Elder Financial Abuse Goes From Bad to Worse
I’ve raised many warnings about financial abuse of the elderly — including the fact that it’s a huge and growing social problem.
Actually, it’s many times worse than anyone knew, according to a new study.
American seniors are losing $36.5 billion every year to fraud and other forms of exploitation, says the 2015 True Link Report on Elder Financial Abuse.
That’s 12 times more than the most widely reported previous estimate — which was $2.9 billion in annual losses, according to the 2011 MetLife Study of Elder Financial Abuse.
One of the most jarring discoveries in the new report is that the highest portion of seniors’ losses — some $17 billion a year — comes from deceptive but technically legal tactics designed to take advantage of seniors.
“This study is a game changer,” says Shawna Reeves, director of elder abuse prevention at the Institute on Aging. “Not only does it challenge the previous studies, but it serves as a clarion call for further research and action.”
The survey of several thousand adults aged 50 to 70 found that:
- More than a third (37%) lose money to scams and other forms of exploitation in any five-year period.
- Of these, 7% experienced major fraud, defined as a loss of $10,000 or more.
- Those who experienced major fraud lost an average of $52,300.
- The seniors at greatest risk were those with one or more key vulnerability factors as well as a source of exposure.
What makes a senior vulnerable to fraud?
While memory loss is often a contributor, the study found that the biggest vulnerability factors are related to living alone and/or not consulting with a family member before making financial decisions.
Among the top exposure factors:
- Seniors described by their families as “extremely friendly” (and thus more approachable and more likely to give scam artists the benefit of the doubt) experienced four times as much financial loss as other victims.
- Financially sophisticated seniors feel more comfortable making solo decisions but in doing so sometimes expose themselves to fraud.
- Thrifty seniors are more likely to be attracted to “bargains.”
- Younger, urban seniors are more active and thus more likely to interact with strangers.
Senior financial abuse also causes emotional and physical harm.
Of those who experienced fraud, 1.8% lost their homes or other major assets, 6.7% skipped medical care and 4.2% reduced their nutritional intake for budgetary reasons. The study estimates that 954,000 U.S. seniors are currently skipping meals because of financial losses. Many suffer depression, anxiety and loss of independence.
The study estimates that 954,000 U.S. seniors are currently skipping meals because of financial losses.
What about the whopping $17 billion in losses caused by deceptive but technically legal tactics?
Those often involve misleading and confusing language, combined with social pressure and taking undue advantage of memory loss. Examples include:
- tricking someone into signing up for a subscription when all they wanted was to buy one product
- billing for hidden shipping and handling charges for infomercial products, and
- repeat phone solicitations from unscrupulous charities.
The study found that exploitation occurs more often as a progression rather than an isolated incident. While a $20 loss to hidden shipping charges or an unwanted subscription might be easy to ignore, the study found that seniors who lost $20 or more in that way lost an average of $2,000 a year to other scams over five years. Those who receive one telemarketing call per day were likely to suffer three times as much financial loss as those who receive only occasional calls.
What To Do
- If you have aging parents, engage with them often to make sure they’re not being manipulated. Do this even if another family member is managing their money.
- When you visit, look around the house for any missing valuables. Are there unpaid bills on the desk? Look at their bank, brokerage and credit card statements for any unusual activity or inappropriate charges.
- If you suspect that a parent — or another elderly person you know, perhaps a neighbor — is being swindled, contact the police or your county’s Adult Protective Services.
- You can also contact the federal Administration on Aging, which often can get a social worker or APS worker on the scene quickly. Visit aoa.gov or call (202) 401-4634.
Many other tips and suggestions can be found right here on our blog!