Why It Matters:
  • Familiarity fraud (perpetrated by a person of trust) against seniors is a potential danger for your clients.
  • Helping your clients understand the types of fraud, what to look for, and where to find help is their best defense.
  • Just having the discussion with your clients could possibly alleviate stress around a difficult subject.

Sadly, stories of conmen bilking seniors out of hard-earned savings are all too common these days. The criminals are often anonymous, hiding behind varied schemes that prey on the trust, innocence, or fear of unsuspecting victims.

What’s equally troubling, and often overlooked, are accounts of fraud perpetrated by those in a position of trust. Everyone—especially the elderly—can become vulnerable when giving unchecked financial account access and information to family and friends.

By talking about familiarity fraud with your clients, you might be able to offer them some added peace of mind and possibly reduce stress. You can also help them better understand where to turn should they fall victim to this type of fraud.

Here are some common familiarity scams, how they work, and actions individuals can take in some instances to avoid becoming a fraud victim.

Misappropriation of income
Someone your client knows accesses Social Security income and uses it for his or her own benefit. This can happen when the perpetrator becomes a “representative payee” of Social Security benefits; it’s similar to an agent under a power of attorney.

Adding a name to a bank account
A friend or family member suggests it will be easier to help with day-to-day expenses if they are added to a bank account. The individual then withdraws money for his or her own benefit.

Instead, your client may consider giving the person a limited power of attorney, which establishes a legal obligation for the individual to access funds only for your client’s benefit. Some banks may offer alternatives, such as a convenience account.

Power of attorney abuse
A power of attorney can be an important tool when preparing financially. It gives another person legal authority to act on one’s behalf. It can also give that person access to virtually all financial assets.

When giving someone a power of attorney, suggest your clients work with an elder law attorney to ensure they grant agents only the powers they want them to have. Encourage clients to visit the National Academy of Elder Law Attorneys to find a local attorney. Other helpful resources include the American Bar Association and the American Association of Trust, Estate and Elder Law Attorneys.

Transferring title to or re-encumbering real property
A friend or family member may suggest to a client to get their house “out of your name.” For example, many people think that transferring home ownership will help them qualify for Medicaid if they need long-term care.

Before transferring real estate — even to a family member —recommended your client talk to an attorney who works for them, not the person suggesting the change.

As we age, it’s natural to ask friends and family for help with our finances. But understanding familiarity fraud basics, and being aware of potential ploys by people we may trust, can make all the difference in gaining a helping hand without becoming a victim.

Things to Consider:
  • Suggest clients safeguard their Social Security income and be cautious of someone wanting to become a “representative payee” in order to claim their benefits.
  • If a friend or family member asks to be added to a client’s bank account to help with day-to-day expenses, suggest clients consider only giving them limited power of attorney.

Neither Transamerica nor its agents or representatives may provide tax, investment or legal advice.  Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors and financial professional regarding their particular situation and the concepts presented herein.