Exploitation of Seniors Cost Them $3B a Year

A call from someone posing as a distressed grandchild needing emergency cash. An unannounced visit from men claiming they can repave a driveway at a discount. An email from a stranger who asks to be a penpal, then asks for money.

 

All are scams, and all have been effective at bilking seniors out of thousands of dollars, a group of elder-fraud experts told a House Energy and Commerce subcommittee on Thursday.

More than 25 million adults, many 65 and older, were victims of fraud in 2011, according to the Federal Trade Commission. The Government Accountability Office, Congress’ watchdog, estimates that “financial exploitation” cost seniors $3 billion in 2010.

 

Experts say the true numbers are underreported because the elderly are especially embarrassed to report they’ve been victimized. Those living alone and suffering from dementia can be easy prey, they said.

 

The problem is expected to get worse thanks to technological advances that have made reaching — and scamming — vulnerable seniors much easier, said Kay Brown, director of Education, Workforce, and Income Security for the GAO. She said it demands a national strategy that encourages cooperation and training among federal, state and local authorities, and an aggressive education campaign for seniors, she said.

 

There are signs of action:

• The Elder Justice Coordinating Council, a group of high-ranking officials from various federal agencies, is working to come up with ways to improve coordination to combat elder fraud.

• Lawmakers from Vermont and Florida this week introduced a bipartisan bill that would start an office at the Federal Trade Commission to alert consumers to new scams and ensure that fraud complaints “are quickly connected to the appropriate state and local law enforcement agency.”

• Officials in Jamaica promised Sen. Bill Nelson, D-Fla., and Sen. Susan Collins, R-Maine, last month that they will extradite scammers who use the false promise of lottery winnings to cheat seniors out of their savings.

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Exploitation of Seniors Costs Them $3B a Year

How To Prevent Financial Abuse of the Elderly

Elder financial abuse is an expensive drain on the U.S. economy. A study of media reports from April to June 2010 “estimated that financial exploitation cost older adults at least $2.9 billion” that year, according to a report by the Government Accountability Office, or GAO. According to the report: “The money that older adults lose in these cases is rarely recovered, and this loss can undermine both the health of older adults and their ability to support and care for themselves.”

That often means that taxpayers end up footing the bill for housing and medical care once an exploited senior has been drained of his or her assets. In fact, the report says that in 80 cases involving Utah’s elderly, that state’s Medicaid program could pony up about $900,000 in Medicaid costs alone.

The GAO report points out that unless law enforcement, the courts and adult protective services get better at protecting the assets of older adults, this country could see a sharp increase in the amount of public dollars replacing private funds that are illegally drained from their estates. And as the senior population increases, those numbers will only continue to climb. Certified Fraud Examiner Steve Lee says that “pre-grave robbing” — which often goes unreported — is an issue frequently encountered by private investigators, specialists in elder care law and colleagues.

Tom Fields’ personal experience has led him to crusade for more effective legislation targeting elder financial abuse. “There is a clear lack of protection under current laws and legislation,” says Fields, who is from Mentor, Ohio. He believes that in addition to current law being insufficient, law enforcement often has little idea of how to handle these cases.

“It’s true that police reaction to cases of elder financial abuse varies widely from jurisdiction to jurisdiction, and there is little crime-specific training available to them. Many jurisdictions treat these cases as civil, rather than criminal, cases, leaving families to struggle with stopping the siphoning of an elderly person’s assets via a sluggish court system.

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How to Prevent Financial Abuse of Elderly Parents

GAO: National Strategy Needed to Effectively Combat Elder Financial Exploitation

Why GAO Did This Study

Elder financial exploitation is the illegal or improper use of an older adult’s funds or property. It has been described as an epidemic with society-wide repercussions. While combating elder financial exploitation is largely the responsibility of state and local social service, criminal justice, and consumer protection agencies, the federal government has a role to play in this area as well. GAO was asked to review issues related to elder financial exploitation. This report describes the challenges states face in (1) preventing and (2) responding to elder financial exploitation, as well as the actions some federal agencies have taken to help states address these challenges.

To obtain this information, GAO interviewed state and local social service, criminal justice, and consumer protection officials in California, Illinois, New York, and Pennsylvania—states with large elderly populations; officials in seven federal agencies; and various elder abuse experts. GAO also analyzed federal strategic plans and other documents and reviewed relevant research, federal laws and regulations, and state laws.

Source:
U.S. GAO – Elder Justice: National Strategy Needed to Effectively Combat Elderly Financial Exploitation

READ the GAO Report

Banks Can Help Defend Elderly Against Scams

Banks and other financial institutions are an important line of defense against scammers seeking to defraud the elderly, but too often tellers and branch managers are not trained to recognize the warning signs, says a Government Accountability Office report issued Thursday.

The study, which looked at programs aimed at fighting fraud that targets the elderly in California, Illinois, Pennsylvania, and New York, said that out of misguided concern they might breach federal privacy laws, banks and other financial institutions are sometimes reluctant to share information with agencies that work to protect older people from financial crimes.

“Banks are well-positioned to recognize, report, and provide evidence supporting investigations,” said Kay E. Brown, director of Education, Workforce, and Income Security at the GAO. “However, many social-services and law enforcement officials we spoke with indicated banks do not always recognize and report exploitation or provide evidence needed to investigate it.”

The report was released at the outset of a hearing Thursday before the Senate Special Committee on Aging in Washington on efforts nationally to combat elder financial abuse.

It comes one year after the indictment of Philadelphia lawyer Michael Kwasnik by a New Jersey state grand jury on charges of stealing $1.1 million from a Cherry Hill widow who had hired him for estate planning and to manage her money.

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Banks Can Help Defend Elderly Against Scams