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Financial Exploitation

Perspective Matters


SAFEGUARDING YOUR FINANCES: RECOGNIZING AND PREVENTING FINACIAL SCAMS AND EXPLOITATION 

 

Financial exploitation is a hot topic these days. In today's digital age, financial scams and exploitation have become increasingly sophisticated, targeting people of all ages and backgrounds. As middle-class consumers, it's crucial to stay informed and vigilant to protect our hard-earned money and assets. Most of us have dozens of online accounts – not all financial – that require user IDs and passwords. It’s easy to cut corners and make ourselves more vulnerable. My goal with this month’s post is to help you understand what financial scams and exploitation look like and provide practical steps to shield yourself from both strangers and those close to you who might take advantage.  



UNDERSTANDING FINANCIAL SCAMS AND EXPLOITATION


Financial scams and exploitation refer to any deceptive or manipulative practices designed to deprive you of your money or assets. These can come from: 

 

  • Strangers: Con artists, fraudulent telemarketers, or online scammers 

  • Bots: Automated systems designed to trick you into revealing sensitive information 

  • People you know: Family members, caregivers, or those with Power of Attorney 


COMMON TYPES OF FINANCIAL SCAMS


  • Phishing: Emails or messages that appear to be from legitimate sources, asking for personal information 

  • Investment fraud: Promises of high returns with little or no risk 

  • Romance scams: Fake online relationships used to manipulate victims into sending money 

  • Tech support scams: Unsolicited calls claiming your computer has a virus and needs immediate, costly "fixing" 

  • Government impersonation: Scammers posing as IRS agents or other officials demanding payment 


SIGNS OF FINANCIAL EXPLOITATION BY THOSE CLOSE TO YOU


Financial exploitation by those close to you can be particularly devastating, as it often involves a breach of trust from someone you rely on. It's crucial to be aware of the following signs: 

 

  1. Unexplained withdrawals or transfers:  

    • Large or frequent withdrawals from your accounts that you don't remember making 

    • Transfers to unfamiliar accounts or to accounts of family members without your knowledge 

    • Sudden inability to pay bills or buy necessities despite having sufficient funds 


  2. Changes in financial documents:  

    • Abrupt changes to wills, trusts, or power of attorney documents 

    • Your signature appearing on checks or documents when you don't remember signing them 

    • Addition of new names to your accounts or credit cards without your permission 


  3. Missing valuables or documents: 

    • Disappearance of cash, jewelry, or other valuable items from your home 

    • Important financial or legal documents that you can't locate 

    • Statements from banks or credit card companies stop arriving at your home 


  4. Sudden changes in financial situation:  

    • Unexpected changes in your living conditions, such as utilities being shut off 

    • Lack of amenities or personal care items that you should be able to afford 

    • Accumulation of unpaid bills, eviction notices, or legal proceedings against you 


  5. Pressure and control tactics:  

    • Someone pressuring you to sign documents you don't fully understand 

    • A caregiver or family member controlling your finances and giving you an "allowance" 

    • Someone discouraging you from discussing your finances with others or seeking advice 


  6. Isolation and behavioral changes:  

    • A caregiver or family member isolating you from friends and other family 

    • Noticeable changes in your behavior or demeanor when certain people are present 

    • Reluctance or fear when discussing financial matters 


  7. Suspicious financial activity:  

    • Unusual or unnecessary purchases made on your behalf 

    • New joint accounts opened with family members or caregivers 

    • Sudden changes in spending patterns or investment strategies that don't align with your goals 


  8. Misuse of Power of Attorney:  

    • The person with Power of Attorney making decisions that benefit themselves 

    • Refusal to provide you with information about your own finances 

    • Using your money or assets for purposes other than your care and well-being 


  9. Unexplained changes in professionals:  

    • Sudden changes in long-standing professional relationships (e.g., lawyers, accountants) 

    • New "advisors" appearing and making significant financial decisions 


  10. Digital red flags:  

    • Unexplained changes to your online banking passwords or security questions 

    • New online accounts or subscriptions you don't remember creating 

    • Unfamiliar email addresses linked to your financial accounts 

 

Remember, while a single incident might have an innocent explanation, a pattern of these signs could indicate financial exploitation. It's important to trust your instincts. If something feels wrong, it's worth investigating further or seeking help from a trusted source. 


PROTECTING YOURSELF: STEPS TO TAKE


Taking proactive steps to protect your finances is crucial in today's world. Here's an expanded list of measures you can implement to safeguard your assets and personal information: 


Digital Safety 

  1. Use strong, unique passwords for all accounts:  

    • Create passwords with a mix of uppercase and lowercase letters, numbers, and symbols 

    • Use a password manager to generate and securely store complex passwords 

    • Avoid using easily guessable information like birthdays or family names 


  2. Enable two-factor authentication (2FA) whenever possible: 

    • Use authenticator apps rather than SMS for 2FA when available 

    • Consider using hardware security keys for critical accounts 


  3. Be cautious about sharing personal information online:  

    • Avoid oversharing on social media platforms 

    • Be wary of quizzes or games that ask for personal details 

    • Don't respond to unsolicited emails or messages asking for sensitive information 


  4. Keep your software and antivirus programs up-to-date:  

    • Set up automatic updates for your operating system and applications 

    • Regularly scan your devices for malware and viruses 

    • Use reputable antivirus software and keep it current 


  5. Secure your home network:  

    • Use a strong password for your Wi-Fi network 

    • Enable WPA3 encryption if available on your router 

    • Consider using a VPN for additional security, especially on public Wi-Fi 


  6. Be cautious with public Wi-Fi: 

    • Avoid accessing sensitive accounts or making financial transactions on public Wi-Fi 

    • Use a VPN if you must access important information while on public networks 

 

Financial Vigilance 

  1. Regularly review your bank and credit card statements:  

    • Set up alerts for large transactions or unusual activity 

    • Reconcile your statements with your receipts monthly 

    • Report any suspicious activity immediately to your bank or credit card company 


  2. Check your credit report annually:  

    • Utilize free annual credit reports from all three major credit bureaus 

    • Look for accounts you don't recognize or inquiries you didn't authorize 

    • Consider freezing your credit to prevent unauthorized accounts from being opened 


  3. Be wary of unsolicited investment opportunities:  

    • Research any investment opportunity thoroughly before committing 

    • Be skeptical of promises of high returns with little or no risk 

    • Verify the credentials of any financial advisor or company 


  4. Never give out personal information over the phone unless you initiated the call:  

    • If you receive a call claiming to be from your bank or a government agency, hang up and call the official number to verify 

    • Don't feel pressured to make immediate decisions over the phone

       

  5. Monitor your accounts regularly:  

    • Use online banking to check your accounts frequently 

    • Set up account alerts for low balances or large transactions 

    • Keep track of when your bills are due to spot any irregularities 


  6. Secure your mail:  

    • Use a locked mailbox or P.O. box 

    • Shred or securely dispose of documents containing personal information 

    • Choose paperless statements when possible to reduce the risk of mail theft 

 

Legal Precautions 

  1. Choose a Power of Attorney carefully:  

    • Select someone you trust implicitly 

    • Consider appointing co-agents to provide checks and balances 

    • Clearly define the scope of authority in the Power of Attorney document 


  2. Set up a revocable living trust:  

    • Work with an estate planning attorney to create a trust that protects your assets 

    • Regularly review and update your trust as your circumstances change 

    • Consider appointing a corporate trustee for impartial management

       

  3. Create an advance healthcare directive:  

    • Appoint a healthcare proxy you trust to make medical decisions if you're incapacitated 

    • Clearly outline your wishes for medical treatment and end-of-life care 

    • Review and update this document regularly 


  4. Establish a financial plan:  

    • Work with a CERTIFIED FINANCIAL PLANNER® to create a comprehensive financial strategy 

    • Regularly review and adjust your plan as your circumstances change 

    • Ensure your plan includes provisions for unexpected events or incapacity 

 

Educate and Communicate 

  1. Stay informed about the latest scams:  

    • Follow reputable financial news sources and consumer protection agencies 

    • Attend community workshops or webinars on financial safety 

    • Sign up for scam alerts from the FTC or your state's consumer protection office 


  2. Discuss finances openly with trusted family members or friends:  

    • Have regular family meetings to discuss financial matters 

    • Consider involving adult children or trusted friends in financial discussions 

    • Create a system of checks and balances within your trusted circle 


  3. If you suspect exploitation, speak up and seek help:  

    • Contact your local Adult Protective Services if you suspect elder financial abuse 

    • Report suspected scams to the FTC and your state's Attorney General's office 

    • Seek support from local senior centers or elder abuse prevention organizations 


  4. Educate others in your community:  

    • Share what you've learned about financial safety with friends and family 

    • Consider volunteering for organizations that educate seniors about financial fraud 

    • Support local initiatives that promote financial literacy and scam awareness 

 

Remember, staying informed and vigilant is your best defense against financial scams and exploitation. By taking proactive steps to protect yourself and your loved ones, you can significantly reduce the risk of falling victim to these harmful practices. Don't hesitate to seek help if you suspect you've been targeted – your financial well-being is worth protecting. 

 

Neither Prism Planning and Solutions Group nor Insight Advisors provide tax advice, and nothing in this communication should be treated as such. This communication should not be interpreted as a recommendation for a specific investment or tax-

planning strategy. We are providing this material for informational purposes only. We have made every attempt to verify that information contained in this communication is accurate as of the date published but make no warranties. Before making any decisions related to your own tax and/or investment situation you should consult the appropriate professionals.   


Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.




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