Financial exploitation is one of the most devastating consequences of dementia, and it happens far more often than families realize. Older adults with cognitive impairment lose an estimated $3 billion each year to scams, fraud, and abuse, often without anyone noticing until significant damage is done.
When someone has dementia, their ability to recognize danger, remember recent transactions, and make sound financial judgments declines gradually. Scammers, dishonest caregivers, and sometimes even family members exploit this vulnerability. The person being exploited often can't report it because they don't remember it happened, don't understand they're being scammed, or feel too ashamed to tell anyone.
Here's what to do right now:
- Review all bank and credit card statements from the past three months for unusual activity
- Set up account alerts and fraud monitoring
- Establish financial power of attorney with a trusted person if you haven't already
- Remove your loved one from marketing lists and reduce junk mail
- Have an honest family conversation about who has access to money and accounts
Key Takeaway:
Protecting someone with dementia from financial exploitation requires multiple layers of prevention: reducing opportunity for scammers to reach them, monitoring accounts actively, limiting access to money as cognitive abilities decline, and watching for warning signs among both strangers and people close to your loved one.
Why People with Dementia Are Targeted for Financial Exploitation
Dementia creates the perfect conditions for financial abuse. People with cognitive impairment often retain social skills that make them appear more capable than they are. They can have pleasant conversations, write checks, and use ATMs even when their judgment is significantly impaired.
Scammers specifically target older adults because they're more likely to have savings, own their homes, and have good credit. They know that someone with memory problems won't remember being contacted before, so they can call repeatedly with the same scam.
Financial exploitation isn't always strangers. Studies show that family members, caregivers, and "new friends" commit the majority of financial abuse against people with dementia. These trusted individuals have access to bank accounts, know where valuables are kept, and can manipulate the person without witnesses.
Recognize the Warning Signs of Financial Exploitation
Early detection makes a huge difference. The sooner you catch exploitation, the more money you can recover and the faster you can stop ongoing abuse.
Watch for these red flags in finances:
- Sudden or unexplained withdrawals, transfers, or account changes
- New credit cards, loans, or lines of credit your loved one doesn't remember opening
- Checks written to "cash" or unusual recipients
- Missing funds from accounts, or accounts being drained quickly
- Unpaid bills despite having sufficient funds
- Changes to wills, trusts, or beneficiaries
- Valuables, jewelry, or documents disappearing from the home
Watch for these behavioral red flags:
- A new "friend," caregiver, or romantic interest who suddenly appears and isolates your loved one
- Someone taking an unusual interest in your loved one's finances
- Your loved one seems fearful, anxious, or secretive about money
- You're suddenly blocked from seeing financial information
- A caregiver or family member becomes defensive when you ask about finances
If you notice any of these signs, investigate immediately. Don't wait and hope it's nothing.
Set Up Financial Power of Attorney with the Right Person
Financial power of attorney (POA) is your first and most important line of defense. This legal document allows a trusted person to manage finances on behalf of someone who can't do it themselves. Without POA, families have no legal authority to monitor accounts, pay bills, or stop suspicious transactions.
Choosing the right person for financial POA is critical.
Look for someone who:
- Has a track record of financial responsibility
- Lives close enough to monitor activity regularly
- Gets along reasonably well with other family members
- Understands that this is a serious legal responsibility
Get POA documents in place as soon as possible after a dementia diagnosis. Your loved one must have legal capacity to sign, meaning they understand what they're signing even if their memory is impaired. An elder law attorney can determine capacity and draft documents that comply with your state's requirements.
Once POA is active, the agent should consolidate financial information, notify banks and institutions, and begin monitoring all accounts regularly.
For comprehensive POA guidance, see our power of attorney dementia checklist.
Monitor Bank Accounts and Credit Reports Actively
You can't catch exploitation if you're not looking. Regular monitoring is essential, especially in the early and middle stages of dementia when your loved one may still have some independence.
Set up these monitoring tools immediately:
Bank and credit card alerts:
Set alerts for transactions over a certain amount, balance drops, or any ATM withdrawals. Set thresholds low (for example, any transaction over $100) so you catch unusual activity quickly.
Online account access:
If you have POA, check accounts weekly at minimum. Look for unfamiliar payees, round-number withdrawals, and patterns that don't match your loved one's routine.
Credit monitoring:
Sign up for free credit monitoring through AnnualCreditReport.com. Check at least quarterly for new accounts or credit inquiries your loved one didn't initiate.
Trusted contact on accounts:
Many financial institutions allow you to designate a trusted contact who will be notified if the bank suspects exploitation. Add yourself or another family member.
Automatic bill pay:
Set up automatic payments for recurring bills to prevent bills from going unpaid if your loved one forgets or if someone is intercepting mail.
Keep a log of any suspicious activity, even if you're not sure it's a problem. Documentation is critical if you need to report abuse or dispute fraudulent charges.
Reduce Access to Cash, Checks, and Credit Cards
As dementia progresses, your loved one's ability to manage money safely declines. At some point, reducing access isn't about taking control, it's about protection. This step requires sensitivity, so approach it gradually and focus on safety rather than control.
How to limit access thoughtfully:
- Reduce cash on hand: Keep only small amounts of cash in the home (perhaps $20 to $50).
- Secure or remove checkbooks: Many scammers convince people to write checks. If your loved one doesn't need checks for daily life, store them somewhere they can't easily access.
- Replace credit cards with prepaid cards: Provide a prepaid debit card loaded with a weekly or monthly allowance. This limits potential damage while preserving some independence.
- Set daily ATM withdrawal limits: Contact your bank and lower the daily ATM withdrawal limit to $100 or $200.
- Lock the mailbox: Use a locking mailbox or rent a PO box to prevent mail theft.
These changes work best when introduced gradually and with your loved one's input while they still have capacity.
Stop Scammers Before They Make Contact
Many scams start with a phone call, email, or piece of mail. If you can stop scammers from reaching your loved one in the first place, you eliminate a huge portion of risk.
Take these steps to reduce unwanted contact:
- Register on Do Not Call lists: Add phone numbers to the National Do Not Call Registry at donotcall.gov
- Block robocalls: Enable robocall blocking on smartphones or add a call-blocking device for landlines
- Remove from mailing lists: Register at DMAchoice.org to reduce direct mail marketing
- Opt out of pre-approved credit offers: Visit optoutprescreen.com to stop pre-approved credit card offers
- Screen calls: Set up voicemail or call screening so your loved one doesn't answer unknown numbers
Talk with your loved one about common scams: IRS threats, grandparent scams, sweepstakes, tech support scams, and romance scams. Repeat these conversations regularly because memory loss means they'll forget.
Monitor and Vet Caregivers Carefully
Paid caregivers and hired help are essential for many families, but they also represent risk. Most caregivers are honest and compassionate, but financial exploitation by caregivers happens often enough that you must take precautions.
Before hiring a caregiver:
- Use a reputable agency that conducts background checks
- Check references and actually call them
- Clearly define job responsibilities
- Make it explicit that handling money is not part of the role
Once a caregiver is working:
- Do not give caregivers access to bank accounts or credit cards
- Keep valuables and financial documents locked up
- Drop in unannounced occasionally
- Review belongings and accounts regularly
- Pay caregivers directly, not through your loved one
If your loved one insists on giving gifts or extra money to a caregiver, this is a red flag. Caregivers in a position of trust should not accept gifts or money beyond their agreed-upon pay.
Watch for Exploitation by Family Members
This is the hardest type of exploitation to address because it involves people you trust and love. But family financial abuse is common, and it often goes unreported because families don't want to believe it or don't want to cause conflict.
Family exploitation can look like:
- A sibling or relative who suddenly takes control of finances and becomes secretive or defensive
- Requests for loans, gifts, or "early inheritance" from a relative who has access to your loved one
- Using your loved one's credit cards or accounts for personal expenses
- Pressuring your loved one to change their will or add someone to accounts
- Isolating your loved one from other family members who might notice financial problems
If you suspect a family member is exploiting your loved one, document everything: unusual transactions, changes in behavior, and any communications. Consult with an elder law attorney about options, which may include removing the person from POA, pursuing guardianship, or reporting to Adult Protective Services.
Know the Common Scams Targeting People with Dementia
Scammers use specific tactics that work especially well on people with cognitive impairment. Knowing the most common scams helps you recognize them and teach your loved one what to watch for.
Grandparent scam:
A caller pretends to be a grandchild in trouble and begs for money wired immediately.
IRS or Social Security scam:
A caller claims to be from a government agency and threatens arrest or benefit suspension unless immediate payment is made. Government agencies do not call and demand payment over the phone.
Sweepstakes or lottery scam:
Your loved one receives mail or a call saying they've won a prize but must pay taxes or fees upfront. Real sweepstakes don't require payment.
Tech support scam:
A pop-up or caller warns of a computer virus and offers to fix it for a fee, often gaining remote access to steal information.
Romance scam:
Someone builds an online relationship, expresses love quickly, and then asks for money for emergencies.
Teach your loved one a simple rule: never give money, personal information, or account details to anyone who contacts them unexpectedly.
Report Suspected Exploitation Immediately
If you discover or suspect financial exploitation, act fast. The sooner you report it, the better the chance of stopping ongoing abuse and recovering stolen funds.
Who to contact:
- Adult Protective Services (APS): Every state has an APS agency that investigates elder abuse. Find your local APS at napsa-now.org.
- Local law enforcement: If you have evidence of a crime, file a police report with documentation.
- Banks and financial institutions: Report fraud immediately to the fraud department. They can freeze accounts and reverse transactions.
- Federal Trade Commission (FTC): Report scams at ReportFraud.ftc.gov.
Don't let fear, shame, or family pressure stop you from reporting. Your loved one is a victim of a crime, and reporting is the right thing to do even when it's a family member or trusted person.
Create a Shared System for Financial Transparency
One of the best ways to prevent exploitation is transparency. When multiple people can see what's happening with finances, it's much harder for exploitation to go unnoticed.
Set up a system where family members or trusted individuals have visibility into accounts and financial activity. Share online banking access with at least two responsible family members, hold regular family meetings to review finances, and use a shared spreadsheet or app to log major transactions and decisions.
When everyone has access to the same information, suspicious activity gets noticed quickly and no single person can hide transactions without accountability.
For more guidance on protecting assets, see our article on legal planning after a dementia diagnosis.
How CareThru Helps Protect Against Financial Exploitation
CareThru provides tools that make it easier to monitor, document, and share financial information among trusted family members, creating natural safeguards against exploitation.
Store and organize financial documents: Keep bank statements, POA paperwork, and account information in one secure place accessible to trusted family.
Shared access and activity logging: Multiple people can see updates and transactions, reducing the risk that exploitation goes unnoticed.
Track care-related expenses: Log any concerns or unusual incidents. If you're worried about a caregiver or notice something strange, documenting it in real time creates a record.
Family communication: Talk openly about money, reducing both exploitation and family conflict.
Frequently Asked Questions About Protecting Against Financial Exploitation in Dementia
How can I tell if my loved one with dementia is being financially exploited?
Warning signs include unexplained withdrawals or account changes, missing money or valuables, unpaid bills despite sufficient funds, new "friends" or caregivers taking unusual interest in finances, and your loved one seeming fearful or secretive about money. Check bank statements regularly and watch for behavioral changes or isolation.
What should I do if I discover a family member is stealing from my loved one with dementia?
Document all evidence, including bank statements and suspicious transactions. Consult an elder law attorney about legal options such as removing the person from financial power of attorney or pursuing guardianship. Report the abuse to Adult Protective Services and consider filing a police report. Protecting your loved one must come first.
Can I legally take control of my parent's finances if they have dementia?
Only if you have legal authority. Financial power of attorney allows you to manage accounts if your loved one named you as their agent. Without POA, you need to petition for guardianship through the courts, which is expensive and time-consuming. Set up POA as soon as possible after diagnosis while your parent still has legal capacity to sign.
How do I protect my loved one from phone scams when I'm not there?
Add their number to the National Do Not Call Registry, enable call blocking on their phone, and screen calls through voicemail. Talk regularly about common scams and establish a rule: never give money or information to anyone who calls unexpectedly. Consider setting up a system where they check with you before making any financial decisions.
Are caregivers allowed to accept gifts from people with dementia?
Ethically and often legally, no. Caregivers are in a position of trust and power, and accepting gifts creates conflicts of interest and opens the door to exploitation. If your loved one wants to give gifts to a caregiver, intervene and set clear boundaries. If a caregiver accepts money or valuables, consider it a red flag.
What's the difference between financial exploitation and normal family help?
Legitimate family help involves transparency, consent, and acting in the person's best interest. Exploitation involves secrecy, coercion, taking more than was agreed upon, or using the person's money for the helper's benefit. If someone becomes defensive when questioned about finances or isolates your loved one from family, those are signs of exploitation, not help.
How do I report financial exploitation of someone with dementia?
Contact Adult Protective Services (APS) in your state to report suspected abuse. Also report to local police if you have evidence of crimes, and notify banks if fraud occurred through financial accounts. Report scams to the Federal Trade Commission at ReportFraud.ftc.gov. Act quickly, as time matters for recovering funds and stopping ongoing abuse.
Should I put cameras in my parent's home to prevent caregiver theft?
Cameras in common areas can deter theft and provide evidence if exploitation occurs. Disclose the cameras to caregivers and follow your state's recording laws. Cameras alone don't prevent exploitation, but combined with monitoring accounts, securing valuables, and vetting caregivers carefully, they add a layer of protection.
Disclaimer: This article provides general information about protecting against financial exploitation and is not a substitute for legal or financial advice. If you suspect exploitation, consult with an elder law attorney and report to appropriate authorities. Laws regarding elder abuse and financial crimes vary by state.
Sources
- National Adult Protective Services Association. (2024). "Elder Financial Exploitation." Available at: https://www.napsa-now.org
- Consumer Financial Protection Bureau. (2024). "Protect Yourself from Elder Financial Exploitation." Available at: https://www.consumerfinance.gov
- Federal Trade Commission. (2024). "Scams and Your Money." Available at: https://consumer.ftc.gov
- AARP. (2024). "Fraud Watch Network." Available at: https://www.aarp.org/money/scams-fraud/
- Alzheimer's Association. (2024). "Managing Money." Available at: https://www.alz.org/help-support/caregiving/financial-legal-planning
- National Institute on Aging. (2024). "Scams and Fraud." Available at: https://www.nia.nih.gov/health/scams-and-fraud
- American Bankers Association Foundation. (2024). "Safe Banking for Seniors." Available at: https://www.aba.com
- Peterson, J. C., et al. (2014). "Financial Exploitation of Older Adults: A Population-Based Prevalence Study." Journal of General Internal Medicine, 29(12), 1615-1623.
- Lichtenberg, P. A., et al. (2016). "Financial Exploitation, Psychological Mistreatment, and Neglect of Older Adults." Journal of Elder Abuse & Neglect, 28(2), 65-87.
- National Center on Elder Abuse. (2024). "Preventing Elder Financial Exploitation." Available at: https://ncea.acl.gov