Elder financial exploitation: how to protect yourself

Most people who help an older person with money do it honestly and with love. Still, a stranger on the phone or someone closer to home can take advantage. Knowing how it happens is the best protection there is.

This post explains what elder financial exploitation is, how to spot it, and what to do, with Washington's law as the worked example. It is part of our guide to paying for care and protecting what you leave.

What counts as elder financial exploitation?

Washington defines financial exploitation as the illegal or improper use, control or withholding of a vulnerable adult's money or property for someone else's benefit (RCW 74.34.020). The law gives three examples:

• Using deception, intimidation or undue influence, by someone in a position of trust, to get or use the person's money.
• Breaching a duty of trust, including misusing a power of attorney, a trust or a guardianship.
• Taking or using someone's money without lawful authority, when the person taking it knows they lack capacity to consent.

Under the same law, a "vulnerable adult" includes someone 60 or older who can't fully care for themselves. It also includes people under guardianship, people receiving home care or hospice, and people living in a care facility.

Other states define it in their own ways. The Consumer Financial Protection Bureau (CFPB) notes that some states require the person to be "in a position of trust" (CFPB guide).

Who does it

The CFPB says neighbors, caregivers, professionals, and even family or friends may try to take advantage. They may take money without permission, fail to repay loans, overcharge, or not do what they were paid to do.

People with a legal duty to manage someone else's money include agents under a power of attorney, trustees, guardians and conservators. A fiduciary is legally required to act in your interest and follow what you wrote. When one breaks that duty, it is exploitation under Washington law.

Warning signs

The CFPB's guide for families lists signs worth noticing (CFPB guide). Here are the main groups:

One sign by itself may mean nothing. A pattern is worth a closer look, and a gentle conversation in private.

Scams to know

Strangers use stories that change all the time. The CFPB lists warning signs that scammers may be targeting someone:

• A prize or lottery win that requires paying fees or taxes first.
• A request for bank details, or for payment by gift card, wire transfer or cryptocurrency.
• Pressure to act right now, before an opportunity is lost or something bad happens.
• A caller claiming to be from a government agency or bank, asking for information they should already have.
• Piles of mail or email about sweepstakes, contests or supplements.

A real agency or bank won't ask you to pay in gift cards. When in doubt, hang up and call the number on your statement or card.

How to protect yourself

The strongest protections are set up calmly, while you can choose. Here is a checklist.

1. Choose your money helpers in writing. A financial power of attorney and a trust name who acts for you, so nobody improvises.
2. Make sure it lasts. In Washington, a power of attorney ends at incapacity unless it says it is durable (RCW 11.125.040). Our post on durable powers of attorney explains the wording.
3. Think carefully about gifting power. A Washington agent can make gifts or change beneficiaries only if the document expressly says so (RCW 11.125.240).
4. Name a backup. So one person is never the only check. Our post on a backup in every role explains why.
5. Add a trusted contact at your bank. The CFPB describes this as someone your bank or credit union can reach if it suspects fraud or can't reach you (CFPB). They can't see your accounts without your consent.
6. Ask for records. The CFPB's guides set out four duties for anyone managing your money: act in your interest, manage carefully, keep it separate, and keep records (CFPB).

The CFPB suggests naming more than one trusted contact, in case the first can't be reached. It also suggests asking your bank what it would do if it suspected that contact.

Help with the routine paperwork

Some people bring in a daily money manager for bills while they're well. Others name a professional trustee, first or as backup to family. Our post on trust company fees explains how professionals charge.

Kinly was built with this check in mind. Members can name Trella Trust Company, a Washington State chartered trust company, as backup to a sister or friend. That way there's always a second set of eyes. How it works has the details.

What a Washington bank can do

Washington gives banks a tool. If a bank reasonably believes exploitation may be happening, it may refuse a withdrawal from the person's account while it's investigated (RCW 74.34.215).

The hold generally lasts up to five business days, or ten for securities, unless a court extends it. The bank must try to tell everyone authorized on the account, and report to Adult Protective Services and local law enforcement.

What to do if you suspect it

Here is a typical case, a composite. Carol notices her neighbor, 81, has a new "friend" who answers the phone for her. Her neighbor mentions wiring money for a prize.

Carol doesn't need proof to report it. Here is where to turn:

DSHS says you don't need proof and you don't need to give your name. A report made in good faith can't make you liable for damages.

The CFPB suggests writing down what you saw: dates, times, names and any documents. Then report it, and follow up.

If the load of watching over a parent's money is already wearing you down, our post on caregiver burnout may help. When you're weighing who should act for you, see choosing professional help.

Common questions

How do I protect myself from financial exploitation as I age?

Name your financial agent and trustee in writing, with a backup. Make sure your power of attorney is durable, and limit gifting power to what you intend. Add a trusted contact at your bank, and ask whoever manages your money to keep records.

What is financial exploitation under Washington law?

RCW 74.34.020 defines it as the illegal or improper use, control or withholding of a vulnerable adult's money or property for someone else's benefit. It includes misusing a power of attorney, trust or guardianship.

Where do I report elder financial abuse in Washington?

Call DSHS Adult Protective Services at 1-877-734-6277 or use its online form. If someone is in immediate danger, call 911. You don't need proof, and you don't need to give your name.

Can a bank stop a suspicious withdrawal?

In Washington, yes. Under RCW 74.34.215, a bank that reasonably suspects exploitation may refuse a withdrawal while it investigates, generally for up to five business days. It must report to Adult Protective Services and law enforcement.

What is a trusted contact person?

Someone you name at your bank or brokerage, whom the institution can reach if it suspects fraud or can't reach you. According to the CFPB, they can't see your accounts or make transactions without your separate consent.

Sources

• RCW 74.34.020: Definitions, including financial exploitation and vulnerable adult
• RCW 74.34.215: Financial exploitation of vulnerable adults (bank holds)
• RCW 11.125.040: Power of attorney, termination
• RCW 11.125.240: Agent's authority over the principal's property
• Washington DSHS: Report concerns involving vulnerable adults
• Washington DSHS: Report concerns by phone
• CFPB: Preventing elder financial abuse, guide for family and friends (PDF)
• CFPB: Choosing a trusted contact person (PDF)
• CFPB: Managing someone else's money
• CFPB: Guides for managing someone else's money (news release)
• CFPB: Protecting older adults from fraud and financial exploitation
• US Department of Justice: National Elder Fraud Hotline