Imagine receiving an email that says you’ve won a new washer and dryer in a local contest. All you have to do is pay a small shipping fee to receive your appliances. Sounds great, right?

Unfortunately, this scenario has multiple signs of financial exploitation.

Financial exploitation occurs when someone illegally or improperly gains the assets of a vulnerable person through a scam. It may also happen through theft, deception, intimidation, or undue influence. According to the Federal Trade Commission, scammers stole nearly $3.3 billion in 2020.* Con artists have numerous—often believable—methods to trick people out of money. They may set up a fake dating profile, then ask for money for “emergencies.” Some impersonate government agencies, like the IRS, and threaten to arrest the victim unless they pay a fee. Retirees are often targeted because of their accumulated wealth, but scammers seek out people of all ages.

Read details of common scams.

We’re here to educate you on financial exploitation and help you protect your assets.

Look for warning signs

While each scam is different, there are common red flags that signal a request is fake, such as:

Vanguard’s Security Center

  • Asking you to pay money or taxes up front to receive a gift or prize.
  • Announcing you’ve won a contest you don’t recall entering.
  • Pressuring you to “act now” or the deal, gift, or prize will go away.
  • Telling you to keep the details secret and not share them with anyone.
  • Giving you a script to follow when calling your bank or financial institution.
  • Misspelling basic words or using poor grammar in communications.
  • Professing strong emotions for you after little interaction (common in romance scams).

Set up a trusted contact

To protect your assets, create a plan while you’re in good health. Start by talking to a trusted family member, professional, or friend about your wishes for your finances. Naming a trusted contact on your account can offer additional protection by:

  • Allowing us to reach out to someone you trust if we’re concerned about your well-being or believe you’re being financially exploited.
  • Assisting us in identifying and contacting your power of attorney or legal guardian.
  • Helping ensure we’re informed if you develop a medical condition—especially forms of dementia such as Alzheimer’s disease—and are no longer able to protect your interests.

We recommend selecting someone who will be able to provide an informed assessment of your whereabouts, well-being, and health status. Also, consider naming someone who can’t transact on your accounts to help ensure objectivity. If you haven’t already, consider working with an attorney to create a financial power of attorney.

Protect the vulnerable

Scammers often target the elderly, teens, and the mentally incapacitated. To keep your at-risk loved ones safe, look for warning signs like:

  • Unexplained large or excessive withdrawals.
  • Secrecy surrounding the need for additional funds.
  • Extreme urgency about needing the money.
  • Abrupt changes in financial documents such as a will or power of attorney.
  • Sudden changes to bank or financial accounts.

If you believe your loved one has been a victim of financial exploitation, contact their financial institutions immediately. Also consider filing a report with local law enforcement or Adult Protective Services. If your loved one is already incapacitated and didn’t execute a financial power of attorney, consult with an estate planning attorney to discuss options such as petitioning the court for guardianship or conservatorship.

Be vigilant

Follow these best practices for avoiding potential scams:

  • Never send money to someone you don’t know well. Stop communicating immediately with any such individual who asks you for money.
  • Speak to an expert at your bank or Vanguard if you suspect attempted fraud.
  • Never give out personal information like your address, Social Security number, or bank information.
  • Don’t click links in emails or popups. Instead, go to the official website, such as IRS.gov, and find their contact number.  
  • For imposter scams—which typically tell you a payment is overdue or your account has been compromised—go to the company’s website and log in to your account to check for notifications.
  • Trust your instincts. If something doesn’t seem right, hang up or walk away.
  • Do your own research or consult with someone you trust before you act.

Anyone could become a victim of financial exploitation. Even sadder, it can happen at the hands of a family member, friend, or caregiver. We want to help you stay in control and support you as you care for vulnerable loved ones. Protecting your hard-earned investments is why we’re here.


*Source: Federal Trade Commission, Consumer Information 2020

Notes:

All investing is subject to risk, including the possible loss of the money you invest.

Please note that trusted contacts are not applicable to 403(b) accounts, most 529 accounts, annuities, and institutional accounts.