July 12, 2011

CANADA: How do firms handle purchases made by customers with dementia?

TORONTO, Ontario / The Toronto Star / Moneyville / July 12, 2011

Roseman: Why this senior spent $13,000 on jewellery


If a customer makes big retail purchases and is later diagnosed with dementia should a store give refunds?

By Ellen Roseman, Personal Finance Columnist

Joan Luik, 78, started buying jewellery at The Diamond Company a year ago. Her husband found small recurring charges on their credit card bills and bank statements.

He became suspicious when he saw she’d spent $3,000 in one month at the Pickering Town Centre store.

“I did some research and came up with a total of $12,000 to $13,000 in jewellery purchases,” said Ando Luik, 72, a former high school teacher. “I don’t deny my wife anything. I love her dearly. But these things were so out of character.

“She bought a ruby pennant and ruby earrings for about $6,000. She bought diamond earrings for both our daughters-in-law for $1,500 each. It became an obsession with her.”

Later that year, Joan Luik went to a geriatric doctor for cognitive tests and was diagnosed with Alzheimer’s disease.

Armed with a power of attorney for her finances, her husband cut the limits on her bank and credit card accounts. Then, he tried to get a refund for the jewellery purchases.

The Diamond Company gave back the money she’d spent on layaways and special orders that hadn’t arrived. But that was only part of the amount.

“They ordered me out of the store and said, ‘It’s your problem.’ I’ve called at least a dozen times,” Ando Luik said, asking The Star for help.

Owner Isis Tadros defended the no-refund policy. She said Luik seemed fine when she visited the store and was aware of each transaction. Her daughter Sylvia Tadros called back soon after, taking a more conciliatory attitude.

“We’re more than willing to co-operate. We understand the seriousness of the matter,” she told me.

Luik got an apology and a promise to meet at the store this week to discuss the jewellery he wants to return. He’s relieved, since he’s a cancer patient who just finished a series of treatments for lymphoma.

Alzheimer’s disease is the most common form of dementia, which affects more than 500,000 Canadians. The number will grow to 1.1 million within a generation, says the Alzheimer Society of Canada.

Judith Wahl is head of the Advocacy Centre for the Elderly, a community legal clinic for seniors. In her view, a dementia diagnosis doesn’t mean that a person is unfit to make financial decisions.

“You can’t assume that people are incapable because they have Alzheimer’s. It’s very fact specific,” she says.

“You have to ask: Did they have the capacity to contract at the time, even though they had Alzheimer’s? A doctor’s report is not sufficient evidence. This is a very challenging point.”

Since dementia patients tend to lose some inhibitions, they can become impulsive and irrational spenders, she adds.

Karen Henderson, head of the Long Term Care Planning Network, helps financial advisers talk to their aging clients about these issues. She also works with families.

Her advice: Don’t ignore subtle signals with money.

Ask questions if you start seeing abnormal behaviour.

Go to a specialist to get a diagnosis before something serious happens.

Call the banks and credit card companies to have a person’s accounts flagged for abnormal transactions.

“Everyone is terrified of memory loss,” Henderson says. “You don’t want to admit that your loved one is ill.”

Family members should put controls into place to avoid financial disasters. They can’t depend on businesses to protect vulnerable seniors.

One of Wahl’s clients liked to go to the bank to get money. His daughter talked to the bank about setting low limits and monitoring the withdrawals.

“You have to understand there’s a risk,” Wahl says. “If you set a low limit, will it stick? Can you prevent someone from making purchases? If the money disappears, then it disappears.”

Dementia is a rising tide in Canada and worldwide, says a report by the Alzheimer Society, asking governments to respond to the challenge.

Business, too, has a role to play in being more sensitive to signs of dementia and reversing transactions by those who are incapable of entering into them.

Also read:
How to protect seniors from online scams
Why parents might avoid joint accounts with kids

Ellen Roseman writes about personal finance and consumer issues. You can reach her at eroseman@thestar.ca.

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