As a fiduciary, trustee, or other professional managing funds on behalf of individuals living with disabilities, you play a critical role in protecting your clients from financial abuse. Financial exploitation can come from two primary sources: unknown fraudsters who use scams and predatory tactics to steal money in targeted ways, and trusted individuals – family members, caregivers, friends, or even other professionals – who unfortunately take advantage of their relationships and access for financial gain. 

Both forms of abuse can have devastating consequences, from draining assets to disrupting long-term plans to jeopardizing a client’s long-term financial security. And while close financial oversight can help you spot concerning activity before it gets worse, a proactive approach to safeguarding beneficiaries will go beyond reviewing transactions that have already occurred.

Let’s walk through the common scams and fraud tactics you should know that could financially harm your clients.

Recognizing Common Scams 

With today’s technology, scammers are using increasingly sophisticated tactics to exploit their targets. Understanding the different types of scams can help fiduciaries spot red flags before significant financial harm occurs.

Prize, Lottery, and Sweepstakes Fraud

Clients can fall victim to scams that claim they’ve won a prize but need to pay taxes or fees upfront to collect their winnings. These scams can be highly manipulative, convincing victims to send money repeatedly with the promise that a payout is just around the corner.

Romance Scams

Romance scams exploit emotional connections and an individual’s desire for companionship. Scammers build trust over weeks or months, then request money for a fabricated emergency, travel expenses, or business investments. Clients who are socially isolated may be particularly susceptible to these schemes, as fraudsters exploit their desire for connection and trust.

Posing as Government Agencies or Financial Institutions

While telemarketing, texting, and phishing scams can take many forms, scammers targeting beneficiaries are known to impersonate legitimate organizations like the IRS, Social Security Administration, Medicaid, or banks. They may claim:

• Public benefits are being suspended due to a problem.
• A bank account has been compromised and requires immediate action.
• The beneficiary owes taxes and must pay immediately to avoid penalties.

These scams often involve direct outreach instructing victims to share personal information or send payments, leading to identity theft or financial losses. AI technology is also making it easier for a scammer to impersonate a known trusted figure, making it more likely they would follow the instructions of someone with a familiar voice. 

Predatory Marketing and Exploitation

Some financial exploitation falls into a gray area – not explicitly illegal, but still deceptive and damaging. Predatory marketing tactics take advantage of intellectual disabilities, processing differences, or mental health challenges to pressure individuals into making decisions that aren’t in their best interest. These schemes often use misleading language, false urgency, or social pressure. This could look like:

• Deceptive "free trial" offers that lock beneficiaries into expensive recurring payments.
• Subscription scams where companies send free samples, then falsely claim the recipient agreed to ongoing payments.
• Phony "tech support" scams in which fraudsters claim a device has a virus or security issue and demand immediate payment for fake protection services.
• Aggressive upselling from telemarketers or online sellers who pressure individuals into purchasing expensive warranties, insurance, or financial products they don’t need or fully understand.

While these schemes may not always break the law, they can lead to significant financial losses and long-term harm, particularly for clients with cognitive issues.

Exploitation by Family, Caregivers, or Acquaintances

This form of financial abuse occurs when a family member, paid caregiver, friend, lawyer, or financial manager misuses their relationship to access a client’s funds. While criminal fraud relies on deception and anonymity, this type of exploitation is rooted in trust.

Examples of caregiver or family member exploitation include:

• Unauthorized use of funds - A caregiver justifies personal purchases with a beneficiary’s money, viewing it as a small "perk" of their role.
• Misuse of authority - A family member with power of attorney makes withdrawals or financial decisions that benefit themselves more than the beneficiary.
• Coercion and undue influence - A trusted individual pressures the beneficiary into making large gifts, changing financial plans, or signing over access to accounts.
• Neglect and financial withholding - A person responsible for managing finances deliberately withholds money, leaving the beneficiary without necessary funds for care, food, or housing.

Because this type of exploitation happens in the context of personal relationships, beneficiaries may be reluctant, or unable, to report it, making it more difficult for fiduciaries to detect and prevent.

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An important part of a fiduciaries role focuses on protecting client financial security and ensuring they’re not vulnerable to exploitation. Because scammers are always evolving and seeking new ways to exploit their targets, it’s a good idea to stay informed about the most common types of scams that could harm those you serve.

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