Protecting Senior Clients from Financial Abuse

By Sharif A. Muhammad, MBA, CPA, MST, CFP, Unlimited Financial Services LLC – November 20, 2019
Protecting Senior Clients from Financial Abuse

As trusted professionals, CPAs can expect to find themselves involved — either as an advisor or service provider — in a case involving some form of elder financial abuse or an investment scam that targets senior citizens. CPAs need to not only be aware of the warning signs that indicate the possibil­ity of abuse or fraud, but also partner with other trusted advisors to educate clients and constituents about these issues and how to protect themselves from becoming victims.

Elder financial abuse often involves the deprivation or manipulation of the victim’s resources.  The methods involved can include deceit, theft, fraud, a misappropriation of the victim’s assets or access to assets (i.e., credit), or conversion by way of duress. These offenses are very difficult to detect primarily because nearly 90 percent are committed by an elder’s own family member, friend, acquaintance or a person in a position of trust.

Elderly victims generally own a home, have sizeable retirement assets, have relatively strong credit scores, are less tech savvy and were raised in a generation where people were taught to be more trusting of strangers. To exacerbate the problem, many cases of elder financial abuse and fraud go underre­ported due to the shame of the victims, the relatively weaker mental acuity of victim and the victim’s potential isolation from others due to family circumstance. This profile makes seniors an attractive target for abuse and financial fraud schemes; they lose nearly $37 billion a year, based on estimates produced by the financial services industry.           

10 Schemes That Target Elders

Per the United States Senate Special Com­mittee on Aging (aging.senate.gov), the top 10 most-reported scams are as follows:

  1. IRS impersonation scam. A scammer falsely represents themselves as an IRS agent and claims that the victim owes money to the IRS. The fake agent threatens to issue a warrant for the victim’s arrest unless an immediate payment is made.
  2. Robocalls/unsolicited phone calls. These are “cold-calling” scams.
  3. Sweepstakes/lottery scam. The victim is told they have just won the lottery. The catch? They must pay a “tax upfront or other type of fee” before the funds can be sent to them.
  4. Computer tech support scams. Fraudsters contact victims with a fake notice of the victim’s account being frozen or of some technical issue impacting the victim’s PC or other item. They ask for account information or credit card information to pay for repairs or “main­tenance protection.”
  5. Elder financial abuse. As discussed above, this is the exploitation of a senior by loved ones or trusted acquaintances.
  6. Grandparent scams. Scammers pose as grandchildren in financial distress and plead for financial assistance and discretion.
  7. Romance/companionship scams. Scam­mers act as romantic interests and request monetary help and assistance in exchange for companionship and affection.
  8. Social Security impersonation scams. Under the guise of a Social Security Administration employee, scammers seek to trick victims into providing their Social Security number, date of birth and other personal information needed to steal their identity.
  9. Impending lawsuit scams. Similar to the IRS scam, victims are contacted with the threat of some legal action unless a payment is made to resolve the matter.
  10. Identity theft. A perpetrator illicitly ob­tains the Social Security number, date of birth and other minimum information required to file a fraudulent income tax return. When the actual client files their return, they are shocked to learn that their return has already been filed.

5 Tips For CPAs and Their Clients

Here are some tips that CPAs should consider in assisting clients to better protect themselves from fraud:

  1. Develop a fraud prevention check­list. Provide clients with an itemized, detailed checklist of fraud prevention actions/tools such as:
    • Register all phone numbers on the National Do-Not-Call Registry (donotcall.gov).
    • Consider purchasing a credit monitoring service.
    • Sign up for email/text fraud alerts from banks and credit card companies.
    • Rent a P.O. Box for sensitive financial mail.
    • Buy a shredder and make a normal practice of destroying unneeded doc­uments with sensitive information.
    • Acquire antivirus software for your computer(s).
  2. Schedule check-ins throughout the year. A five- to 10-minute phone call once a quarter can go a long way in helping your senior clients.
  3. Coordinate with financial advisors and attorneys. With the client’s permission, team up with their financial advisor, insurance agent, banker and/or attorney to monitor their affairs. Be vigilant about any suspicious activity and make inquiries.
  4. Identify “interested parties” and/or “trusted contacts” for financial accounts. This allows the CPA to provide notification to trusted third parties of abnormal activity in an account and to contact such parties to discuss the account in the event the owner becomes unreachable or there is suspected elder abuse.
  5. Encourage education and vigilance. Take the time to educate your clients about new scams and any technology, services or other protective tools.

As well-regarded “problem solvers,” the professionalism, thoroughness and heightened vigilance of CPAs will further enhance their reputation as the public’s most trusted advisor.


Sharif A. Muhammad

Sharif A. Muhammad

Sharif Muhammad, CPA, MBA, MST, CFP, is the managing member of Unlimited Financial Services LLC. He is a member of the NJCPA State Taxation, Federal Taxation and Cannabis interest groups.

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This article appeared in the November/December 2019 issue of New Jersey CPA magazine. Read the full issue.