Let’s be blunt – there isn’t anything so despicable as abuse and exploitation of our most vulnerable members of society. And while child abuse / exploitation / trafficking is as despicable as it gets, the exploitation and fraud perpetrated on the elderly is just as malicious, in our opinion. And yet, it’s a shockingly common occurrence that, left unchecked, will continue to grow exponentially, as it has in the last 3 years.
Every day in the United States, 10,000 people turn 65. In 20 years, there will be nearly 80 million Americans over the age of 65. The Baby Boomer generation has accumulated a significant amount of wealth, the fruit of decades of strong economic growth and rising investments and property values. It’s no surprise then that this demographic is also the constant target of abuse and fraud.
Consider the size of the problem:
- $3 billion stolen or defrauded from millions of seniors every year – The Department of Justice
- The North American Securities Administrators Association (NASAA), which polices and regulates small and medium-sized investment firms, estimates that at least ONE THIRD of the legal enforcement actions it takes every year involve senior investors.
- 63,500 reports of suspicious financial activity involving seniors in 2017 – up 400% from 2013 – The Consumer Financial Protection Bureau
- Average loss for age 70 – 79 = $45,300.
- Average loss when a fiduciary was involved = $83,600
- Average loss when a family member was involved = $42,700.
- Average loss when a non-family caregiver was involved = $57,800
- Average loss when a stranger was involved = $17,000
The frequency with which financial exploitation and fraud is perpetrated against the elderly might not strike you as a lot. But consider the fact that only a fraction of the perpetrated cases are actually reported to authorities, in large part because seniors may not be aware they have been exploited, they may be embarrassed to report it, or may be fearful of reporting it.
According to the FBI, seniors are particularly attractive targets for a variety of reasons. In addition to their sizable assets, they have excellent credit, which gives them access to additional financial resources that can be exploited, and they tend to be trusting and polite, which makes it hard for them to say “No” or hang up the telephone. They tend to be less astute with technology and can easily fall prey to email and other internet phishing scams. Moreover, they tend to make poor witnesses; because many of them don’t realize they’ve been exploited until some time has passed, they often have difficulty relaying details to authorities, which hinders the investigation.
But fighting financial exploitation doesn’t have to be complicated. It takes an awareness of how financial abuse of seniors is most commonly perpetrated and a family’s willingness to work together to protect its elderly members. And while there are numerous laws and regulations in place to protect seniors, the first step in prevention and enforcement begins with you! It’s important that your family understand the different types of abuse and fraud, the red flags that indicate a family member might be targeted, steps you can take to prevent it, and what to do if it happens.
Exploitation – the illegal or improper use of a senior’s resources for another’s profit or advantage, perpetrated by someone the senior knows.
Fraud – the theft or use of a senior’s resources through deception, perpetrated by someone the senior does not know.
Because Exploitation and Fraud are different in nature, preventing, identifying, and rectifying them require different approaches. In the next few posts, we’re going to take a deeper dive into Exploitation, Financial Fraud, and Investment Fraud, a subset of Financial Fraud. We’ll finish with a general discussion of best practices for families with elderly family members. But in the meantime, we encourage you to review the following resources for additional information, and to begin having conversations within your family about it.
Resources
- AARP Scams & Fraud – https://www.aarp.org/money/scams-fraud
- National Adult Protective Services Association – https://www.napsa-now.org/get-informed/
- Save our Seniors – http://saveourseniors.org
- Consumer Financial Protection Bureau – https://www.consumerfinance.gov/consumer-tools/fraud/
- Colorado Department of Regulatory Agencies (DORA) Senior Hotline – (720) 593-6720
- Securities and Exchange Commission (SEC) – https://investor.gov/protect-your-investments
- Financial Industry Regulatory Authority (FINRA) – Protect Your Money – https://www.finra.org/investors/protect-your-money
