It's a form of abuse that often unfolds in silence. Its victims are often reluctant to report it. And it is likely to become even more commonplace as our society ages.
What is financial elder abuse?
Financial exploitation of elders occurs whenever someone dishonestly hijacks the resources of an older adult for personal gain, such as:
- Other resources
Exploiters target seniors because the elderly are more likely to have a lot of money. (In fact, more than 70 percent of the nation's wealth is in the hands of people 50 and older, according to the American Banking Association.)
Abusers prey on seniors for many reasons, according to Naomi Karp, senior policy analyst with the federal government's Office for Older Americans, a division of the Consumer Financial Protection Bureau.
“Older adults may be lonely and socially isolated,” she says. She adds that seniors may become vulnerable due to loss of a spouse, family member or loved one, especially during the first year after the loss.
How big is the problem of senior financial exploitation?
Unfortunately, nobody really knows how often elder financial abuse occurs, and estimates vary widely about how many people are affected. The CFPB says 17 percent of people ages 65 and older have reported being the victims of financial exploitation, with total losses soaring into the billions of dollars.
A 2010 Investor Protection Trust survey found that 20 percent of people ages 65 and older have “been taken advantage of financially.” Other sources disagree about whether the overall number is higher or lower because it so often goes unreported. (The CFPB indicates that just one in 44 cases of elder financial exploitation is ever reported to protective services.)
Sometimes, seniors stay silent about the abuse because they want to protect the perpetrator. For example, Karp says seniors often are reluctant to report exploitation by a family member, caregiver or someone on whom they depend. In other cases, seniors may not report the abuse because they are embarrassed or fear retaliation.
Another factor is that many seniors also have cognitive impairments associated with diseases such as dementia or Alzheimer's disease. Thus, they may not be fully aware that abuse is taking place.
Whatever the actual numbers, authorities and experts are concerned — so worried that last year's White House Conference on Aging highlighted the danger of financial exploitation of elders. As part of this effort, the CFPB is offering advice to help financial institutions “prevent, recognize and report elder financial exploitation.”
The U.S. Department of Justice has also pledged to enroll and train prosecutors from all 50 states to prosecute elder abuse and financial exploitation.
How financial elder abuse starts
In some cases, it's a stranger that exploits a senior. One example is an unknown caller that asks a senior to send money or provide personal information. Another example is a dishonest salesperson offering a too-good-to-be-true deal and pressuring a senior to act fast.
“Consumer scams happen on the phone, through the mail, or over the internet,” Karp says. “They can occur in person, at home, or at a business.”
However, it is much more common for the elderly to suffer financial abuse at the hands of someone they know and trust, such as a caregiver, a fiduciary, or even a family member. A Consumer Reports examination of the problem found that 90 percent of people who financially exploit seniors are family members or other trusted people.
Typically, abusers try to gain a senior's trust before the exploitation begins. For example, the abuser may suddenly become especially friendly with a senior and start accompanying him or her to the bank. Over time, the abuser may begin conducting all financial transactions on behalf of the senior. Doing so opens the door for the abuser to steal money or other resources.
How to identify financial exploitation of elders
A senior's friends and loved ones are the people best able to spot the abuse — and to help stop it. A sudden change in an elderly person's established financial patterns is the No. 1 indicator that the senior might be a victim of financial exploitation, according to the American Bankers Association. Other red flags that a senior may be the victim of financial exploitation include:
- Large, frequent, or unexplained withdrawals from a bank account
- ATM withdrawals among seniors who never previously used an ATM machine
- Sudden unpaid bills or nonsufficient fund activity
- Uncharacteristic wiring of large sums of cash
- Suspicious check signatures
- Bank statements that no longer go to the senior's home
- Altered wills and trusts
Be aware if a senior begins associating with new friends or strangers, or if a previously uninvolved relative, caregiver or friend takes control of a senior's financial transactions.
Reporting elder financial abuse
If you believe a loved one is being financially exploited, talk to the senior and try to identify what is happening. In addition, the American Banking Association recommends reporting any suspected abuse to the senior's bank, and working with the financial institution to try to stop the activity.
Karp suggests contacting the adult protective services division in your town, county, or state to ask for help, and reporting any suspected fraud or other criminal activity to the police. Depending on the nature of the abuse, you may also need to contact federal authorities, state authorities or both.
Federal sources of help are most often necessary in crimes and abuse that involve other states or countries. Federal agencies that address such issues include the Consumer Financial Protection Bureau, the FBI, the Federal Trade Commission and the U.S. Postal Inspection Service.
“Each of these agencies and professionals has a different role so you may need to call more than one,” Karp says. “Sources of state help may include the office of the attorney general or another agency that deals with consumer protection,” she says. “You may also need to talk to a lawyer who may be able to help get back money or property and may be able to protect you from future exploitation,” Karp adds.
Where to go for help
Worried that you or a loved one might become a victim of elder financial abuse? Make sure to seek help from one of the organizations that fight to protect seniors. These groups offer advice for preventing abuse, and can help if you are already a victim. They include:
Consumer Financial Protection Bureau. This federal agency includes Office of Financial Protection for Older Americans, which has a webpage devoted to the helping older Americans and their caregivers avoid financial exploitation. Here, you can download the curriculum “Money Smart for Older Adults — Prevent Financial Exploitation.” Caregivers also can download the guide “Managing Someone Else's Money.”
National Center on Elder Abuse. A branch of the U.S. Department of Health and Human Services, the NCEA website offers links to help lines and elder-abuse prevention groups in the 50 states and the District of Columbia.
Eldercare Locator. This service of the U.S. Administration on Aging allows you to find local services for older adults and their families. The search tool includes many options to find various types of services, including financial assistance, elder abuse prevention and legal assistance.
American Association of Daily Money Managers. A national membership organization of individuals and businesses that provide money management help to people, including seniors. Use the organization's search tool to find a money manager in your area.
Preventing elder financial abuse
Banks and other financial institutions are taking various steps to help keep seniors and their caretakers from falling victim to elder financial exploitation. Karp says these financial institutions:
- Train staff to recognize warning signs
- Have procedures in place for reporting to adult protective services and law enforcement
- Provide educational materials and do educational programs in their communities
Still, Karp adds, “The CFPB believes that banks and credit unions can do more.” In March, the CFPB issued an advisory and a set of detailed recommendations about how financial institutions can better “prevent, recognize, report, and respond to financial exploitation of older Americans.” Suggestions include making better use of fraud-detection technology and offering more age-friendly services.
Seniors, their loved ones, and their caretakers can also take some commonsense measures to lower the risk of this abuse. The key for seniors is to find someone they truly can trust to become a partner in managing the senior's finances, according to the CFPB. After finding this trusted person, the senior should allow him or her to:
- Monitor account transactions and look for signs that suspicious activity is occurring
- Write checks and pay bills from a convenience or agency account set up for this purpose
- Make financial decisions on behalf of the senior if he or she cannot. To do this, a power of attorney or other advance plan needs to be created. The senior's bank or credit union should have a record of who is allowed to make these decisions on the senior's behalf.
If you are thinking of helping a senior manage his or her finances, be sure to check out the CFPB's “Managing Someone Else's Money” guides.
Have you been able to protect your loved ones from elder financial abuse? Please share your tips in the comments below!