When does a scam become elder financial abuse? There’s a fine line says litigation specialist

Elder fraud losses have reached record levels. The FTC says older adults reported losing more than $3 billion to fraud in 2025, while the FBI recorded 201,266 complaints from victims over 60 and more than $7.7 billion in reported losses.

But behind those numbers lies a legal question that families increasingly struggle to answer. At what point does a scam stop being a fraud problem and become something that requires court intervention?

Scott Rahn, Founding Partner of RMO LLP, a probate, trust, estate and conservatorship litigation firm, told InvestmentNews that the distinction matters more than most families realize.

"A scam stops being merely a fraud case when it reveals something larger: that an older adult may no longer be able to protect themselves, understand the risk, resist pressure, or stop the financial harm once it begins," Rahn said.

From a private wealth litigation perspective, he argues the central question is not simply whether someone was deceived.

"The more important question is whether the fraud exploited age, dependency, cognitive decline, isolation, illness, emotional vulnerability, or susceptibility to undue influence,” he said. “When those factors are present, the case may move from a recovery action into financial elder abuse, protective proceedings, or conservatorship territory."

Warning signs

Rahn points to a cluster of warning signs that signal a protection problem rather than a single fraudulent transaction.

These include repeated transfers, secrecy, unpaid bills, isolation from trusted family members or advisors, sudden estate planning changes, or an inability to accept help while the harm continues.

"We are seeing this more often because people are living longer, incidence of Alzheimer's and other dementia are skyrocketing, wealth is being transferred earlier, and older adults may spend decades still needing liquidity, care, housing, and other support," he said. "One scam can expose a much larger structural issue: the plan around the older adult no longer protects the person as intended."

The legal bar for court intervention, he cautions, is deliberately high.

"Concern is not enough. Families need evidence, and enough evidence to convince a jury that the elder's right to manage their own affairs should be taken away and given to someone else," Rahn said. "They need specific, admissible facts showing that the elder cannot manage their financial resources, cannot resist fraud or undue influence, or is being controlled, isolated, or exploited in a way that requires court intervention."

That threshold surprises many families.

"Courts are being asked to interfere with fundamental autonomy,” he said. “Conservatorship is not a tool for children to manage a parent's money because they disagree with the parent's choices. It is a serious legal remedy that necessarily restricts someone's rights, privacy, independence, and control over their own life."

A diagnosis alone, he stresses, is not sufficient. Neither is age.

"Strange or disagreeable behavior does not automatically justify intervention,” Rahn said. “Courts look at functional capacity. Can the person understand the nature and consequences of the transaction? Can they manage basic financial obligations? Can they say no? Can they detect pressure? Can they resist it?"

Courts are also required to consider less restrictive options first, including powers of attorney, advanced healthcare directives, and trusts.

"That is where families often underestimate the burden,” he said. “They may know in their gut that something is wrong. But the court needs evidence that connects the concern to a legal need for protection."

AI fraud

The rise of AI-enabled fraud has added another layer of complexity to those assessments. Rahn says the sophistication of modern scams, including deepfakes, voice cloning, and engineered romance fraud, fundamentally changes how capacity and vulnerability must be evaluated.

"An older adult may hear what sounds like a grandchild's voice, see a convincing image or video, receive highly personalized messages, or be drawn into an online relationship engineered to feel authentic," he said. "That sophistication changes the analysis entirely because the victim may not be responding to something that is obviously fraudulent. Instead, they may be facing a specific, highly targeted emotional and psychological manipulation expertly designed to bypass ordinary human judgment."

In those situations, he argues that standard capacity assessments are insufficient. "The inquiry has to move beyond whether the person can answer basic capacity questions in a quiet room on a good day. Capacity and vulnerability have to be evaluated in the context of the specific fraud at issue. The real question is whether the person could realistically appreciate, evaluate, detect and resist the fraud. That is a different question than whether they can recite the date, identify their assets, and name their heirs."

Isolation signal

When it comes to identifying potential abuse, Rahn says isolation is often the clearest signal. "The most important red flags are secrecy, isolation, sudden behavioral changes, and the emergence of a family member or new 'friend' exercising unusual influence."

He flags specific financial warning signs: "Sudden, large or repeated withdrawals, wire transfers, cryptocurrency purchases, gift cards, unpaid bills, unexplained loans, new credit cards, beneficiary changes, new powers of attorney, sudden estate plan changes, or gifts that are inconsistent with the person's history, values, relationships, or financial reality."

Language, too, can be revealing. "If the explanation for a transaction feels coached, scripted, or borrowed from the person who benefits from it, that deserves serious scrutiny."

Rahn is emphatic that conservatorship should be treated as a last resort. Less restrictive alternatives, he says, include durable powers of attorney, successor trustees, trusted contacts, banking alerts, credit freezes, and engagement from Adult Protective Services or law enforcement. Each of those alternatives, however, has limits.

"Each of these alternatives becomes insufficient when it does not actually stop the harm. If the older adult will not cooperate, lacks capacity to sign new documents, is being isolated, or the person holding authority is the bad actor, these alternatives may not be enough."

Denial issues

Among the hardest cases, Rahn says, are those where the family is certain exploitation is occurring but the older adult insists they are acting freely.

"Two things can be true at the same time: the family may be right that exploitation is occurring, and the older adult may still believe they are in control of their affairs and have a legal right to have their decisions, even bad decisions, respected," he said. "The mistake families often make is leading with accusation. That often only serves to push the older adult away and closer to the person causing them harm.”

He says rather than telling a parent they are being manipulated, a better approach is to focus on verification, protection, and slowing the transaction down, with suggestions such as: 'Let's confirm this before money moves.' 'Let's talk to the bank.' 'Let's make sure this is legitimate.'

He also challenges the common assumption that elder financial exploitation is driven by strangers or online criminals.

"In the vast majority of elder financial exploitation private wealth disputes, the wrongdoer is not an outsider. It is someone close to the older adult who has gained access, trust, proximity, and control, most often a family member,” he said. "AI creates a new trap, but the most familiar danger is most often much closer to home."

Looking ahead, Rahn expects courts and litigators to place greater emphasis on digital evidence: "Text messages, call logs, payment apps, bank alerts, cryptocurrency transfers, social media accounts, email trails, device access, and AI-generated communications. Families will need to move quickly to preserve that evidence before it disappears."

His closing counsel to families is to treat prevention as a planning priority.

"The strongest protection is consistent involvement with your elder loved one that allows you to identify and address potential exposure before the situation devolves into a crisis where legal action is the only option,” he said.