The Consumer Financial Protection Bureau is launching new efforts to protect aging Americans from the rising crime of financial exploitation and abuse. The initiative coincides with today's World Elder Abuse Awareness Day. CFPB director Richard Cordray spoke on the topic Thursday at a White House forum.
Elder financial abuse is "a hidden epidemic and the signature crime of the 21st century," Cordray said. A 2010 study found older Americans lost nearly $3 billion to the financial exploitation. From 2008 to 2010, the study showed a 12 percent increase in the amount of money scammed from seniors. "It is estimated that for each case that is actually addressed by an agency or a program for victims, 42 others go unrecognized," he added.
"Many seniors have routines, and their predictable patterns make them easier targets for predators," Cordray said. "They can be lonely or overly trusting, and we now have many methods by which perfect strangers can communicate with them, often anonymously or posing as someone they are not."
Case in point: An Oregon woman, Sandra Aung, is suing Wells Fargo after a local bank branch permitted her 72-year-old mother, an educated, mentally sharp woman whom Aung describes as "incredibly trusting," to lose her life savings to an online scammer, according to The New York Times.
The scammer contacted Mrs. Aung via skype, posing as an American soldier in Afghanistan, the Times reports; Mrs. Aung then proceeded to drain an Individual Retirement Account, wiring money to West Africa, supposedly to help the soldier recover a trunk of valuables.
Aung's case is not the norm: Family members and others in a position of trust are most likely to commit elder financial abuse, the CFPB notes. It's a crime that is expected to rise with the aging population: By 2030, one in five Americans will be 65 or older.
A study released this week by the Investor Protection Trust, a nonprofit group dedicated to investor education, confirmed the growing problem. The IPT polled 762 state securities regulators, caregivers and social workers, and law enforcement officials. Some 70 percent of respondents called the problem of elder financial abuse and exploitation in the U.S. "very serious," while 26 percent said it was "somewhat serious."
To help inform the CFPB’s future policy on this topic, the agency is seeking comment from the public by August 13 on a number of senior finance issues (it is not seeking individual complaints). For more on how to comment, see the Request for Information, submitted to the Federal Register for publication.
Check out the slideshow below for some key facts about elder financial abuse, according to the IPT survey.
1. It's A Serious Problem In The United States
Nearly all of the experts (96 percent) say the problem of elderly investment fraud/financial exploitation in the U.S. is "very serious" (70 percent) or "somewhat serious (26 percent); three-quarters of the 762 respondents believed that older Americans are "very vulnerable" to financial swindles, while 24 percent agreed that they are "somewhat vulnerable;" and 58 percent of respondents said they dealt with elderly victims of investment fraud/financial exploitation "quite often" or "somewhat often" (fewer than one in 10 (7 percent) say they never deal with such victims).
2. It's Getting Worse
84 percent of the experts polled agree that the problem of swindles targeting the elderly is getting worse today.
3. A Large Number Of Elderly Investment Frauds Go Unreported
According to the experts, the top three reasons why elderly investment frauds go unreported are: "shame on the part of victims" (86 percent); "the ability of con artists to string victims along until it is too late" (80 percent); and "failure of adult children to spot the problem and intervene" (70 percent).
4. Those Suffering From Alzheimer's Disease Or Mild Cognitive Impairment Are Particularly Vulnerable
80 percent of respondents say that their experience is "very" or "somewhat" consistent with "a 2008 study (that) found that about 35 percent of the 25 million people over age 71 in the U.S. either have mild cognitive impairment or Alzheimer's disease, making them especially vulnerable to financial exploitation, including investment fraud."
5. It Can Be Prevented
More than nine out 10 respondents (93 percent) indicate that medical professionals can play a "very" or "somewhat" important role "when they are trained to spot and report the warning signs of elderly investment fraud/financial exploitation."