Estimates have the amount of money lost by seniors as a result of fraud and other forms of elder financial abuse at around $30 billion a year. Elder abuse fraud continues to increase, affecting approximately 1 in 18 older Americans each year, although experts say the numbers might be higher since many senior victims are reluctant to report or share details of the crime with their families or authorities.
Often the victims are individuals who lost a spouse who has historically handled all of the finances throughout the marriage.
Most Common Forms of Elder Financial Abuse Fraud
According to the North American Securities Administrative Association (NASAA), the most common occurrences of fraud against the elderly are committed by outside third-parties, although elder financial abuse takes on many forms as shown in the chart below.
Elder financial fraud cases
||Percentage of cases reported
|Family member, trustee or power of attorney taking advantage
|Combined diminished capacity and third-party abuse
|Friend, housekeeper or caretaker taking advantage
SOURCE: North American Securities Administrators Association
Senior Safe Act
On May 24, 2018 the Senior Safe Act was signed into federal law by President Trump after passing both the House of Representatives and the Senate with broad bi-partisan support. This new federal law promises immunity to encourage banks, and other financial institutions when making reports of suspected financial exploitation against older clients. The driving force behind the law is the realization that financial advisors, brokers and bankers are often the first to witness clients making untypical withdrawals of money or other unusual activities.
Ways to Help Prevent Elder Financial Abuse
Of course, government regulations shouldn’t be the only defense against elder financial abuse. There are other steps that you can take now to help reduce the risk.
Stay in Touch
Stay connected to older loved ones through visits, phone calls, emails, etc. Isolation is one of the biggest risk factors in elder financial abuse.
Plan for the Future Today
When a person is still mentally sharp, help him or her make a plan that designates power of attorney and health care directives.
Know the Caregiver
Take the time to get to know the person who is your loved one’s primary caregiver. Building a relationship with the caregiver will let them know you are paying attention to what is going on in your loved one’s life.
Make Use of Outside Resources
Sign up for a service to track financial activity and notify an advocate of unusual withdrawals or spending.
Direct Deposit for checks eliminates the need for others to cash checks.
Know What You are Signing
Always make sure you never sign any document you don’t understand.