Only one in 44 cases of elder fraud is actually reported, according to the National Adult Protective Services Association.
But the issue is attracting more attention, with some states passing laws to give authorities more tools to fight elder fraud. Agents and advisors are often best positioned to witness and report suspicious incidents, said Michele Kryger, senior compliance and elder & vulnerable client care officer for AIG Life & Retirement.
Elder fraud normally falls into one of three buckets, she said during a Thursday webinar sponsored by the National Association for Fixed Annuities:
- Third-party fraud, in which victims are randomly selected
- Targeted fraud, in which the victim is chosen
- Family fraud, in which a family member or caregiver commits fraud
Sixty percent of elder fraud falls into the last category, Kryger said, pointing to AIG statistics. And fraud cases are rising during the COVID-19 pandemic, she added.
"More and more seniors are finding themselves locked down and … in many of these cases family members are not able to visit the client," Kryger noted. "Financial institutions and professionals are definitely in a unique position to identify red flags that might otherwise go unnoticed."
5 Keys To Fighting Fraud
Fighting elder fraud as an advisor is largely just common sense, Kryger said. Keep an eye out for unusual activity and behavior. She delivered her five keys to protecting yourself as well as the client:
- Discuss the risks. It is important to discuss early what the client is vulnerable to, and how they want to be best protected. Many seniors will not want help, and might not even want to discuss the topic, Kryger said, but having and documenting those conversations could protect the advisor and firm down the line.
- Check and balances. "What you really want to talk to them about is building a system of checks and balances," Kryger said.
- Involve trusted family members. Bringing in family members to get as many trusted people involved better protects the client. "If you build a relationship with that next generation, that’s obviously a benefit for the financial institution," Kryger added.
- Stay alert for red flags. For example, somebody new accompanying the client could raise a legitimate red flag. "Noticing those situations and having those discussions with the client to try and find out what is going on is going to be really important," she said.
- Escalate and report. In some cases, it might be difficult to get the authorities to intervene in a case, Kryger said. Perhaps the amount of money is too minor, or no crime has been committed. In those cases, it's crucial to keep monitoring and documenting, she said.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.
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