Adult child sits at kitchen table with father, concerned about elder financial exploitationSageVest Wealth Management proudly serves as your fiduciary financial advisor, always placing your best interests first. Your wealth wellbeing is paramount to what we do, at all times and at every life stage.

Recent analysis by the Consumer Financial Protection Bureau’s (CFPB) Office for Older Americans highlighted the increasing prevalence of elder financial exploitation. To help safeguard yourself and loved ones from this serious issue, we consider some facts from the report about elder financial exploitation.

 

What Is Elder Financial Exploitation (EFE)?

The Federal Elder Justice Act of 2010 defines elder financial exploitation (or EFE) as ‘the fraudulent or otherwise illegal, unauthorized, or improper’ use of ‘the resources of an elder for monetary or personal benefit, profit, or gain’, thus ‘depriving the elder … rightful access to, or use of, their benefits, resources, belongings, or assets’.

About The Study

The CFPB analyzed 185,000 occurrences of elder financial exploitation, reported during 2013-2017 via Suspicious Activity Reports (SARs). SARs are special reports, filed by banks, credit unions, and others to the Financial Crimes Enforcement Network (FinCEN). SARs data is used by government agencies and law enforcement to support investigations, identify patterns, and effect policy change.

The Impact Of Elder Financial Exploitation

Most people accrue assets throughout their lifetime, making elder financial exploitation more costly in dollar terms. Losses can be far more financially damaging, as there’s less time to make up any deficit.

80% of SARs involve monetary loss. During 2013-2017, elder financial exploitation totaled more than $6 billion dollars in losses, with individuals losing on average $34,200 each.

Age Groups Affected

The data revealed that the older you get, the more likely you are to experience financial exploitation. The risk increases further with diminished capacity.

Pie chart showing elder financial exploitation losses by age group, courtesy of CFPB

Source: Courtesy of CFPB. Bureau’s analysis of a random sample of EFE SARs (459 SARs)

Those aged 70-79 suffered the highest monetary losses per incident.

Graph showing average monetary loss from elder financial exploitation, courtesy of CFPBSource: Courtesy of CFPB. Bureau’s analysis of a random sample of EFE SARs (324 SARs)

How Widespread Is The Issue?

From 2013 to 2017, SARs relating to elder financial exploitation quadrupled. In 2017, more than 63,000 SARs were filed. Unfortunately, it’s estimated that only one in every 44 cases is reported, meaning the problem is far more prevalent than the figures suggest.

Types Of Elder Financial Exploitation

Elder financial exploitation can originate close to home with someone you know, or far away via offshore scams. The most common types of elder financial exploitation reported via SARs were:

Scams By Strangers

51% of elder financial exploitation was perpetrated by strangers, typically through large-scale global operations involving common financial scams.

Theft By A Non-family Caregiver

36% of elder financial exploitation was by someone known to the victim, either a non-family caregiver or family member. Where the perpetrator was known to the individual, losses averaged $50,000 (versus $17,000 to strangers).

Exploitation By A Family Member

62% of cases involving family members were perpetrated by an adult child by:

  • Misusing a Power of Attorney or other financial authority.
  • Withdrawing money using an ATM card or check.
  • Pressuring a parent to take out a reverse mortgage, buy a vehicle, or make other large gifts of money or assets.

Money Mule

In these cases, the older adult either knowingly or unknowingly laundered money for others through the transfer and receipt of money.

According to the CFPB analysis, wire transfers, bank accounts, and credit cards were the most common methods used. Checking and savings accounts sustained the highest monetary losses, an average of $48,300.

Recognizing Elder Financial Exploitation

The CFPB determined that cases of elder financial exploitation typically last for around four months before a SAR is filed and authorities step in to help the individual at risk.

Learn to recognize the red flags, for your own benefit and for loved ones:

Behavioral Changes

  • Your loved one has new ‘friends’ or ‘associates’.
  • They appear submissive, pressured, or fearful in the presence of someone else.
  • You aren’t able to speak alone together anymore.

Transactional Changes

  • Your loved one is making large, frequent, or inconsistent withdrawals.
  • They’re carrying new loans or higher debt.
  • They’re transacting uncharacteristic wire transfers.
  • There’s a sudden lack of funds or increasing non-payment of bills.

Authority Changes

  • A new person is managing the money.
  • Financial Power of Attorney or account beneficiaries have been changed.
  • Assets such as real estate or personal property have been retitled.

Helpful Resources

Less than one third of all elder financial exploitation SARs in the study were reported to the authorities. While you can’t file a SAR, it’s essential to report your suspicions, to help limit distress and reduce monetary losses. If you suspect an older adult is being financially exploited, contact your local Adult Protective Services, law enforcement, and/or the US Justice Department.

The following proactive measures may also help:

As the report indicates, elder financial exploitation is damaging and widespread. In fact, it’s one of the most common forms of elder abuse, both nationally and worldwide. June is Elder Abuse Awareness Month. Take the time now to consider how to protect your own finances and those of loved ones. To learn more about SageVest’s fiduciary financial services, please contact us.

Prepared by SageVest Wealth Management. Copyright 2019.

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