Senior Financial Exploitation: Understanding the Problem
In a recent article for Merrill Lynch, Cynthia. L. Hutchins outlined the growing problem of senior financial exploitation. “Senior Financial Exploitation: A Hidden Threat” is offered as Part 2 of the brokerage company’s Financial Gerontology Series.
Senior financial exploitation is fined as the manipulation of an older adult into transferring his or her assets to another person for that individual’s personal benefit. It is often done without the senior’s knowledge that victimization is even occurring.
It is understandable that a major brokerage firm would be concerned about protecting the assets of seniors and their families. As the number of baby boomers at retirement age rises, the problem of financial exploitation goes. Hutchins estimates that, by mid-century, 20% of the population will be over the age of 65, and 19 million over 85. Today, the annual cost to victims of senior financial exploitation is an estimated $2.9 billion, and that number will only grow unless public awareness increases.
Who Is Most at Risk?
Those who are most at risk for senior financial exploitation include:
Women – females are twice as likely as males to be the victims of financial exploitation.
Elderly – most victims of senior financial exploitation are between the ages of 80 and 89.
Dependent – those who reside in long-term care facilities, are cognitive impaired, or otherwise reliant upon others to get their personal needs met are more vulnerable.
Isolated – Individuals who are widows, widowers, live alone, and/or are socially isolated are at higher risk for financial exploitation.
Financial Exploitation Close to Home
In one in three crimes of financial exploitation, the victim knows the perpetrator, such as a friend, neighbor, or family member. The type and style of victimization often depends upon how well a perpetrator knows a senior victim.
Some of the most typical types of financial abuse by family members or others close to the victim include coercion to obtain check or ATM withdrawals, financial abuse of powers of attorney, exploitation of joint bank accounts.
Trusted loved ones often extort funds from an older adult by threatening to withhold care, actually practicing neglect, or even threatening bodily harm. Such leverage makes the older individual particularly vulnerable and also less likely to report financial exploitation.
When strangers select victims for financial exploitation, they often use one of several scams that have proven effective. Such scams include the following:
Telemarketing – Perpetrators often call seniors on the phone, asking for money. They may ask for donations to a non-existent charity, convince the individual that a loved one needs emergency funds for medical care, or concoct another convincing story that results in a “donation” or other financial contribution.
“Prizes” – Victims are mailed a check and told that they have won a sweepstakes or other price. They are asked to send money to cover the taxes or fees associated with collecting the prize. The original check for prize winnings bounces, after the victim has paid the scammer.
Billing fraud – Scammers obtain personal information from victims and use it to fraudulently bill Medicare or other governmental programs.
False identities – Some con artists will even attend funerals, found in obituaries, and convince a recently bereaved widow or widower that their loved one owed the scammer a debt. Funds are then extorted to “settle” the debt. In another scheme, the scammer poses as a family member, such as a distant grandchild. Usually by telephone, the perpetrator convinces the victim that he or she needs an immediate transfer of funds to solve a serious medical or legal problem.
Warning Signs of Financial Exploitation
On behalf of seniors who are at high risk of financial exploitation, concerned loved ones should be vigilant in watching for any warning signs of exploitation. Examples of potential red flags include:
Reluctance to discuss financial matters – Some hesitation may be due to a senior’s sense of pride or need to maintain independence. But changes in an older loved one’s openness about financial activity may signal something more serious, such as financial manipulation.
Sudden changes in financial activities – New wills or powers of attorney, changes in property titles, increased account withdrawals or credit card activity, and newly authorized signers on accounts or cards are all examples of changes that may indicate outside influence in financial matters.
Irresponsible financial behaviors –An older loved one who is transferring assets to unknown individuals, frequently writing checks made out to “cash,” or having unexplained loss of cash or other valuables is clearly at greater risk for financial exploitation and may be a current victim.
The Department of Justice offers assistance to senior financial abuse victims and their family members at its Elder Justice web site. Resource information is provided on a state-by-state basis. To obtain more detailed information on the problem of senior financial exploitation, we encourage you to download the Merrill Lynch report on this subject.