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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.
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.
Source: 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.
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:
- 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.
- 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.
- 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.
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:
- Work with a registered independent financial advisor.
- Elect a Trusted Contact.
- Keep Powers Of Attorney up-to-date.
- Engage a daily money manager to help older adults with routine financial tasks.
- Visit the CFPB’s Office Of Older Americans to learn how to continue making sound financial decisions as you age, and protect yourself and others from financial harm.
- Discuss family finances openly and honestly.
- Develop a network of support to help prevent, detect, and respond as needed.
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.