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Have We Grossly Underestimated The Extent Of Financial Elder Abuse?

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This article is more than 9 years old.
For some time researchers, including those under the aegis of the U.S. government, have estimated the extent of losses to seniors each year from financial abuse to be $2.9B per year.  A new study by True Link, a private financial services company, concludes that the actual figure is over twelve times previous estimates, or $36.48 billion each year.
What gives the study credibility to me is certainly not that it was sponsored by a financial services organization that wants you to buy its online protection tools. Rather, it’s that according to their report, the design of this survey was guided by recommendations of an expert panel of fraud researchers convened by the Financial Fraud Research Center at the Stanford Center on Longevity.
Every research study I have read on elder abuse, which includes hundreds of pages reflecting years of data collected tells us that most cases of financial elder abuse are not reported. That left us to guess at just how big the problem is in real numbers.  Even if the size of the study by True Link had flaws or any of its methodology were not perfect, it does give us a shocking look at some real numbers that support prior conclusions:  the financial abuse problem is a whole lot worse than we thought before.
Some of the most surprising conclusions from of the True Link study are that seniors who are younger, urban, and college-educated lose more money than those who are not.  That somewhat defies the stereotype in other research suggesting that the isolated, lonely and unsophisticated senior would be the most vulnerable to loss. Another surprising finding is that legal but misleading tactics used to get a senior’s permission to take money from them leads to losses of $16.99 billion per year.  The senior may be tricked into giving consent to credit card charges, for example and not realize how deeply or  how long that consent ends up costing them.
Most of us have heard of abusive pressure tactics, “friendly” phone scammers, unscrupulous charities, criminal caregivers and manipulative adult children ripping off our elders.  I have blogged about all of these scenarios at AgingParents.com and here.  And we may not think of an elder’s own lawyer, financial advisor,  or banker being a perpetrator of financial abuse, but they steal and manipulate too, from the so-called position of trust too.  These undue influence cases are especially galling because of how ruthlessly the person in power uses the relationship with the senior to take advantage.  What we may not think of that the study revealed is the escalating risk to seniors who start out losing a little and end up losing more and more over time.  A person who loses just $20 a year to exploitation, the study showed, could be expected to lose $2000 a year to other types of fraud.
One thing the study doesn’t explain directly is that it is up to families to monitor their loved ones all the time and very closely and to communicate about finances. All of us are vulnerable, no matter how smart, educated or independent we may be.  We can buy any monitoring device to keep track of withdrawals from accounts that exists but there is still the responsibility to address that information with an aging loved one. That is at the heart of the problem of financial abuse as much as anything can be. Abuse causes the victim to be ashamed of being ripped off. Depression, damage to physical health and even suicide have resulted.
Too many aging parents fear losing control over their lives and they don’t want to discuss their financial affairs with their adult children. They may think it’s private or that telling their kids about their money will encourage adult children to take advantage of them.  The lack of communication underlies lack of monitoring of an aging parent’s accounts, as this requires the elder’s consent.  Your aging parent has to allow you to watch over what is going on financially. For many that is not an easy request to make.
The takeaway here is to open the door to discussion about your loved ones’ finances. This is not “The Talk” a grossly oversimplified characterization of what you need to do. There is no such thing as covering all your financial concerns with aging parents in one talk.  A series of ongoing conversations is essential. It is my hope that you reading this will take that first step. Introduce the subject. Communicate your concern about the risk of abuse with your parents. Share with them what the studies tell us about financial abuse and think in terms of best ways to protect the ones you love. The elder financial abuse problem is so large, it will inevitably threaten someone you know and care about.
 
Until next time,

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