In 2022, a retired Ontario couple was contacted by someone offering to buy their time-share property in Florida. When the couple agreed to sell, yet another firm contacted them, supposedly to carry out the sale.
But the callers repeatedly asked for money to cover various fees and expenses. It was not until a year later, having paid out more than $50,000, that they realized it was a scam that has since been linked to a Mexican drug cartel.
In another case a few months ago, a B.C. court decided to return to an 88-year-old woman the sole ownership of her home after a con artist engaged her in an abusive seven-year relationship. During this time, he isolated her from friends and family, gained control of her money and persuaded her to list him as a joint owner of the property.
Bad actors abound, and the rise of social media and AI have only made it easier for entrepreneurial criminals to defraud unwary seniors.
The consequences for wealthy families can be catastrophic if that senior has signing authority over the family business and assets.
The bad guys are growing more sophisticated all the time, says Raymond Vankrimpen, a partner with Richter Family Office in Toronto.
“I feel that this is going to get worse with AI, to create believable situations that will defraud people,” Vankrimpen says. For example, he points to cons involving simulated phone calls from an AI-generated “grandchild” in trouble.
Another “slightly alarming situation” is the non-involved spouse of a founder, says Michael Louie, who works with wealthy families as a partner at D&H Group LLP in Vancouver.
“In many families, one of the parents or grandparents ran the empire and the other had nothing to do with it. That is ripe for a lot of trouble and challenges,” says Louie. “We’re playing defence around elder financial abuse, but you can’t defend against everything.”
Anybody can be a conduit to an attack, says Anwar Visram, CEO and founder of HardTarget, based in Vancouver, which uses innovative game-based learning to help families protect themselves from cyber-threats.
“I’ve worked with people from as young as 8 to as old as 91,” Visram explains. “Every member of the family has a specific profile, and criminals understand that, and they specifically target that.”
“The current Generation One may be exposed because they’re caught between two different eras: one that they’re familiar with—typically the less digital—and the extremely digital, connecting everything from the beach to the bedroom.”
How can families fight back and protect their elders?
- Get organized: Protecting the family holdings from an attack on an elderly family member falls within the same ballpark as estate planning, Louie says. First, identify all the holdings that the senior member has access to and control over so they can be made secure, since that person “may not be as competent as they were when they were younger,” he says.
- Limit access: Before a breach happens, try to close avenues for theft and fraud. Create dual-signature bank accounts, for instance. Designate someone on the team to monitor accounts, Visram says.
- Consider data cleaning: Some families employ firms that search and destroy personal data floating around online, foiling scam artists hoping to use “social engineering” to impersonate a friend, family member or trusted business. (Vankrimpen recommends Incogni.)
- Monitor who has power of attorney: “Power of attorney can be carte blanche or limited,” says Louie. For instance, in some cases it could be triggered only after certain events. He cites the example of the temporary transfer of powers to a U.S. vice-president if the president undergoes surgery.
- Maintain close contact: Visram requires that clients, as part of routine governance, do “regular check-ins, particularly with family members who live on their own and family members who have isolated themselves from everyone else—they’re prime targets. Criminals will say, ‘We’re law enforcement, we’re your bank, you cannot discuss this with anyone.’ The No. 1 way to defeat this is for family members to talk to each other.”
- Implement joint tenancy: Although it can cause dissent within the family, putting an adult child in joint tenancy so they will automatically inherit property is a shield against evildoers, says Louie: “It’s the same as putting your child on joint title for investment accounts.”
- Limit social-media visibility: “Because of the amount of information that’s out there, we’ve seen ‘phishing’ attacks turn into what you might call ‘spear-phishing’ attacks,” Vankrimpen says. Those are highly specific and targeted scams involving impersonation or identity theft. Social-media ground rules for the whole family can offer some defence against them.
- Involve the whole family: It’s tough to take power away from a senior family member. “When they’ve been the pinnacle of the industry for many years, that’s their identity,” says Vankrimpen. Tact, timing and empathy are required, and instead of singling them out as being especially vulnerable, “educating them along with other members of the family is a good idea,” he says. “If the elderly feel they’re being targeted they’ll be on the defensive,” adds Visram, “but if they feel they’re taking a leadership role in protecting their family’s assets, they’ll come on board.”
- It’s obvious, but think about passwords: Many people still lack strong passwords for laptops, phones and online banking, or fail to record them. Vankrimpen recommends password-filing tools such as 1Password and LastPass. He notes that facial and thumbprint recognition are being built into some mobile devices, and he suggests acquainting elderly parents with double-factor identification if possible.
- Start early: “Do this as early as you can,” says Louie. Don’t wait until it’s too late to prevent a catastrophe or the senior family member is no longer capable of authorizing actions. Vankrimpen concurs: “The best thing we can do is to try to have these conversations earlier rather than later.”
Protection against fraud should be as routine as estate planning, Vankrimpen says.
“This should be no different than creating wills, planning RRSPs or purchasing insurance,” he adds. “It is another area where being smart and getting professional help early on is worth so much.”
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