Preventing Elder Financial Exploitation:
How Banks Can Help
Elder financial abuse is a type of elder abuse in which misappropriation of financial resources or abusive use of financial control, in the context of a relationship where there is an expectation of trust, causes harm to an older person.
The Older Americans Act of 2006 defines elder financial abuse, or financial 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 results in depriving an older individual of rightful access to, or use of, benefits, resources, belongings, or assets.”
According the research funded by the U.S. Justice Department, about 1 in 20 older adults report being financially abused by a family member in the year prior. The National Center on Elder Abuse estimates that such abuse costs older adults around 2.9 billion annually, a problem that is expected to rise as the elderly population grows.
Family members and informal or paid caregivers have special access to seniors and thus are often in a position inflict financial abuse through deception, coercion, misrepresentation, undue influence, or theft. Common abusive practices include:
- Money or property is used without the senior’s permission or taken from them, for example removal from their home and then use of the home by the abuser, or depositing income such as pension or benefit checks
- The senior’s signature is forged or identity is misappropriated for financial transactions
- The senior is coerced or influenced to sign over deeds or wills, or caused to execute legal documents they do not understand
- The abuser fraudulently obtains a power of attorney or guardianship
- Money is borrowed from the senor and never repaid Family members engaged in financial abuse of the elderly may include spouses, children, or grandchildren. They may engage in the activity because they feel justified, for instance, they are taking what they might later inherit or have a sense of “entitlement” due to a negative personal relationship with the older person, or that it is somehow the price of a promise of lifelong care. Or they may take money or property to prevent other family members from getting the money or for fear that their inheritance may be lost due to cost of treating illnesses. Sometimes, family members take money or property from their elders because of gambling or other financial problems or substance abuse.
- Scams and Fraud targeting seniors Seniors are also often deliberately targeted by scams, fraud, and misleading marketing – often by otherwise legitimate businesses. This may include:
- Fraudulent investment or insurance schemes
- Fraudulent contracts and unauthorized charges imposed by internet service providers
- Worthless “sweepstakes” that elderly persons must pay in order to collect winnings
- Fake pharmaceutical or diet/health products
- Medical billing scams and unnecessary lending, for example reverse mortgages
- Charitable giving scams, including pressure to rewrite wills
- Identity theft
- Lottery scams
- Work from home schemes or other ways to generate income
Disturbing facts about Elder Abuse-
- Elder abuse is vastly under-reported; only one in 44 cases of financial abuse is ever reported
- Abused seniors are three times more likely to die and elder abuse victims are four times more likely to go into a nursing home
- 90% of abusers are family members or trusted others
- Almost one in ten financial abuse victims will turn to Medicaid as a direct result of their own monies being stolen from them
- Cognitive impairment and the need for help with activities of daily living make victims more vulnerable to financial abuse
Common Scams by Strangers
- Lottery and sweepstakes scams “You’ve already won! Just send $2,500 to cover your taxes”
- Home repair/traveling con men “We’re in your area and can coat your driveway/roof really cheaply”
- Grandparent scam: “You’re called and told your grandson is in jail and needs you to send money immediately”
- Charity Scams: Falsely soliciting funds for good causes; very common after disasters
- I’m from the utility company; I need you to come outside with me for a minute (while accomplice steals valuables)
- Roof repair, yard work, home repair scams
- Telemarketing scams and accompanying threats
- Money sent via telegraphs to people claiming lottery winnings
Common Scams by “Professionals”
- Predatory Lending- seniors pressured into taking out inappropriate reverse mortgages or other loans
- Annuity Sales- the senior may be pressured into using the equity realized from a reverse mortgage (or other liquid assets) to buy an expensive annuity which may not mature until the person is well into their 90s or over 100
- Investment/securities schemes- pyramid schemes; unrealistic returns promised; dealer is not licensed
- Internet phishing- false emails about bank accounts
- Identity theft- credit cards opened fraudulently, etc.
- Medicare scams- these are the costliest in terms of the dollar amounts
Common Ways Family Members and Trusted Others Exploit Vulnerable Adults
- Using a Power of Attorney, given by the victim to allow another person to handle his/her finances, as a license to steal the victim’s monies for the perpetrator’s own use
- Taking advantage of joint bank accounts in the same way
- Using ATM cards and stealing checks to withdraw monies from the victim’s accounts
- Threatening to abandon, hit or otherwise harm the victim unless he or she gives the perpetrator what he/she wants
- Refusing to obtain needed care and medical services for the victim in order to keep the person’s assets available for the abuser
- In-home care providers charging for services; keeping charges from errands, paying bills which don’t belong to the vulnerable adult, asking the vulnerable adult to sign falsified time sheets, spending their work time on the phone and not doing what they are paid to do. Reports of financial exploitation of vulnerable adults often involve allegations of abuse and neglect as well. APS investigates all the reported types of abuse, assesses the victim’s cognitive capacity, and takes appropriate steps to stop or mitigate the abuse to the extent possible. The effects of financial exploitation on a vulnerable adult are devastating. The individual frequently experiences:
- Loss of trust in others
- Loss of security
- Depression
- Feelings of fear, shame, guilt, anger, self-doubt, remorse, worthlessness
- Financial destitution
- Inability to replace lost assets through employment
- Inability to hire attorney to pursue legal protections and remedies
- Becoming reliant on government ‘safety net’ programs
- Inability to provide long term care needs
- Loss of primary residence
Interventions to address financial abuse include closing joint bank accounts, having the victim revoke the power of attorney; putting in place a responsible person or agency to assist with managing the victim’s funds; and restarting utilities if they’ve been shut off.