Preventing Elder Financial Exploitation: Solutions to a Growing Threat

Elder abuse is a devastating problem that affects millions of seniors every year. In its 2022 Elder Fraud Report, the FBI’s Internet Crime Complaint Center reported total losses of $3.1 billion reported by victims over 60 years old—an 84 percent increase in losses from 2021. This alarming statistic reveals just how important it is to be aware of elder abuse and take steps to prevent it.  

The most common type of elder abuse is financial exploitation, which occurs when someone takes advantage of an older person’s assets for financial gain. Unfortunately, seniors are particularly vulnerable to these types of scams due to their age, diminished physical or mental capacity, lack of familiarity with modern technology, and fewer available resources than younger generations. Perpetrators often use a variety of tactics such as impersonation scams, investment frauds, identity theft schemes, and other fraudulent activities in order to take advantage of seniors’ finances.

Elder Financial Exploitation

FinCEN noted that in 2021, financial institutions submitted 72,000 suspicious activity reports (“SARs”)—nearly 10,000 more than the prior year—and cited CFPB estimates that Elder Financial Exploitation (“EFE”) suspicious transactions grew from an estimated value of $2.6 billion in 2019 to $3.4 billion in 2020. Citing the Department of Justice, FinCEN stated that EFE affects at least 10 percent of older adults each year in the United States. And, citing the Federal Trade Commission, FinCEN stated that “older adults now account for 35 percent of the victims associated with filed fraud reports in cases when a consumer provided an age.”

FinCEN categorized EFE as either related to theft or to scams, the former concerning stolen “assets, funds, or income by a trusted person,” and the latter related to the wrongful transfer of senior assets to a stranger or imposter. Based on its analysis of SARs relating to elder theft, FinCEN found that family members were involved in 46 percent of stolen asset cases reported between 2013 and 2019.

Regarding EFEs perpetrated by strangers, FinCEN identified the following prevalent typographies: government imposter scams, romance scams, emergency/person in need scams, lottery and sweepstakes scams, and tech or customer support scams.

FinCEN reminded financial institutions that it is critical for “customer-facing staff to identify and consider [ ] behavioral red flags when conducting transactions involving their older customers,” and that the details should be incorporated in SARs filings. They listed twelve behavioral red flags in all, among them sudden and unusual changes in contact information, an unusual degree of fear or submissiveness by a client toward a caregiver, and unexplainable or unusual account activity.  Other financial red flags include sudden or frequent non-sufficient fund activity, customer purchases of large numbers of gift cards or prepaid access cards, and uncharacteristic attempts to wire large sums of money, among others.

In addition to potential SAR reporting requirements, financial institutions may have state reporting. The U.S. Department of Justice provides valuable resources regarding state statutes, including a list of state-level reporting obligations.

Conclusion

World Elder Abuse Awareness Day, launched in 2006 by the International Network for the Prevention of Elder Abuse and the World Health Organization at the United Nations, is intended to raise “awareness of the cultural, social, economic and demographic processes affecting elder abuse and neglect.” In 2022, President Biden issued a proclamation officially recognizing June 15th as World Elder Abuse Awareness Day in the United States. He highlighted the administration’s “comprehensive, collaborative efforts to respond to elder abuse, neglect, and exploitation [through] initiatives to reform guardianship, support adult decision-making, crack down on scammers and fraudsters, and empower victims of exploitation.” As to elder financial exploitation, the statistics from FinCEN, the FTC and CFPB show how aware we are of the problem of EFE, but also how far away we are from getting it under control.  Bates will keep you apprised.
 

Bates Expert Compliance Training provides custom training programs for firms and individuals on EFE and other important topics. Please also contact us for additional services below:

• Compliance and AML Solutions
• Bates Investor Risk Assessment (BIRA) - focusing on seniors and vulnerable populations
• Elder Experts
• Senior Investor Experts
• Securities Litigation and Arbitration Support
• Damages Analyses