Outcomes of Elder Financial Fraud in the U.S.
The most vulnerable people have the greatest risk of becoming victims of fraud, but the outcomes affect society as a whole. Older Americans who have built wealth over their lives are an especially appealing target for scam artists, and cognitive decline among seniors causes financial impairment that puts this group at risk.
Elder financial abuse occurs when someone uses fraudulent tactics to improperly access a senior’s money or personal property. The rate of elder financial fraud has grown so rapidly over the past decade that it is now the fastest growing form of elder abuse, and some experts are calling it a public health crisis. Not only does financial fraud result in significant monetary losses for seniors, but it also impacts health outcomes and has a far-reaching impact on the economy.
One in 20 seniors have reported recently enduring financial abuse, making it the most commonly cited type of abuse among the elderly. But the majority of financial crimes against older adults don’t get reported to authorities, so it’s difficult to get an accurate picture of the losses associated with elder financial exploitation. Estimates pin the annual financial toll of elder financial fraud between $2.9 billion and $36.5 billion. And as the elderly population increases, the problem is only expected to get worse.
The Impact on Health Outcomes
It’s no surprise that monetary losses from financial fraud can lead seniors to delay healthcare or medication refills due to the cost. What is more alarming is the link between financial exploitation and mental health. Depression and anxiety, along with shame around being victimized, have been correlated with financial exploitation. Sometimes, the effects are so severe that they lead to self-harm and even suicide.
Seniors who have endured financial abuse are more likely to end up in the ER or become hospitalized. And older adults who have been abused face a 300 percent higher risk of mortality. Of the types of abuse seniors can experience, neglect and financial exploitation are associated with the highest mortality rates. The risk of death for senior financial fraud victims is in fact higher than the mortality rate for older adults who have been physically abused. The mental health outcomes of financial fraud, compounded by the resulting lack of financial resources, pervasively impact the health of older Americans.
The Impact on the Economy
When older adults suffer losses from financial fraud, the cost trickles down to taxpayers. Nearly 10 percent of financial exploitation victims will end up utilizing Medicaid because they lack the funds to pay for healthcare. And seniors who endure monetary losses from fraud come to rely on other forms of government assistance, too. Some seniors experience such extreme financial devastation that they lose their primary residence and end up living in institutional settings.
Seeking justice for victims comes with a high price tag as well. In New York, the cost of investigating cases of elder financial exploitation and prosecuting scammers adds up to more than $14.5 million, according to estimates.
Preventing Elder Financial Exploitation
Educating older adults about the dangers of financial fraud can go a long way in protecting their assets. That said, in the majority of financial abuse cases, a trusted friend or family member is to blame. These cases often involve the abuse of Power of Attorney privileges, joint bank accounts, or stolen ATM cards or checks.
Scams by strangers are also common. These include fake sweepstakes or lottery scams, home repair scams, fake charities, and telemarketing scams. Some scam artists will pose as the senior’s grandchild and request money in an emergency. Medicare scams, identity theft, and internet phishing schemes are also common.
Predatory lenders target seniors as well. Some states have seen an increase in payday loan usage among the elderly, and seniors are often coerced into taking out risky loans, such as reverse mortgages.
Adult children of seniors can help by informing their parents about common scams, but financial institutions should also step up to combat elder fraud. Training staff to look for suspicious transactions and report any red flags to regulators will help mitigate potential financial losses. To avoid fears of privacy violations among financial institutions, The Senior Safe Act was enacted in 2018. It removes any liability from financial institutions for reporting potential financial exploitation of older adults.
Reporting Elder Financial Fraud
If you notice signs of elder financial exploitation, such as changes in financial transactions, isolation or sudden close friendships, or missing property, you should contact your local Adult Protective Services agency to report the misconduct. You can also use the Elder Abuse Resource Roadmap to identify which regulatory authority to contact in your situation.
One study found that only five percent of victims are able to recover lost money from financial exploitation. Reporting these crimes is essential to preventing total financial devastation and adverse health outcomes for seniors. To prevent financial hardship in your family, educate the older adults in your life about the dangers of financial fraud, and be on the lookout for red flags.