A power of attorney is meant to protect an aging parent, giving a trusted person the legal authority to pay bills, manage investments, or handle banking when the parent can no longer do it alone. Consumer regulators warn the same authority can just as easily be turned against the person it was designed to protect, and the accounts most at risk are often the ones nobody else is watching closely.
What a power of attorney actually authorizes
A power of attorney, or POA, is a legal document that lets one person — the “agent” or “attorney-in-fact” — make financial decisions on behalf of another person, called the “principal,” according to the Consumer Financial Protection Bureau’s Managing Someone Else’s Money resource hub. The scope can be broad, covering nearly every account and asset the principal owns, or narrow, limited to a single transaction such as selling a house. Once signed, a “durable” POA typically remains in effect even after the principal becomes incapacitated, which is precisely the situation regulators say creates the most risk: the person with the least ability to monitor the account is often the one whose money is being spent.
The CFPB’s guide, titled Help for Agents Under a Power of Attorney, distinguishes a durable POA from a “springing” POA, which does not take effect until a triggering event — usually a doctor’s written certification that the principal has lost capacity — actually occurs. A non-durable, general POA ends automatically the moment the principal becomes incapacitated, the opposite outcome families usually want when the document was signed as a safety net for aging. Because the choice between these versions is typically made years before anyone expects to need it, the CFPB recommends principals revisit the document periodically, confirm which version they signed, and make sure at least one other family member knows the agent’s identity and the document’s location.
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The fiduciary duties an agent is legally bound to follow
The CFPB’s guide for agents under a power of attorney lays out four core duties: acting only in the principal’s interest, managing the principal’s money and property carefully, keeping the principal’s money and property separate from the agent’s own, and keeping good records. An agent who pays personal bills from the principal’s account, “borrows” money without a signed agreement, or mixes funds between accounts has typically crossed from questionable behavior into what most states classify as financial exploitation, even if the agent intends to pay the money back eventually.
How misuse typically shows up in bank records
Financial institutions and family members who suspect abuse are generally told to look for the same pattern: large or unusual cash withdrawals, new authorized users or joint owners added to accounts, transfers to accounts the principal has never used before, missed bill payments despite adequate funds, or a sudden reluctance from the agent to share account statements. Because a POA agent typically does not need court approval for individual transactions the way a court-appointed guardian does, misuse can continue for months before anyone outside the household notices.
The CFPB’s interagency guidance for banks on preventing elder financial exploitation trains tellers and other customer-facing staff to watch for related cues at the counter: an agent who insists on speaking for the principal and discourages direct answers, a principal who seems confused about transactions made in their name, uncharacteristically frequent ATM withdrawals, or repeated attempts to wire large sums to unfamiliar recipients. Banks that spot these patterns can flag the account, delay a suspicious disbursement, and, in most states, report the concern to Adult Protective Services without violating account-privacy rules.
The scale of the broader problem is significant. The Justice Department’s 2025 annual report to Congress on elder fraud and abuse found that domestic and transnational offenders attempted to steal, or did steal, more than $2 billion from more than one million older Americans, and the Department pursued more than 280 enforcement actions against over 600 defendants during the reporting period — figures that include financial exploitation by trusted individuals such as family members and caregivers, not just outside scammers.
Safeguards families can put in place before signing
The CFPB recommends naming a POA agent only after real deliberation, since the choice is rarely revisited once a parent becomes incapacitated. Families can build in oversight without stripping the agent’s authority: requiring the agent to keep receipts and provide periodic accountings to another family member, opening a separate account for POA transactions rather than granting access to every account the principal owns, or naming a co-agent or monitor with view-only access at the bank. Some banks and credit unions also allow a trusted contact to be added to an account specifically so the institution can reach a second person if it notices suspicious activity, independent of who holds the power of attorney itself.
The CFPB’s companion guide for family and friends recommends writing down warning signs as they happen — dates, times, specific transactions, and the names of anyone else who witnessed the incident — rather than relying on memory later, since that record is often what turns a vague suspicion into something Adult Protective Services or a bank’s fraud department can act on. For a document already in effect, families are not powerless: a principal who still has legal capacity can revoke a power of attorney at any time by signing a written revocation and notifying every institution where the old document was on file, and a new POA naming a different agent can be executed the same day.
Where to report suspected misuse of a power of attorney
Suspected misuse of a power of attorney can typically be reported to the bank holding the account, the state’s Adult Protective Services agency, or local law enforcement, and a report does not require proof — only a reasonable concern that a vulnerable adult’s money is being mismanaged. Families unsure which state agency handles the report can start with the Eldercare Locator, a federally funded public service of the U.S. Administration for Community Living reachable at 1-800-677-1116, which connects callers to the correct local Adult Protective Services office and other elder-support resources by ZIP code. Reports can also be filed anonymously in most states, and reporting a suspicion in good faith is generally protected from liability even if an investigation ultimately finds no wrongdoing.
This article was researched and drafted with the assistance of AI and reviewed by The Financial Wire editorial team.
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Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
