Question: Because my father lives on the other side of the country, he gave me his power of attorney to handle his finances and health care. I am an only child, and my mother died two years ago. At 86, Dad is in good physical health, but he has memory loss and can’t handle his own finances. He doesn’t drive, and he depends on others to help him get around. His income is from Social Security and a small pension.

Because it was so difficult to obtain his bills and get them paid due to the distance, six months ago, I engaged a firm that advertised expertise in handling money and paying bills for seniors. As a condition of hiring, my father and I made the head of the group Dad’s representative payee for his Social Security.

I travel quite a bit with my job, and when I finally got around to reviewing Dad’s bank records, I found his account to be overdrawn, some of his recurring bills in collection for nonpayment, and a number of ATM withdrawals. Dad never had an ATM card and wouldn’t know how to use one. When the “business” did not return my calls, I traveled cross-country to close out the bank account. Is there anything I can do about the money that has been stolen from my father? I have learned that more than 20 other people have had the same problem with this group.

Answer: Social Security does not accept powers of attorney, but uses the “representative payee” system. The Social Security Protection Act of 2004 was signed into law to protect against these types of abuses by representative payees that are becoming more frequent. In all, close to 8 million Social Security and SSI recipients have “representative payees” – that is, folks appointed by the Social Security Administration to receive and manage benefits for beneficiaries. While the majority of these fiduciaries are family members, a growing number have been non-family members or organizational entities like the one you hired, certified community-based nonprofit agencies, and others.

Under the 2004 law (Pub. L. No. 108-203), the Social Security Administration can, among other things, 1) replace misused benefits under certain circumstances; 2) require private representative payees to be both bonded and licensed; 3) monitor certain representative payees; 4) disqualify those convicted of felonies, etc. as representative payees; and 5) recover misused money as overpayments to the representative payee by taking income tax refunds and engaging in the collection process.

Taking the NextStep: While there have been prosecutions and convictions for family members and organizations misusing Social Security benefits when serving as representative payee, we think the long legal process could have been avoided with a little practical planning on your part. Without being critical of your efforts, which we know were with your father’s best interests in mind, we believe the situation can be handled much better in the future.

First of all, we see no reason why you would want anyone but yourself serving as your father’s “representative payee”. If the Social Security benefits were directly deposited into your father’s account, why appoint anyone else? Here, we think you were looking for trouble. Second, your father’s telephone bill and other utilities could have been paid electronically. Third, you could have engaged paid non-medical caregivers. For example, Home Instead Senior Care Click Here, is a nationwide service that can be accessed to do your father’s shopping and take him where he needs and wants to go. Fourth, you should have reviewed and audited his account every month – not every six months, and, if you did not have the time, you could have hired an accountant local to your father to do so. With bank accounts available online, you could and should have kept up with the spending weekly.

That said, even though what occurred is water under the bridge, you should contact the Social Security Administration and ask for their help in helping you attempt to recover your father’s money. You should also contact the local Better Business Bureau and police in your father’s locale. Financial abuse of seniors must come to an end.