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The Growing Vulnerability of Elderly Financial Exploitation

| September 21, 2018
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According to the Consumer Financial Protection Bureau (CFPB), “Elder financial exploitation has been called ‘the crime of the 21st century’... Older people are attractive targets because they… may be especially vulnerable due to isolation, cognitive decline, physical disability, health problems, or bereavement.”[1]  CFPB estimated annual losses from elder financial abuse ranges from $2.9 billion to $36.48 billion.  This type of crime is expected to further increase with future changes in demographics.  The U.S. Census Bureau’s 2017 National Population Projections indicate that by 2030 all baby boomers will be older than age 65 expanding the size of the older population so that one in every five residents will be of retirement age.[2]   Life expectancy adds to Elderly’s vulnerability to financial abuse due to their longevity.  Let's look at life expectancy:[3] 

  • A 65-year-old man living today will live, on average, until age 84
  • A 65-year-old woman living today will live, on average, until 86
  • 25% of 65-year-olds will live past 90
  • 10% of 65-year-olds will live past 95
  • Life expectancy at birth for men is 78
  • Life expectancy at birth for women is 81

 

As the greater number of people retire, an increase in financial exploitation is certain to occur.  So how should older adults protect themselves from these fraudsters?  Plan, in advance, to guard yourself, your assets and ensure your wishes will be implemented.  Understanding what you need to protect against is a critical step towards creating your plan.

Let’s start by defining elder financial exploitation - The Older American Act (OAA)[4] first enacted in 1965, amended numerous times, defines elder financial abuse/exploitation as: 

“The fraudulent or otherwise illegal, unauthorized, or improper act or process of an individual, including a caregiver or fiduciary, that uses the resources of an older individual for monetary or personal benefit, profit, or gain, or that results in depriving an older individual of rightful access to, or use of, benefits, resources, belongings, or assets.”

In summary, abuse involves taking advantage of older persons who rely on others for assistance.  The National Center on Elder Abuse research indicates that the typical victim of elder financial abuse is between the ages of 70 to 89.[5] 

Who are the elder financial abusers?  Statistics show 68% of the perpetrators are a family member, 17% friends and neighbors, and 15% are from caregivers/healthcare aides.[6]  The widespread prevalence of elder financial abuse affects millions of older Americans and destroys their wellbeing and financial security.   Elder financial exploitation can be placed into the following categories and subcategories:[7] 

  • Criminal Fraud
    • Con Artist
      • Grandparent Scam
      • Nigerian prince email
      • Fake lottery & sweepstakes winnings or government grant
      • Sweetheart Scam
    • Identity Theft
      • Opening new credit cards, bank accounts or payday loans
      • Car titles or home equity loans on your property
      • Using card data gained by phishing, in data breach or from emails
    • Caregiver Abuse
      • Theft by family members or caregivers (90% of abusers are family members or trusted persons[8])
      • Rewritten wills or powers of attorney
      • Borrowing money hoping senior will forget
      • Sometimes combined with physical abuse or neglect
    • Financial Exploitations
      • Hidden shipping and handling or subscriptions
      • Work-from-home schemes
      • Quack weight loss or dietary products
      • Excessive gifts
      • Misleading financial advice

How do older people protect themselves? 

By adopting a strict financial screening routine, you can protect yourself from these perpetrators.  Here are some vital steps you can take:

  • Remain vigilant about your finances by routinely examining all your financial statements.
  • Shred all documentation containing vital information you do not need to keep (i.e. receipts, credit card number bank, credit card statements etc…).
  • It is highly recommended that all benefits checks be directly deposited.
  • Screen all telemarketers and unknown solicitor.
  • Place barriers by entering your phone number in the Do Not Call Registry.
  • In person or on the phone prudence dictates never to deal with an unfamiliar company or charity, especially when their initial contact is unsolicited.
  • If appropriate, place a freeze with all credit agencies.
  • Before managing your daily finances becomes difficult, consider when hiring a daily money manager should come into play. Consider when this type of professional can help you with bills, insurance claims, phone calls to financial institutions and troubleshooting. It is best to learn of these services before you need them the most.
  • Being proactive with your CPA and financial advisor.
  • Establish an estate plan to create your will, powers of attorney, and advanced directives and possible trust.
  • Create a network of family, friends, neighbors and groups. They will notice if something is amiss.
  • Consult your financial advisor or attorney before signing any document you are unfamiliarly or uncertain about.
  • Don’t be afraid or embarrassed to contact authorities if you feel something is amidst.  Begin with your local Adult Protective Services.

In conclusion, this is a call to action to protect the assets you have worked so hard to accumulate!  Elder financial exploitation is the crime of the 21st century and expected only to grow as more Americans age, although there are growing trends demonstrating this issue is being addressed by several groups (governmental, state, local agencies and special interest groups).  Your personal preparations to protect yourself against these predators is serious.  Knowledge is power and seeking the help of a specialist in the areas of financial advisory planning and estate planning can assist you in preventing this abuse from ever happening.

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[1] Consumer Financial Protection Bureau, Recommendations and Report for Financial Institutions on Preventing and Responding to Elder Financial Exploitation, March 2016; https://files.consumerfinance.gov/f/201603_cfpb_recommendations-and-report-for-financial-institutions-on-preventing-and-responding-to-elder-financial-exploitation.pdf

[2] United States Census Bureau; Older People Projected to Outnumber Children for First Time in U.S. History; March 2018; https://www.census.gov/newsroom/press-releases/2018/cb18-41-population-projections.html

[3] Baker & McKenzie LLP; Senior Clients and Financial Abuse: See the Signs and Be Part of the Solution, July 26, 2018

[4] Congressional Research Services, Older American Act:  Overview and Funding by Kristen J Colello, Specialist in Health & Aging Policy and Angela Napili, Senior Research Librarian, July 15, 2018. https://fas.org/sgp/crs/misc/R43414.pdf

[5] National Center on Elder Abuse, “What We Do, Research, Statics, Data,” https://ncea.acl.gov/whatwedo/research/statistics.html

[6] National Center of Elder abuse “What We Do” (see above)

[7] The True Link Report on Elderly Financial Abuse 2015, January 2015; https://truelink-wordpress-assets.s3.amazonaws.com/wp-content/uploads/True-Link-Report-On-Elder-Financial-Abuse-012815.pdf

[8] Baker & McKenzie LLP; Senior Clients and Financial Abuse: See the Signs and Be Part of the Solution, July 26, 2018

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