Protecting Wealthy Seniors Against Financial Fraud

Defining Elder Financial Exploitation
The Financial Abuse of Seniors in Wealthy Communities
Methods Used by Criminals
Things to Do To Prevent Financial Abuse
Role of Community and Governmental Resources
In Closing

While the level of sophistication associated with financial exploitation of seniors continues to increase, wealthier communities are typically more vulnerable to this growing trend due to their relative size. The combination of wealth and privacy has created circumstances under which abusive activities can easily remain hidden. Researchers, including Claudette Rickett Schwartz, have recently shed light on the many unique challenges faced by seniors who are members of the wealthiest populations and have found that they are often exploited for their wealth by both strangers and trusted parties. Thus, there needs to be an increasing awareness and a coordinated response from all families, caregivers and society at large.

While seniors that have experienced financial abuse impact the individual on multiple levels, we now know that it can have significant emotional and psychological consequences as well. Because of the increasing complexity of financial situations, wealthier seniors may be more easily victimized than those of lower wealth. The Consumer Financial Protection Bureau has reported that the rate of underreporting has also increased, and that approximately one in five seniors may currently be experiencing some form of financial exploitation. Therefore, it is important that a coordinated response from the legal community, community organizations and financial institutions to better understand the challenges faced by wealthier seniors be developed so we can create effective and supportive networks that create a community that will protect wealthier seniors from financial exploitation.

Defining Elder Financial Exploitation

Elder financial exploitation is the unauthorized or improper use of an older individual’s finances or assets, and it can result in a significant financial loss for the victim. The magnitude of the problem is staggering; Current estimates suggest that elder financial exploitation losses could total as much as $36.5 billion each year, based on the estimates by the Consumer Financial Protection Bureau. When vulnerable persons (i.e., older adults) have been victimized, they frequently suffer from extreme anxiety and fear due to the trauma caused by the betrayal of someone they trusted.

Exploitation of vulnerable individuals occurs in many forms: through a process in which someone’s trust is violated through the use of threats or manipulation, as well as through direct physical coercion. Vulnerable individuals can suffer abuse through a variety of means: from having their bank accounts accessed without permission to being the victim of fraud in real estate transactions. According to the National Council on Aging, only one out of every 44 cases of financial exploitation is ever reported, reinforcing the need for continued vigilance and proactive measures to prevent financial exploitation.

The Financial Abuse of Seniors in Wealthy Communities

Financially affluent communities are often characterized by a high level of financial assets. As a result, Elders in these affluent communities typically have complex estate plans and investments and may own high-value properties. Elders in these affluent settings may have numerous advisors and may use several different accountants and attorneys to manage their finances. As a result, the ability of financial advisors and attorneys to monitor an elder’s financial health is diminished.

In addition, elders living in affluent communities are frequently more likely than those living in other areas to desire privacy regarding their finances. As a result, elders may be less likely to report instances of financial exploitation for fear of being embarrassed by the perception that they had been exploited and for fear that their family members will also be embarrassed by their associated reputations.

Psychosocial Impact of Elderly Abuse

Elderly people who are financially secure and who are afraid of financial loss and/or loss of control of their own lives because they may be stigmatised are unlikely to talk about being abused, which allows financial abusers, whether the abuser is an opportunistic stranger or a family member who has misled the elderly person, to continue to exploit older adults with total impunity.

Methods Used by Criminals

There is a lot of criminal activity and the way these crimes are carried out will change over time. There are numerous schemes targeting wealthier elderly people including:

Misuse of Power of Attorney: Financial abusers may be attorneys or other agents who misuse the power of attorney to divert funds to themselves (embezzlement) and/or make unauthorised changes to an elder’s input into investments or estate documents.
Ponzi Schemes/Investment Fraud: Financial scammers can offer many fake/high-risk investment opportunities promising exceptionally high ( or low-risk) returns on the investment. Usually, an affluent elderly person is looking to grow their assets or help charities.
Real Estate Fraud: Many financial scammers will use coercion or deceptive practices to convince an elder to sell their real estate holdings for less than market value or give someone else their property without consulting with them or getting permission.
Deepfake – Impersonation: Financial scammers impersonate trusted family members, financial professionals, attorneys, etc., using artificial intelligence to create the voices and/or videos that are convincing enough for an elder to believe they are talking to/receiving information from a trusted source.

Things to Do To Prevent Financial Abuse

Monitor Your Financial Accounts (Routine Review of Major Account Activity and Legal Documents): It’s a good practice for the elderly person’s family or a trusted individual to monitor the elder’s financial accounts and look for instances of major changes, such as fraud alerts in the elder’s account.
Educating Elderly Clients and Family Members, Staff in Identifying and Reporting Suspicious Activity: Seniors, family members, caregivers and staff should receive training on recognising and reporting suspicious activities.
Require Dual Approval of Financial Transactions, Major Transfers, Will/Trust Changes: Requiring the approval of at least two individuals for all significant business dealings will provide a lessening of the likelihood of a financial abuser being able to exploit a trusting relationship.
Utilize Financial Technology: Financial technology will assist in alerting the elderly client or family member/trusted person, before irreversible actions can occur through the electronic means of account monitoring.
Laws and Programs That Provide Protections to the Elderly: If an elderly person has a Power of Attorney with certain limitations and the use of a co-trustee or Oversight Personnel who watch over the Power of Attorney, there is a reduced risk of abuse of a Power of Attorney.

Establishing an open dialogue between families and professionals about the potential for financial abuse against the elderly provides the opportunity for the elderly to be active participants in understanding their rights and legal recourse.

Role of Community and Governmental Resources

Community-based organisations, law enforcement, financial institutions and adult protective services are recognised as major players in the prevention and prosecution of elder financial abuse.

The Elder Abuse Prevention and Prosecution Act was established in 2017 to strengthen federal initiatives to assist in the prevention of financial exploitation towards the elderly by establishing additional penalties and creating task forces that support the efforts of federal and state law enforcement agencies to investigate and prosecute offenders in a timely manner. It is essential that law enforcement be aware of the signs of financial abuse in order to intervene when they recognize an elder who has been financially exploited and to also create an environment of safety for the elderly.

The community has developed community-led (developed by local community organisations) efforts to assist in preventing financial exploitation of elders through the utilisation of community resources, e.g. telephone hotlines, developing Interdisciplinary Team training programs, and implementing mandatory reporting statutes, which are the most effective means of preventing financial exploitation of elders. Collaborative efforts between local communities and law enforcement have also enhanced the speed in which local law enforcement is able to detect and prosecute financial fraud committed against the elderly.

In Closing

Affluent elderly individuals deserve to be protected and cared for in their time of need and for their dignity. Elderly individuals who have financial stability should be able to continue to maintain their dignity and independence in their advancing years; however, it should not cause a burden to the elderly. By empowering the elderly to better understand their rights and legal options for reporting financial exploitation and creating an open dialogue between families and professionals, increasing awareness in the community, improving oversight and protection from abuse will help to protect the elder’s rights. Through a combination of all stakeholders working together help raise awareness and educate local communities will help ensure that our elderly family members and neighbours will receive support not only financially but also socially and emotionally, in turn creating a community of safe and healthy elders.