The underreported $3 billion crime

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The recent federal conviction of an Alabama woman on charges of bank fraud and aggravated identity theft of an elderly nursing home resident is yet another reminder of the serious problem of elder financial abuse.

Shostocka Keya Ward, 43, who was an employee of the nursing home, gained the trust of an elderly dementia patient by helping the woman with bill payments and other financial matters, the Department of Justice alleged. She eventually gained access to the victim’s checkbook, debit card and credit cards, stealing $335,000 in the process.

Prosecutors said Ward used the money to pay for her wedding, car payments, private school tuition payments and vacations. She was sentenced to nearly 5 years in prison under a plea deal reached in September.

Why this is a big deal

Older people make up a disproportionately large number of the victims of scams and identity theft. The Investor Protection Trust found 1 in 5 Americans age 65 or older has been abused financially. Another study by the MetLife Mature Market Institute found the cost of financial exploitation of seniors was close to $3 billion each year.

That dollar figure is almost certainly low because financial exploitation is often underreported. Out of embarrassment, many seniors are reluctant to report becoming victimized, while others, particularly isolated seniors, may not even be aware they have been scammed.

Why seniors fall victim

An interesting study at the University of Iowa has identified a possible physiological reason for why the elderly are so often victimized by scam artists, the only criminals we refer to as artists.

The study points to the ventromedial prefrontal cortex, or vmPFC, an area of the brain that controls belief and doubt, which loses functionality as people age. According to the study, “vulnerability to misleading information, outright deception, and fraud in older adults is the specific result of a deficit in the doubt process that is mediated by the vmPFC.”

How to protect your loved one

If you have an elderly family member who may be suffering from a decline of mental acuity, it is important to take specific steps to keep them from becoming a victim of financial abuse. One important step to take is to physically secure their financial records as well as documents with personal information that can be used by a scammer to turn the elderly person into a victim of identity theft.

Many seniors have caretakers, nurses and others with whom they come into contact who should not have easy access to these records.  A person’s Social Security number is the key to identity theft, so it is important to keep all records that contain the person’s Social Security number safe.

It’s also important to regularly monitor all of the accounts of your elderly relatives. Regularly check credit reports for irregularities. Check credit reports for free at myBankrate.

You may wish to put 2 family members or friends on the elderly person’s accounts to be able to monitor the accounts and each other. Finally, there are companies such as True Link Financial that provide debit cards that can be customized to monitor spending, block certain types of transactions and set spending limits for seniors.

As with all scams, the best type of protection is prevention.

Steve Weisman is a lawyer, a professor at Bentley University in Waltham, Massachusetts, author of “Identity Theft Alert” and editor of the blog