Financial elder abuse is on the rise, and often it's committed by the victim's family or guardians. “Unfortunately, the extent of elder abuse by guardians is relatively unknown to us due to the limited data that we have available,” Claire McCaskill, (D-Mo.) stated at a recent hearing by the Senate Special Committee on Aging called “Trust Betrayed: Financial Abuse of Older Americans by Guardians and Others in Power.” But statistics indicate that perhaps as many as one out of every five senior citizens has suffered from elder abuse in one form or another.

The federal government and regulators are stepping in to help combat financial scams and abuse that target the elderly. But it's still important for advisors and individuals to understand the extent of the issue. (For more, see: Financial Fraud That Targets Seniors.)

Increasing Financial Crimes Against the Elderly

The problem of elder abuse continues to grow as the population ages and this issue is coming increasingly to the attention of the federal government, which has previously allowed state and local authorities to deal with this matter.

“The amount of money lost through exploitation of elders is staggering and growing. There is no question these losses are increasing at an alarming rate.” Cathy “Cate” Boyko, a Minnesota judicial branch conservator account auditing program manager stated at the hearing. Boyko referred to a 2015 study which indicates elders are being duped out of a whopping $36.5 billion per year. (For more, see: What Does the Average Senior Financial Scam Cost?)

Those committing the crimes are using many different methods, from pretending to be representatives of Medicare or some other governmental agency in order to glean personal information from phone respondents, to unscrupulous telemarketers who take advantage of lonely seniors who are vulnerable to emotional manipulation. One of the most unfortunate aspects of this form of fraud is that much of it goes unreported. Many seniors feel shame at having been duped and therefore do not tell anyone what happened, while others are afraid that admitting their error may result in the loss of their autonomy at the hands of friends or family members. And some simply may not have ecognized that fraud has occurred.

Perhaps the most tragic element of elder abuse is the fact that in many cases, the perpetrator is a trusted friend or family member whom the elderly person think is acting in their best interest. Jaye Martin, the executive director of Maine’s Legal Services for the Elderly, told The Washington Post that nearly half of the elder abuse cases that her organization dealt with involved financial abuse, “with 75% of those involving family members as the perpetrators. This is consistent with national research, which found that in 90% of reported elder-abuse cases with a known perpetrator, the perpetrator is a family member.”

The federal government is responding to this issue by directing the agency of Health and Human Services (HHS) to begin a program that will collect data and also implement a new program named the National Adult Maltreatment Reporting System (NAMRS). The department says that this system will be “the first comprehensive national reporting system” for Adult Protective Service (APS) programs. In addition, FINRA and the SEC have been reviewing their policies towards financial elder abuse, and are implementing ways to encourage financial advisors to come forward when they suspect a problem. (For more, see: Popular Scams Targeting Retirees.)

The Bottom Line

Financial elder abuse is a growing problem in America and elsewhere as a large segment of the population moves into old age. Children and other beneficiaries need to be aware of the symptoms of elder financial abuse, such as a sudden loss of savings or major movement of money or financial accounts for no apparent reason. For more information on elder financial abuse, visit the Department of Health and Human Services website at www.hhs.gov. (For more, see: Baby Boomers Beware: Financial Fraud That Targets Seniors.)

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