transfers can 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 financially abusive act, Risk and Legal will seek to stop the financially exploitative activity and 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

Another line of defense is becoming a Trusted Contact on your loved ones’ accounts, which can help prevent elder abuse and is permitted by FINRA.2 A Trusted Contact is a person appointed by a client who serves as a point of contact in case a concern arises about the client’s health status, financial activities or wellbeing. Note that, unlike an agent with a power of attorney, a Trusted Contact has no authority to take any action on an account. In 2024, FINRA included Trusted Contacts as an item in their 2024 FINRA Annual Regulatory Oversight Report emphasizing the importance our regulators place on having a Trusted Contact in place.3


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.

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