By JUDD MATSUNAGA, Esq.
Although you might not agree, financial capacity – the ability to make sound financial decisions – is one of the first things to go when facing mild cognitive impairment. Mild cognitive impairment can be an early sign of Alzheimer’s disease; it affects about 5.4 million Americans and 22 percent of people over the age of 71 have it.
I recently attended a symposium on elder financial abuse prevention held at the Center at Cathedral Plaza. They had an army of speakers, including a California Superior Court judge, L.A. County district attorney, assistant director for the Office of Financial Protection for Older Americans (federal government), L.A. Sheriff’s Fraud and Cybercrimes Bureau, L.A. County Adult Protective Services, bankers and a host of others.
One speaker with the Financial Industry Regulatory Authority (FINRA) Foundation said. “All of us will be a target of fraud.” He went on to say that scammers are not necessarily targeting seniors, it is just that they are more successful at it. But why? Financial literacy declines in later life and investment skills deteriorate sharply around age 70.
What is alarming is that the older Americans who are having trouble making wise money decisions do not realize they are making bad financial choices. Research conducted at George Washington University’s School of Business found that although older Americans scored low on questions regarding financial literacy, yet gave themselves high rankings.
That’s one reason why older victims of financial fraud lose $2.9 billion annually, according to a 2011 MetLife analysis. It is also another reason why the elderly pay some of the highest costs for debt. In one study, 75-year-olds shelled out about $265 more annually than 50-year-olds for home equity lines of credit.
You might say, “But Judd, that might be true for those other seniors, but I don’t have dementia.” Research suggests that even among older persons who most would consider “cognitively healthy,” there is very subtle cognitive decline that occurs, which detrimentally affects decision-making and increased susceptibility to scams. (PLOS ONE, published Aug. 20, 2012)
Sadly, over the years, I have had several people (always an elderly man) come into my office asking for help collecting a “million dollars” that they won in some foreign lottery. They told me how they had already sent $5,000 or more to collect their prize. They were told that the money was needed to process their prize, or to pay the tax on their “million-dollar” prize.
A speaker with the U.S. Postal Inspection Service said that foreign lottery scams can come via the mail, email or by phone. “It is illegal to play a foreign lottery in the United States,” he said. “Another reason not to take a chance on playing a foreign lottery through the mail is that you are almost guaranteed to lose. And once you play, you can count on receiving more ‘chances’ to play and lose.”
If you think you are the victim of a lottery scam, save all documentation of the transaction, including postcards, canceled checks, phone bills, credit card statements, and even envelopes. Also, make detailed notes of your telephone conversations by date and time and write down any important statements made by each person who spoke with you.
The speaker warned the audience to not give out personal or financial information to anyone who tells you you’ve won, over the phone or by Internet. If you would like more information on foreign lotteries and/or a free DVD, “Longshot,” call the U.S. Postal Inspector at (800) STAMP-24 or go to www.usps.com/postalinspectors.
The morning’s keynote speaker was from the Consumer Financial Protection Bureau (CFPB). She said that scammers are “masters of psychological manipulation.” She warned that the so called “Granny Scam,” which the FBI says started in 2008, is on the rise. If you’re not familiar with the “Granny Scam,” here’s how it works:
You’re a grandparent, and you get a phone call or an email from someone who identifies himself as your grandson. “I’ve been arrested in another country,” he says, “and need money wired quickly to pay my bail. And, oh by the way, don’t tell my mom or dad because they’ll only get upset!”
This is an example of what’s come to be known as “the grandparent scam” — yet another fraud that preys on the elderly, this time by taking advantage of their love and concern for their grandchildren.
Thanks to the Internet and social networking sites, a criminal can sometimes uncover personal information about their targets, which makes the impersonations more believable. For example, the actual grandson may mention on his social networking site that he’s a photographer who often travels to Mexico. When contacting the grandparents, the phony grandson will say he’s calling from Mexico, where someone stole his camera equipment and passport.
Common scenarios include:
• A grandparent receives a phone call (or sometimes an email) from a “grandchild.” If it is a phone call, it’s often late at night or early in the morning, when most people aren’t thinking that clearly. Usually, the person claims to be traveling in a foreign country and has gotten into a bad situation, like being arrested for drugs, getting in a car accident, or being mugged … and needs money wired ASAP. And the caller doesn’t want his or her parents told.
• Sometimes, instead of the “grandchild” making the phone call, the criminal pretends to be an arresting police officer, a lawyer, a doctor at a hospital, or some other person. And we’ve also received complaints about the phony grandchild talking first and then handing the phone over to an accomplice … to further spin the fake tale.
• We’ve also seen military families victimized: after perusing a soldier’s social networking site, a con artist will contact the soldier’s grandparents, sometimes claiming that a problem came up during military leave that requires money to address.
• While it’s commonly called the grandparent scam, criminals may also claim to be a family friend, a niece or nephew, or another family member.
The following advice comes from the FBI website to avoid being victimized in the first place:
• Resist the pressure to act quickly.
• Try to contact your grandchild or another family member to determine whether or not the call is legitimate.
• Never wire money based on a request made over the phone or in an email…especially overseas. Wiring money is like giving cash — once you send it, you can’t get it back.
In conclusion, remember that as one gets older the ability to recognize scams weakens and as a result the elderly become the prime targets for these crimes. If you or someone you know is approaching this age, it is very important to be vigilant and be aware of potential scammers. To be continued….
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Judd Matsunaga, Esq., is the founding partner of the Law Offices of Matsunaga & Associates, specializing in estate/Medi-Cal planning, probate, personal injury and real estate law. With offices in Torrance, Hollywood, Sherman Oaks, Pasadena and Fountain Valley, he can be reached at (800) 411-0546. Opinions expressed in this column are not necessarily those of The Rafu Shimpo.