This Blog was written by: Alicia Mossington (Godin), Estate and Trust Consultant, Scotia Wealth Management
“Fraud is the most frequently reported banking issue across all age groups.” In 2021 more than 100,000 cases of fraud were reported by the Canadian Anti-Fraud Centre with over $380 million dollars lost. These numbers only account for those instances that were reported.
The Ombudsman for Banking Services and Investments (“OBSI”) is a national, independent and not-for-profit organization that helps resolve and reduce disputes between consumers and financial services firms from across Canada. In 2019 the OBSI published their Seniors Report with case data showing that 38% of complaints to the OBSI were made by consumers over the age of 60. Interestingly, the report details the volume of complaints by product type and found that the most complaints were received about credit cards. Complaints about GIC’s and term deposits also increased significantly with age. Fraud was the most frequently reported banking issue across all age groups.
Even when they are innocent victims of fraud, consumers are typically responsible for losses resulting from their own actions. Although fraud does affect everyone and is committed against all age demographics, older adults are often the target of specific types of fraud and scams.
Fraud in relation to powers of attorney (POAs) is a serious issue, and the use of fraudulently obtained POAs is an increasing concern. Power of attorney fraud is a particular subset of fraud which occurs when someone is taken advantage of by the person they have named as their attorney for property or where a power of attorney is improperly obtained or forged. Elderly individuals are highly susceptible to such fraud. Power of attorney fraud can have wide ranging consequences. For example, the incidence of mortgage fraud by means of fraudulent POAs has risen in recent years and is very difficult to rectify after the fact.
As noted in a paper by Kim Whaley and Helena Likwornik, fraud can also be the product of validly executed powers of attorney. An attorney for property (or personal care) must make decisions that are in the best interest of the grantor. However, the scope of an attorney(s) powers is very broad. Section 7(2) of the Substitute Decisions Act provides that, unless restricted, an attorney may do anything in respect of property that the grantor could do, except make a Will.
There are several examples of situations where a POA went wrong:
- a wife and son used a forged power of attorney to sell residential property in British Columbia, which was owned by the husband/father who, at the time, was living in India. They also used the POA to withdraw funds from the husband’s RRSP and bank account.
- a daughter assisted her mother in granting a power of attorney in 2008 and the son-in-law orchestrated the signing of additional powers of attorney in 2009 which were used to obtain title to the mothers’ land. The court found that fraud and misrepresentation had occurred.
- a mother granted a POA in 1998 to her youngest daughter. After a stroke in 2008, the other children removed their mother from the home and had her sign new powers of attorney. The children claimed the youngest daughter had mismanaged Mother’s funds and depleted approximately $200,000.00. The court held both sets of POA documents invalid as a result of undue influence, and lack of capacity.
- a woman granted a POA to a friend/acquaintance who frequently assisted her with daily activities including grocery shopping and other errands. The friend is alleged to have taken tens of thousands of dollars from the woman.
While having a power of attorney in place is important for myriad of reasons, to whom the power of attorney is granted must be carefully considered. Appointing a single individual as an attorney may increase the risk of abuse or misuse. Accountability may be achieved where there or two or more individuals (or a neutral third party such as a trust company). Appointing more than one individual can provide a “check and balance” system to help avoid abuse.
As Kavina Nagrani, chair of the Canadian Bar Association’s Elder Law section told CBC in 2020 “the crux of the issue is who’s watching? Who’s monitoring that person? (…) when no one is watching and you’re not accountable to report to anyone, the risk of mismanagement and abuse is there.”
The OBSI recommends ensuring that your estate plan remains up to date “before misfortune strikes.”
 Ombudsman for Banking Services and Investments (“OBSI”) Seniors Report 2019. Retrieved from: https://www.obsi.ca/en/news-and-publications/resources/PresentationsandSubmissions/seniors-report_EN.pdf (“OBSI Report”)
 Canadian Anti-Fraud Centre. https://www.antifraudcentre-centreantifraude.ca/index-eng.htm
 OBSI Report page 2.
 OBSI Report page 12.
 Whaley, Kim. “The Power of Attorney: Its Misuse, Abuse and Fraud” at page 36. Retrieved from: https://welpartners.com/resources/WEL_PowerofAttorneyMisuseFraud.pdf
 Dhillon v Dhillon 2006 BCCA 524.
 Grewal et al. v Brar, 2015 MBQB 3 (CanLII) paras 2-16.
 Nguyen-Crawford v Nguyen, 2012 ONSC 1337 and see Nguyen-Crawford v. Nguyen, 2010 ONSC 6836.
 Saltzman, A. “Woman with power of attorney takes thousands from 97 year old with dementia” (CBC, published 3 March 2020) Retrieved from: https://www.cbc.ca/news/business/power-of-attorney-seniors-elder-abuse-senior-financial-crime-1.5476820.