Elder financial fraud and abuse is a big crime in the United States. According to some estimates, the elderly lose more than $3 billion every year to financial fraud and investment scams. Many of these scams involve investments, Medicare, donations, door-to-door sales, travel deals, work-at-home jobs and prizes.
Experts who deal with elder financial fraud, including financial planners, medical professionals and social workers, say they’ve noticed an increase in elder financial abuse in recent years. From 2008 to 2010, there was a 12% increase in the amount of money scammed from seniors, according to the Consumer Financial Protection Bureau. About half of elder fraud is perpetrated by strangers, while family, friends and neighbors account for about 34% of the abuse, according to research from a 2011 study conducted by MetLife Mature Market Institute on elder financial abuse.
The increase in financial abuse and fraud of the elderly prompted the Consumer Financial Protection Bureau, the government’s new consumer watchdog group, to launch an inquiry into the issue last year.
In his former post as Attorney General of Ohio, the CFPB’s director, Richard Cordray, says he’s witnessed many instances of financial abuse against seniors – including fraudulent lottery or sweepstakes scams where criminals stole their life savings.
“Many seniors have routines, and their predictable patterns make them easier targets for predators,” noted Cordray in a speech in Washington, D.C., in June 2012. “They can be lonely or overly trusting, and we now have many methods by which perfect strangers can communicate with them, often anonymously or posing as someone they are not.”
Studies show that most elderly victims of financial abuse don’t report the crime because they are either too ashamed, don’t realize they are being duped until it’s too late to get their money back, or their adult children fail to recognize the problem in time to intervene.
Moreover, people who grew up in the 1930s, 1940s, and 1950s were generally raised to be polite and trusting, says the FBI. Con artists exploit these traits, knowing that it is difficult or impossible for these individuals to say “no” or just hang up the telephone.
“Financial exploitation against the elderly is very prevalent right now,” said Sharon Merriman-Nai, project director for the National Center on Elder Abuse, in a 2011 ABC News story on the topic. “The elderly have assets. They’ve had their lifetime to acquire savings and property.”