Financial exploitation is one of the most devastating crimes committed against people with dementia, and it often goes undetected for months or years. By the time families discover that someone has been stealing from, manipulating, or defrauding their loved one, tens or hundreds of thousands of dollars may be gone, leaving inadequate funds for care and no way to recover losses. The person being exploited often can't report it because they don't remember the transactions, don't understand they're being scammed, or feel too ashamed to tell anyone. Cognitive impairment makes people with dementia perfect targets for exploitation.
What makes financial exploitation in dementia particularly insidious is that perpetrators are often people the victim knows and trusts: family members, caregivers, neighbors, friends, or financial advisors who have access and opportunity. Strangers also target people with dementia through scams specifically designed to exploit confusion and impaired judgment. The combination of cognitive decline, social isolation, poor judgment, and trusting nature creates the perfect conditions for financial abuse that can strip away resources needed for care.
Here's what to do right now:
- Review all bank and credit card statements from the past six months for unusual transactions
- Check credit reports for unauthorized accounts or inquiries
- Talk to your loved one's bank about adding fraud alerts and trusted contact designations
- Limit access to checkbooks, credit cards, and large amounts of cash
- Establish or verify financial power of attorney so a trusted person can monitor accounts
Key Takeaway:
Recognizing financial exploitation requires vigilance for red flags in account activity, changes in your loved one's financial behavior, suspicious new relationships, and signs someone is isolating or manipulating them. Early detection is critical because the longer exploitation continues, the more money is lost and the harder recovery becomes. Prevention through monitoring, limiting access, and legal protections is the best defense.
Why People with Dementia Are Targeted
Dementia creates vulnerabilities that make financial exploitation both easier to commit and harder to detect.
Cognitive vulnerabilities:
- Impaired judgment: Can't assess whether financial decisions are sound or if someone is trustworthy
- Memory loss: Don't remember giving money away or making purchases; perpetrators can steal repeatedly
- Confusion about finances: Can't track spending, balance accounts, or recognize when something is wrong
- Loss of math skills: Can't calculate change, understand interest rates, or determine if prices are reasonable
- Difficulty with technology: Online banking and electronic payments are confusing, creating dependency
Social and emotional vulnerabilities:
- Increased trust: Dementia often reduces skepticism; people become more trusting
- Loneliness and isolation: Grateful for attention, making them vulnerable to exploitative "friendship"
- Desire to please: Want to be helpful and agreeable, susceptible to pressure
- Fear of losing independence: May hide problems to avoid family taking away control
- Lack of insight: Don't recognize their own impairment, dismissing family concerns
Practical vulnerabilities:
- Physical access: Caregivers and family have access to homes, accounts, checkbooks, credit cards
- Legal authority: Some perpetrators have legitimate POA or joint account access
- No oversight: If family isn't monitoring, exploitation continues undetected
Red Flags in Financial Transactions and Account Activity
Unusual patterns in bank accounts, credit cards, and spending are often the first detectable signs of exploitation.
Banking red flags:
Unusual withdrawals:
- Large withdrawals that don't match typical spending
- Frequent ATM withdrawals when your loved one rarely used ATMs before
- Withdrawals just below the bank's reporting threshold ($10,000)
- Cash withdrawals when they typically used checks or cards
Suspicious transfers:
- Money transferred to unfamiliar accounts or people
- Wire transfers, especially international
- Electronic transfers they wouldn't know how to initiate
- Transfers that empty accounts or leave minimal balances
Check problems:
- Checks written to "cash" rather than specific payees
- Checks with forged signatures or unusual handwriting
- Missing checks or check numbers out of sequence
- Checks for round numbers ($500, $1,000) rather than specific bills
New accounts or changes:
- New accounts your loved one doesn't remember opening
- Accounts jointly held with new people
- Changes to account ownership or beneficiaries
- Addition of names without clear reason
Credit card red flags:
- Purchases from stores or websites your loved one doesn't use
- Charges in locations they haven't visited
- Multiple small charges testing the card before larger fraud
- Charges for items inconsistent with their needs (electronics, jewelry, gift cards)
- New credit cards they don't remember applying for
- Maxed-out cards when they typically paid balances in full
Investment and asset red flags:
- Sudden changes to investment allocations
- Withdrawals from retirement accounts
- New investments your loved one can't explain
- Deeds or titles transferred to other people
- New mortgages or liens on property
- Selling property for below market value
Other financial red flags:
- Unpaid bills despite adequate funds
- Utilities shut off or threatened disconnection
- Collection calls or eviction proceedings
- Financial statements disappearing from mail
- Important documents (deeds, insurance policies) missing
Behavioral and Relationship Warning Signs
Changes in your loved one's behavior, demeanor, or relationships often signal exploitation is occurring.
Changes in financial behavior:
- Suddenly secretive about money when previously open
- Hiding statements or bills
- Evasive when asked about spending or balances
- Can't explain recent large purchases or withdrawals
- Uncharacteristic generosity or large gifts to people
- Lending money to people they barely know
Changes in demeanor:
- Seeming fearful around certain people
- Anxiety about money that seems disproportionate
- Becoming more isolated or withdrawn
- Expressing guilt or shame
- Defending someone despite evidence of wrongdoing
- Unable to recognize manipulation
Warning signs in relationships:
- New "friend" or "helper" who suddenly appeared
- Someone taking unusual interest in your loved one's finances
- Someone preventing or discouraging family visits
- Your loved one suddenly less available
- Someone always present during family visits
- Someone answering questions for your loved one
- Rushed engagement or marriage
Common Types of Financial Exploitation
Understanding how exploitation typically occurs helps you recognize it.
Exploitation by family members
The most common form of elder financial abuse.
How it happens: Adult child with access takes money for personal use, family member with POA misuses funds, relative pressures for loans that aren't repaid, sibling forges checks, family member changes wills or beneficiaries for their benefit.
Why it's hard to detect: Family members often have legitimate access, making transactions look authorized. Victims defend family even when evidence is clear.
Exploitation by caregivers
Paid or unpaid caregivers have opportunity and access.
How it happens: Taking cash or valuables, using credit cards for personal purchases, forging checks, accepting inappropriate "gifts," manipulating estate document changes, stealing Social Security or pension payments.
Exploitation by scammers
Criminals specifically target people with dementia.
Grandparent scam: Caller pretends to be grandchild in trouble needing money immediately
Romance scam: Online relationship leading to requests for money
IRS/government scams: Threatening calls claiming unpaid taxes or suspended benefits
Sweepstakes scams: Claims they've won but must pay fees to claim prize
Contractor scams: Overpriced or nonexistent work on urgent problems
Tech support scams: Fake virus requiring payment to fix
Exploitation by professionals
Who: Financial advisors making unsuitable investments, attorneys charging excessive fees, accountants diverting funds, real estate agents undervaluing property. Professional credibility makes exploitation harder to detect and prosecute.
What to Do If You Suspect Financial Exploitation
Quick action is critical to stop ongoing exploitation and potentially recover stolen funds.
Step 1: Document everything
Before confronting anyone, gather evidence:
- Collect bank statements, credit card statements, canceled checks
- Document suspicious transactions (dates, amounts, payees)
- Screenshot text messages or emails if available
- Note who has access to accounts and when access began
- Keep a detailed timeline of suspicions and evidence
Step 2: Secure accounts immediately
- Change online banking passwords
- Report stolen or misused credit cards
- Close compromised accounts and open new ones
- Remove unauthorized persons from joint accounts
- Place fraud alerts with credit bureaus
Step 3: Report to authorities
- Adult Protective Services (APS): Contact your state's APS immediately (find at napsa-now.org)
- Local law enforcement: File a police report with documentation
- Financial institutions: Report fraud to banks and credit card companies
- Federal Trade Commission: Report scams at ReportFraud.ftc.gov
- State Attorney General: For scams involving professionals or businesses
Step 4: Consult with an attorney
An elder law attorney can advise on legal options for recovering funds, help establish guardianship if needed, review legal documents, and represent your loved one in civil proceedings.
Step 5: Implement protective measures
For detailed prevention strategies, see our comprehensive guide on protecting against financial exploitation in dementia.
Preventing Financial Exploitation
Prevention is far more effective than trying to recover stolen money.
Monitoring and oversight:
- Check statements weekly minimum
- Monitor credit reports annually
- Set up transaction alerts
- Review investment accounts quarterly
Limiting access:
- Reduce cash at home
- Secure checkbooks
- Don't give caregivers financial access
- Establish power of attorney
Financial protections:
- Trusted contact at financial institutions
- Automatic bill pay
- Joint oversight accounts
Security measures:
- Register on Do Not Call Registry
- Block robocalls
- Vet caregivers thoroughly
- Education about common scams
For comprehensive guidance on protecting finances, see our article on how to organize financial accounts after dementia diagnosis.
Legal Protections and Recourse
Understanding legal options helps protect your loved one and potentially recover losses.
Power of attorney
Establishes legal authority to manage finances, monitor accounts, and make decisions. Without POA, family has no legal access.
Guardianship/Conservatorship
If POA wasn't established, petition court for guardianship. Expensive and time-consuming but grants legal authority.
Civil lawsuits
Sue perpetrators to recover funds. Success depends on strength of evidence, whether perpetrator has assets, and statute of limitations.
Criminal prosecution
Financial exploitation is a crime. Law enforcement may prosecute if evidence is sufficient. May result in restitution orders.
Reality about recovery
Most financial exploitation is never fully recovered. Money is spent, hidden, or the perpetrator lacks assets. Prevention and early detection are far more effective.
How CareThru Can Help Prevent and Detect Financial Exploitation
Preventing financial exploitation requires organization, monitoring, documentation, and coordination among family members. CareThru provides tools to make this easier.
Track and log financial information: Document who has access to accounts, when access was granted, and any concerns about suspicious activity.
Store financial statements for family review: Multiple family members can review statements without sending individual copies. Transparency reduces both exploitation and suspicion.
Track spending patterns and flag unusual transactions: When multiple people monitor finances, suspicious activity is noticed faster.
Document conversations about scams: Create a record of scam calls, unusual requests, or suspicious relationships if concerns escalate.
Coordinate family monitoring: Ensure nothing falls through the cracks when siblings share responsibility for oversight.
Frequently Asked Questions About Financial Exploitation in Dementia
How common is financial exploitation of people with dementia?
Studies estimate 20-30% or more of older adults with dementia experience financial exploitation, though actual numbers are likely higher since much goes unreported. People with dementia are particularly vulnerable due to impaired judgment, memory loss, and confusion. The problem is widespread and affects families across all socioeconomic levels. Financial exploitation is one of the most common forms of elder abuse.
What should I do if I discover a family member is stealing from my parent with dementia?
Document all evidence, including bank statements and suspicious transactions. Consult an elder law attorney immediately about options such as removing the person from financial access, pursuing guardianship if needed, or filing civil suits. Report to Adult Protective Services and consider filing a police report. Focus on stopping ongoing exploitation and protecting remaining assets even if full recovery isn't possible.
Can someone with dementia sign legal documents or make financial decisions?
It depends on the stage of dementia and whether they have legal capacity at the time. Early-stage dementia doesn't automatically eliminate capacity. Capacity is determined by whether the person understands what they're signing and the consequences. As dementia progresses, capacity declines and eventually they can't make legal or financial decisions. This is why establishing power of attorney early is critical.
How can I tell if someone is manipulating my loved one versus genuinely helping?
Genuine helpers are transparent and encourage family involvement. They don't isolate your loved one or accept financial benefits beyond agreed-upon payment. They keep appropriate boundaries. Manipulators isolate your loved one from family, become defensive when questioned, accept inappropriate financial benefits, create dependency, and discourage discussion of the relationship. Trust your instincts if something feels wrong.
What if my loved one defends the person exploiting them?
This is extremely common. People with dementia often can't recognize manipulation and defend the exploiter. They may not remember giving money or may fear losing the relationship. Don't expect your loved one to acknowledge exploitation. Focus on stopping it through legal and practical means: removing access, establishing POA, and if necessary, pursuing guardianship.
Can exploitation be stopped if the person has power of attorney?
If someone with POA is misusing it for personal benefit, this is abuse of POA and is illegal. Report to Adult Protective Services, law enforcement, and consult an attorney about removing the agent and pursuing guardianship. POA doesn't give authority to steal or misuse funds. Courts can revoke POA and prosecute agents who abuse their authority, though this requires legal action.
How do I recover money that's been stolen from my loved one?
Recovery is challenging but possible. Options include filing civil lawsuits, reporting to law enforcement for criminal charges with restitution orders, filing insurance claims if fraud insurance exists, working with banks to reverse fraudulent transactions if reported quickly, and pursuing probate claims after death. However, most exploitation is never fully recovered because money is spent or perpetrators lack assets. Focus on stopping ongoing theft.
Should I tell my loved one I suspect they're being exploited?
This depends on their cognitive level. If they have enough insight to understand and assist, yes. If they'll defend the exploiter, become distressed, or not remember the conversation, it may not help and could alert the perpetrator. Consult with Adult Protective Services, an elder law attorney, or their doctor about the best approach. Protecting them is more important than full disclosure if disclosure won't help.
Disclaimer: This article provides general information about recognizing and responding to financial exploitation and is not a substitute for legal advice. If you suspect financial exploitation, consult with law enforcement, Adult Protective Services, and an elder law attorney. Laws regarding financial crimes and elder abuse vary by state and jurisdiction.
Sources
- National Adult Protective Services Association. (2024). "Financial Exploitation." Available at: https://www.napsa-now.org
- Consumer Financial Protection Bureau. (2024). "Preventing Elder Financial Exploitation." Available at: https://www.consumerfinance.gov
- Federal Trade Commission. (2024). "Scams Targeting Older Adults." Available at: https://www.ftc.gov
- National Institute on Aging. (2024). "Elder Abuse." Available at: https://www.nia.nih.gov/health/elder-abuse
- Alzheimer's Association. (2024). "Preventing Financial Abuse." Available at: https://www.alz.org
- AARP. (2024). "Protecting Against Financial Exploitation." Available at: https://www.aarp.org
- National Center on Elder Abuse. (2024). "Financial Exploitation." Available at: https://ncea.acl.gov
- FBI. (2024). "Elder Fraud." Available at: https://www.fbi.gov/scams-and-safety/common-scams-and-crimes/elder-fraud
- American Bar Association. (2024). "Elder Financial Exploitation." Available at: https://www.americanbar.org
- Family Caregiver Alliance. (2024). "Preventing Financial Abuse." Available at: https://www.caregiver.org
- National Council on Aging. (2024). "Elder Financial Exploitation." Available at: https://www.ncoa.org