Ask a roomful of service professionals about whether or not their clients have experienced elder financial abuse, and you’re likely to spark a spirited conversation. Unfortunately, most of us are familiar with a senior who unwittingly fell for con-men posing as the IRS (on the phone), or a Nigerian prince (in an email), or even phony utility workers (knocking on the front door).
But these “known” scams are only the tip of the iceberg.
How Prevalent Is Elder Financial Abuse?
Experts say that it’s difficult to know exactly how many older Americans fall victim to financial abuse each year because much of the time, the crimes go unreported. What is well understood is that the financial exploitation of seniors causes significant economic losses—and not only for the elders themselves, but also for other family members, businesses, and programs. In a way, every US taxpayer is affected because elder financial abuse increases reliance on government-funded health care programs such as Medicaid.
Financial abuse by itself was once thought to cost older Americans over 2.6 billion dollars annually, as revealed in the MetLife Mature Market Institute’s study Broken Trust: Elders, Family and Finances from 2009. However, the problem is even bigger than that. A more recent study, the TrueLink Report of Elder Financial Abuse 2015, found that today’s seniors are losing a whopping $36.48 billion each year—more than twelve times what was previously reported. On top of that, the report concluded that the highest proportion of these losses—some $16.99 billion per year—comes from deceptive, but technically legal, tactics designed to specifically take advantage of older Americans.
Who Are the Perpetrators of Elder Financial Abuse?
If you were taken aback by the prevalence of elder financial abuse, you may be even more surprised to learn who most commonly commits it.
As remarkable as it may sound, the perpetrators of elder financial abuse are most likely (by far) to be adult children or spouses. In fact, in a study of over 4,000 older adults, the three primary categories of perpetrators of fiduciary abuse turned out to be:
- Family members (adult children/spouses): 57.9%
- Friends/Neighbors: 16.9%
- Professionals/Working Caregivers: 14.9%
The perpetrators of elder financial abuse are also more likely to be male, to have a history of past or current substance abuse, to have mental or physical health problems, to have a history of trouble with the police, to be socially isolated, to be unemployed or have financial problems, and to be experiencing major stress.
Who Is Most at Risk for Elder Financial Abuse?
In an earlier blog post, I discussed why seniors are so vulnerable to financial abuse. But among the elderly, there are also certain subpopulations that are most at risk. For instance, studies indicate that those with cognitive incapacities suffer twice the economic losses than those who are cognitively intact.
Generally speaking, the seniors most susceptible to financial exploitation are:
- Functionally and/or cognitively impaired
- Residing with multiple family members
- Dependent upon others
- Newly widowed
- Low-income, looking to “get rich quick”
However, as the TrueLink Report of Elder Financial Abuse 2015 points out, risk equals vulnerability plus exposure. As a result, researchers have found that these attributes can also increase the likelihood of financial exploitation:
- Friendly (this alone makes elders four times as likely to experience fiduciary abuse)
- College- and graduate-level educated
- Financially sophisticated
- Urban dwelling
- Prone to take calls from telemarketers
When you put all this information together and start to see the big picture of who is perpetrating elder financial abuse, along with who is vulnerable to it, you begin to understand why it is such a multi-faceted and widespread problem. In addition, as the True Link report stresses, it’s important to realize that elder financial exploitation is rarely an isolated incident. Typically, there is a progression, and even if it starts out as negligible—a mere $20 here or there—the abuse tends to grow over time. That’s why when you notice any financial loss at all, you should take it as a sign of your client’s underlying vulnerability.
Are there other red flags service providers need to be aware of? And what should you do if you suspect that your client may be a victim of financial abuse? I’ll answer those questions in my third and final blog post in this series. Until then, stay vigilant and remember that hiring a geriatric care manager or Aging Life Care Professional™ can augment the services you already provide and can be an effective way to help your clients avoid the devastation caused by elder financial abuse.