Elder financial abuse

Elder financial abuse is a type of elder abuse in which misappropriation of financial resources or abusive use of financial control, in the context of a relationship where there is an expectation of trust, causes harm to an older person.

The Older Americans Act of 2006 defines elder financial abuse, or financial exploitation, as “the fraudulent or otherwise illegal, unauthorized, or improper act or process of an individual, including a caregiver or fiduciary, that uses the resources of an older individual for monetary or personal benefit, profit, or gain, or that results in depriving an older individual of rightful access to, or use of, benefits, resources, belongings, or assets.”^[1]

Types

By family or caregivers

Family members and informal or paid caregivers have special access to seniors and thus are often in a position inflict financial abuse through deception, coercion, misrepresentation, undue influence, or theft. Common abusive practices include:

• Money or property is used without the senior's permission or taken from them, for example removal from their home and then use of the home by the abuser, or depositing income such as pension or benefit checks
• The senior's signature is forged or identity is misappropriated for financial transactions
• The senior is coerced or influenced to sign over deeds or wills, or caused to execute legal documents they do not understand
• The abuser fraudulently obtains a power of attorney or guardianship
• Money is borrowed from the senior and never repaid

Family members engaged in financial abuse of the elderly may include spouses, children, or grandchildren. They may engage in the activity because they feel justified, for instance, they are taking what they might later inherit or have a sense of "entitlement" due to a negative personal relationship with the older person, or that it is somehow the price of a promise of lifelong care. Or they may take money or property to prevent other family members from getting the money or for fear that their inheritance may be lost due to cost of treating illnesses. Sometimes, family members take money or property from their elders because of gambling or other financial problems or substance abuse.

Scams and fraud targeting seniors

Seniors are also often deliberately targeted by scams, fraud, and misleading marketing – often by otherwise legitimate businesses.^[2] This may include:

• fraudulent investment or insurance schemes
• worthless "sweepstakes" that elderly persons must pay in order to collect winnings
• fake pharmaceutical or diet/health products
• medical billing scams and unnecessary medical care
• predatory or unnecessary lending, for example reverse mortgages
• charitable giving scams, including pressure to rewrite wills
• identity theft
• lottery scams
• work from home schemes or other ways to generate income

A 1996 study by AARP^[3] found that while individuals over 50 comprised 35% of the American population, they accounted for 57% of all fraud victims (AARP, 1996). Seniors' level of vulnerability to this type of exploitation varies by the type of scam. For example, the AARP found that lottery fraud victims were more likely to be women over 70 living alone, with lower education, lower income, and less financial literacy, while victims of investment fraud were more likely to be men between the ages of 55 and 62 who were married, with higher incomes and greater financial literacy. ^[4]

Hybrid financial exploitation

Hybrid Financial Exploitation (HFE) is financial exploitation that co-occurs with physical abuse and/or neglect. HFE victims are more likely to be co-habiting with abusive individual, to have fair/poor health, to fear the abusive individual, to perceive abusive individual as caretaker, and to have a longer duration of abuse.^[5]

Estimates of size and scope

Various attempts have been made to estimate the size and scope of the problem. The primary difficulties in estimating the size of the problem are:

• Differing descriptions of financial abuse – Victims often do not identify as having been a victim of fraud, so researchers generally offer respondents specific examples. The more specific the questions are, the more likely someone is to say they have experienced it – for example, surveys focused on identity theft, telemarketing, "gray charges," or investor fraud have found much higher rates than general surveys.
• Underreporting – Studies that rely on government databases or press reports are estimated to be off by factors ranging from five to forty, with 25 being a frequently cited number.^[6] Additionally, because of the stigma of victimhood caregivers are more likely to report that their parents have been victimized than the parents are to self-report as victims.
• Differences in survey methodology – Some surveys ask for losses in the last year, some ask about losses in the last five years, and some ask "have you ever experienced…", and surveys have variously defined seniors as aged 45+, 50+, 60+, and 65+.

Author	Year	Estimated impact	Notes
True Link[7]	2015	$36 billion in annual losses	The study found that 37% of seniors affected over any given five-year period, consistent with 15% annual victimization rates found elsewhere. They do not provide a loss per incident but found any given victim loses approximately $11,600 over five years.
Allianz[8]	2014	5% of seniors report having lost money to scams, with average losses of $30,000, meaning that seniors alive in 2014 have experienced $69 billion in total losses due to financial abuse. The study does not provide an annualized figure.	The study also noted that one in five adults 40‐64 reported having an older friend or family member who has been a victim, suggesting it may be underreported by a factor of two to four versus the self-report.
MetLife[9]	2011	1,256 incidents per year reported in the press resulting in $2.9 billion in losses. There is no explicit estimate of how much is lost to incidents not reported in the press.	Their estimate is based on an estimated 1,256 incidents of financial abuse reported in the press, out of approximately 40 million seniors. The report acknowledges that making an estimate based only on press reports will produce an underestimate by a factor of five to forty. The study also found that about one third of incidents were by family and friends, with the remainder by strangers or businesses.
New York State	2011	5.2% of seniors experience financial abuse by family members	Only includes financial abuse by family members in the past year among adults 60+. Other studies have suggested about a third of incidents involve a family member or friend, so this is also consistent with a 15% victimization rate.
Investor Protection Trust[10]	2010	20% have been affected by financial services swindles in the past	IPT defined swindles as "inappropriate investment, unreasonably high fees for financial services, or outright fraud."
MetLife[11]	2009	1,076 incidents per year resulting in $2.6 billion in losses	Based on only fraud reported in the press. The report acknowledges that making an estimate based only on press reports will produce an underestimate by a factor of five, though other estimates suggest it may be closer to a factor of forty.
Federal Trade Commission[12]	2007	14% of people (all ages) experience fraud loss of $50 billion in total	The Stanford Center on Aging inflation-adjusted this to 2012 dollars. They also cited another report listing a 15% victimization rate and average losses of $216 per victim. Another study found a 14% victimization rate among seniors.[13]
AARP[14]	2003	4% of adults 45+ self-reported experiencing a "major consumer swindle or fraud" in the last year
Senate Committee on Aging[15]	2000	Americans (all ages) lose $90 billion per year to telemarketing fraud and identity theft.	This is often combined with AARP and NASAA studies that suggest that approximately half of fraud victims are seniors to arrive at a number around $40-$50 billion.

Nonfinancial effects

The True Link study found that:

Of the seniors who experienced fraud, 1.8% lost their home or other major assets as a result. 6.7% skipped medical care, and 4.2% reduced their nutritional intake for budgetary reasons. We estimate that 954,000 seniors are currently skipping meals as a result of financial abuse. Many suffered depression, anxiety, or loss of independence. Overall, 41.2% reported that financial abuse had nonfinancial costs as well.^[16]

Other effects include damage to credit, missing work, depression, and loss of sleep.^[17]

References

1. Older Americans Act of 2006, , retrieved July 2016
2. Shilling, D. (2008, November/December). "Improving the court system's response to elder abuse," Victimization of the Elderly and Disabled, 11, 49, 51-52, 59, 62-63.
3. AARP. (1996). Telemarketing fraud victimization of older Americans: an AARP survey. Washington, DC: AARP.
4. “Off the Hook: Reducing Participation in Telemarketing Fraud (Washington, DC: 2003),
5. Jackson S, Hafemeister T (2012). "Pure financial exploitation vs. Hybrid financial exploitation co-occurring with physical abuse and/or neglect of elderly persons". Psychology Of Violence. 2 (3): 285–296. doi:10.1037/a0027273.
6. Wasik, J. (2000). The fleecing of America’s elderly. Consumers Digest. March/April.
7. The True Link Report on Elder Financial Abuse 2015. . Accessed July 2016.
8. New Allianz Life Study Confirms Elder Financial Abuse Under‐reported and Misunderstood Problem Likely to Grow." 2014. Accessed July 2017.
9. MetLife. (2011). The MetLife study of elder financial abuse: Crimes of occasion, desperation, and predation against america’s elders.
10. "Survey: 1 out of 5 Older Americans are financial swindle victims, many adult children worry about parents’ ability to handle finances." and accessed July 2016
11. "Broken Trust: Elders, Family, and Finances." MetLife Mature Market Institute, 2009.
12. Federal Trade Commission. (2007). Consumer fraud in the United States: The second FTC survey. Report by Anderson, K. Federal Trade Commission. Washington, DC.
13. Citations to Holtfreter et al. and Titus et al. in "The Scope of the Problem: An Overview of Fraud Prevalence Measurement." 2013. Accessed July 2016.
14. AARP. (2003). 2003 Consumer experience survey: Insights on consumer credit behavior, fraud and financial planning. Washington, DC: AARP. Retrieved from http://www.aarp.org/money/credit-loans-debt/info-2003/aresearchimport-131.html
15. Senate Special Committee on Aging. (2000). Developments in aging 1997 and 1998: Volume 1. Retrieved on August 7, 2008 from http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=106_cong_reports&docid=f:sr229v1.pdf
16. The True Link Report on Elder Financial Abuse 2015. . Accessed July 2016.
17. The Scope of the Problem: An Overview of Fraud Prevalence Measurement, p 29. Accessed July 2016.