Two recent studies on elder financial abuse caught my eye — one suggesting the problem is far bigger than we think and the other suggesting it’s much smaller.
I’m a little skeptical of both, and will explain why momentarily.
But I’m also happy to say that I’ve just learned about a few government and private initiatives starting to seriously attack the scourge of financial exploitation of older Americans — considered the most prevalent form of elder abuse.
(MORE: 5 Steps to Combat and Prevent Elder Abuse)
'Rampant, Invisible and Lethal'
It’s a problem that Kathleen Quinn, Executive Director of the National Adult Protective Services Association, called “rampant, largely invisible, expensive and lethal” at last week’s Senate Special Committee on Aging hearing on the subject.
How big a problem is impossible to say, because hard data is scarce. “The reality is that we don’t even have national data on the scope of the problem,” Sen. Claire McCaskill (D-Mo.), said at the hearing.
Most analysts go with the 2010 Investor Protection Trust Elder Fraud Survey which said one in five Americans over 65 has been victimized by a financial fraud and a 2011 MetLife Mature Market Institute study determining that financial exploitation costs seniors at least $2.9 billion annually.
2 Studies With Very Different Results
But a new study by True Link Financial, a company that sells products and services to protect older Americans from financial abuse and exploitation (see the Next Avenue article about them), asserts that financial elder abuse actually costs $36.5 billion annually — more than 12 times MetLife’s figure.
True Link came up with that number through an online poll. It contacted 2,096 people age 50 to 70 and “filtered” respondents down to 467 who said they had some responsibility for an older adult. I’m not convinced that this fairly small survey’s findings are solid. Also, there’s an inherent conflict of interest due to True Link’s business.
(MORE: How to Stop Mom or Dad From Stupid Spending)
Another study by three University of Waterloo psychology professors (which MarketWatch’s Anne Tergeson wrote about) said the elderly aren’t as vulnerable to fraud as we think. In fact, they said, there’s evidence that consumer fraud is “less common among older persons that adults of other ages.” They looked at Federal Trade Commission data on fraud complaints, databases of fraud victims and surveys of the general population.
The problem I have with this study is that financial abuse often goes unreported, partly due to shame and embarrassment of the victims. According to the New York State Elder Abuse Prevalence Study, only one in 44 cases is reported.
“Seniors are often reluctant to report elder abuse,” said Julie McEvoy, U.S. Deputy Associate Attorney General, in the Elder Justice webinar I attended this week run by the 2015 White House Conference on Aging.
In addition, some targets have cognitive deficiencies (dementia, for example) and don’t know they’ve been victimized. They’ve “consented” to give away assets.
Also, as True Link CEO Kai Stinchcombe told me: “Each type of fraud has a different age spectrum. Investment scams peak around 65. Work from home scams, dating scams, weight loss, and most Internet scams peak a little earlier. Theft by family members peaks much later.”
Why Curbing Elder Financial Abuse Is Tough
If nailing down the extent of financial elder abuse is tough, curbing it is even tougher.
“Only a small fraction of [elder financial exploitation] crimes are properly investigated and prosecuted,” said Page Ulrey, Senior Deputy Prosecuting Attorney for the King County Prosecutor’s Office in Seattle, Wash., at the Senate Special Committee on Aging hearing. “We are woefully ill equipped to handle these cases, both in terms of knowledge and resources.” Why?
(MORE: Promising Effort to Curb Elder Financial Abuse)
For one thing, Ulrey said, the abuse often involves overlapping types of crimes, including neglect and physical and sexual assault.
As Marie-Therese Connolly, a leading elder abuse expert and Senior Scholar at the Woodrow Wilson International Center for Scholars, told me: “There’s a lack of dedicated law enforcement and prosecution units of people with expertise in these often complex cases.”
For another, many caregivers, family members, financial services employees and police officers aren’t trained in preventing, detecting or dealing with financial exploitation of the elderly. And there’s often a lack of coordination between agencies and professionals who have pieces of the puzzle.
New Efforts With Promise
But there are a few signs of hope.
Although Quinn says the federal government has essentially ignored the problem historically, that’s changed recently.
The 2015 White House Conference on Aging has made “elder justice” one of its four tracks. And a government working group known as the Elder Justice Coordinating Council; the Department of Justice; Health and Human Service’s Administration for Community Living and the Consumer Financial Protection Bureau’s Office for Older Americans have teamed up to gather data and create materials for professionals and family members.
Last year, the Administration for Community Living created the first federal home for Adult Protective Services (APS), where it’s developing a national adult protective services data system to capture and analyze reports of abuse.
The Department of Justice now has a useful Elder Justice website — what McEvoy calls a “one-stop shopping site for victims, families, prosecutors, researchers and practitioners.” Here, you can report elder abuse and find your local Adult Protective Services and Area Agency on Aging. And as my Next Avenue colleague Liza Kaufman Hogan recently noted, the Department of Justice has also created training modules to help attorneys recognize and address financial exploitation of older Americans. And it now has a pocket guide for police, explaining the legal issues of elder abuse.
The Securities and Exchange Commission is getting more involved, too. Its first Investor Advocate, Rick A. Fleming, says one of his agency’s priorities is to give financial service professionals more effective tools to protect clients whenever an adviser or registered representative suspects financial or other abuse of a vulnerable client.
“We recognize elder financial abuse as a major problem that is expected to grow dramatically with the aging of our population,” he said at The American Retirement Initiative Winter Summit.
Last week, Fleming said he’s inclined to favor a federal law that would let a financial adviser refuse or delay a transaction — contrary to the explicit instructions of the client — when it appears the client is being defrauded or exploited.
At the state level, one intriguing effort is Senior$afe, a program devised by Maine’s Office of Securities and the state’s financial institutions to increase identification and reporting of suspected cases of elder financial exploitation by training bank tellers and managers and credit union personnel. In less than a year, there’ve been 20 referrals. The program is now being expanded nationwide.
And the nonprofit Investor Protection Trust has had some success with its Elder Investment Fraud and Financial Exploitation (EIFFE) Prevention Programs, training doctors, medical professionals and lawyers to spot and report elder financial abuse.
A Wish List for Further Help
What else could be done?
At the Senate hearing, Ulrey said she wants to see more prosecutors, detectives and victim advocates who specialize in elder abuse, ideally working together, as well as a National Center for the Investigation and Prosecution of Elder Abuse. Quinn called for banks to give Adult Protective Services staffers access to financial records of customers it believes are elder abuse victims.
More federal research could help, too. Quinn says the National Institute on Aging spends 1/1,000 of its budget studying elder abuse, maybe less. To me, that’s a crime.