By Naveen Athrappully
Contributing Writer
Multiple regulatory agencies have urged American financial institutions to implement strict measures to ensure the protection of older adults in light of the increasing number of scams targeting the vulnerable population.
State and federal agencies, including the Financial Crimes Enforcement Network, the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corp., said in a Dec. 4 joint statement that the financial exploitation of older Americans is estimated to cause annual losses exceeding $28 billion.
“Elder financial exploitation is the illegal use of an older adult’s funds or other resources for the benefit of an unauthorized recipient,” the agencies said in the statement. Such abuse “can deprive older adults of their life savings in whole or in part, devastate their financial security, and cause other harm.”
Between June 15, 2022, and June 15, 2023, over 155,000 reports of such potential abuse were reported by institutions that were linked to more than $27 billion in suspicious activity.
According to an FBI report, there were more than 101,000 “elder fraud” complaints in 2023, with people over the age of 60 losing an average of $33,915. The average loss was nearly 270% higher than in 2020 when the average loss was $9,175. Last year, older adults reported most losses were from investment scams.
“Investment fraud involves complex financial crimes often characterized as low-risk investments with guaranteed returns,” the FBI report said. “They comprise of advanced fee frauds, Ponzi schemes, pyramid schemes, market manipulation fraud, real estate investing, and trust-based investing such as cryptocurrency investment scams.”
Other major scams were related to business email compromise, romance, government impersonation, and personal data breaches.
Last week, regulatory agencies urged institutions, such as banks, to help older adults more effectively by increasing account oversight and by training employees to recognize and respond to such financial exploitation. In questionable situations, institutions may delay the disbursement of funds. Designated employees can also serve as a single point of contact for older account holders, the agencies said.
Institutions are asked to contact regulatory authorities and “elder fraud prevention and response networks” immediately if they encounter suspicious activity.
“These networks can help improve coordination among supervised institutions, law enforcement, APS [adult protective services], local aging service providers, and other key partners,” the agencies said.
According to the Arizona State University’s Center for Problem-Oriented Policing, older adults are typically duped financially either through fraudulent schemes perpetrated by strangers or via exploitation by relatives or caregivers.
Strangers deceive older people through fake sweepstakes, investments, and charity contributions. Fraudsters offer loans to older adults in need of cash and then charge exorbitant interest rates and other fees. Some scammers promise to resolve health issues facing older individuals by promoting “miracle cures.”
“Unlike strangers, relatives and caregivers often have a position of trust and an ongoing relationship with the elderly,” researcher Kelly Dede wrote in a 2023 guide for the center. “Financial exploitation occurs when the offender steals, withholds, or otherwise misuses their elderly victims’ money, property, or valuables for personal advantage or profit, to the disadvantage of the elder.”
Such activities include cashing an older adult’s Social Security or pension checks without their approval, repeatedly borrowing money from them without paying back, and forcing older people to legally hand over their assets, according to the guide.
According to the American Bankers Association, older adults are often targeted as they tend to have more accumulated wealth.
Older adults who are most vulnerable to financial exploitation include those who have previously been victimized by scams, experience social isolation, suffer from mental health issues such as dementia, are unfamiliar with modern technology, and do not have much information about the various types of scams, the ABA said in an infographic.
Some of the warning signs that an older adult could be experiencing monetary exploitation include unusual activity in their bank accounts, new people accompanying them to banks, account withdrawals that they cannot explain, and relatives or caretakers who start monetary transactions on the older adult’s behalf without any documentation, ABA noted.
CFPB advises people who suspect an older person may have been duped out of their money to report the incident to the adult protective services.
In case the older adult is facing immediate harm, the matter should be reported to 911. Otherwise, filing a complaint with the local police or sheriff’s office would do.
“If the financial abuse involved a financial account, work with your loved one to contact their bank, credit union, credit card company, or other financial services provider as soon as possible,” the agency said. “Depending on the situation, the financial institution may be able to get your loved one’s money back. You can also check whether your loved one has any insurance that might cover the loss.”
