Elder financial fraud is a hidden but growing crime in the United States. Each year, victims are financially abused by family members, friends, strangers and businesses to the tune of $2.9 billion, according to a new study by MetLife Inc. Experts says the figure actually may be much higher, because some 80% of the cases are never reported to authorities.
According to the MetLife study, women are twice as likely as men to be victims of elder financial abuse. Most victims are between the ages of 80 and 89, living alone, and require some level of help with either health care or home maintenance. Nearly 60% of the perpetrators of elder financial fraud are men, mainly between the ages of 30 and 59.
During the holidays the number of news articles increase and the character of elder financial abuse changes, according to the study. Of the 1,128 articles on elder abuse identified through the newsfeeds between November 2010 through January 2011, 354 (31%) concerned elder financial abuse. At least one-quarter (27%) of the cases reported were random, predominantly single-event crimes accounting for relatively small monetary rewards and characterized by a high level of brutality and disregard for human life. Reports of elder financial abuse perpetrated by strangers and by friends and families showed similar results (47% vs. 45%, respectively).
As reported July 17 by Investment News, financial advisers play a key role in detecting potential elder financial fraud because they are the ones who should be regularly reviewing the financial accounts of their elderly clients. Older clients also might be more willing to open up to their adviser about financial scams for which they have become victims — even when they’re unwilling to tell their own family members.
Advisers also have the financial knowledge to review investment opportunities for older clients who might not understand the risk of certain products, according to the Investment News article.
Senior citizens are especially vulnerable to financial fraud because they may be cognitively impaired or simply confused by complex financial products. Research from behavioral economist David Laibson shows that as people age they tend to make poorer financial decisions. In other instances, older people are often lonely and therefore more willing to talk to strangers.
Signs that an elderly person is being targeted for financial fraud include efforts to hide recent financial losses, a boost in transactions, or requests to change the names on accounts, says Sandra Timmermann, director of the MetLife Mature Market Institute, which conducted the MetLife study.
“These could indicate a “sweetheart scam’ or the financial demands of a neighbor or caregiver,” she says.