Financial Counseling Certification Program (FiCEP) Practice Exam

What is a common red flag that could suggest possible elder financial fraud?

1. Sudden interest in investment clubs

2. Unexpected changes in spending habits

3. Consistent use of credit cards

4. Frequent donations to charities

The correct answer is: Unexpected changes in spending habits

Unexpected changes in spending habits can be a significant red flag that suggests possible elder financial fraud. When an elderly person's spending diverges from their typical patterns, it may indicate that someone is influencing their financial decisions or, in some cases, even taking advantage of them. This could manifest through unusual withdrawals from bank accounts, large purchases that are uncharacteristic of their financial history, or even unexplained transactions that raise concerns about their financial well-being. In contrast, while sudden interest in investment clubs or frequent donations to charities may appear suspicious, they do not necessarily indicate fraud. Such behaviors could stem from genuine curiosity or charitable sentiments. The consistent use of credit cards might reflect normal financial behavior or a shift towards modern payment methods, rather than suggesting fraud. Therefore, it’s the unexpected changes that tend to stand out and signal potential issues that need further investigation.