You've probably heard of a durable power of attorney (DPA), which is a simple, easy legal tool to help you with financial assistance if you need it. However, the DPA is just as easy for people to obtain and misuse.
Consider the Business Week article "License to Steal From Seniors: How to Protect the Elderly from the People They've Chosen to Trust" about an 87-year-old woman whose son abused a durable power of attorney. The elderly woman became a victim of financial abuse at the hands of her own son soon after she had given him durable power of attorney to make financial decisions for her. She knew that something wasn't right when her son told her that she couldn't afford to move into an assisted-living facility. She had the money, but her son told her that she didn't. The elderly woman's friend contacted Adult Protective Services (APS). The agency discovered that the son had transferred $225,000 from his mother's account to his own without her permission, which is a clear case of elder financial abuse and a breach of trust.
Called the "Crime of the 21st Century," elder exploitation (also called financial or material exploitation, elder financial abuse, fiduciary abuse, or economic exploitation) is a powder key ready to explode as older adults become a proportionately larger share of the total population. One study called elder exploitation "a many-headed Hydra for both elders and their families, as the tentacles of exploitation reach far beyond a single event reported or a single elderly victim."
What exactly is financial exploitation, and why should you be concerned about it?
What Is Financial Exploitation?
The National Center on Elder Abuse (NCEA) describes financial or material exploitation as "the illegal or improper use of an elder's funds, property, or assets," whereas the National Academy of Elder Law Attorneys (NAELA) states that "Exploitation is usually defined as taking financial advantage of a disabled or elderly victim."
Each state has crafted elder abuse laws, which usually include financial exploitation. For example, the New York statute reads: "Financial Exploitation means improper use of an adult's funds, property, or resources by another individual, including but not limited to, fraud, false pretenses, embezzlement, conspiracy, forgery, falsifying records, coerced property transfers, or denial of access to assets." In California, the statute says: "Financial abuse" [...] occurs when a person or entity does any of the following: (1) takes, secretes, appropriates, or retains real or personal property of an elder or dependent adult to a wrongful use or with intent to defraud, or both; (2) assists in taking, secreting, appropriating, or retaining real or personal property of an elder or dependent adult to a wrongful use or with the intent to defraud, or both."
The parameters of these laws can vary according to the person's age, psychological health, the perpetrator's intent, the victim's disadvantage, and the nature of the relationship between the perpetrator and the victim, among other things.
How Prevalent Is Financial Exploitation? What Are the Most Common Forms?
In an earlier blog post entitled "Elder Abuse Growing Into a National Crisis," study findings described the magnitude of the problem. One out of every five citizens over the age of 65 (over 7.3 million older Americans) has fallen prey to a financial swindle.
According to the National Center on Elder Abuse Bureau of Justice Statistics, financial exploitation represented 12.3 percent of reported elder abuse cases in 2012.
The U.S. Department of Justice's (DOJ's) Office of Community Oriented Policing Services has established a classification system for financial exploitation. In its Problem-Specific Guides Series, a special report on "Financial Crimes Against the Elderly," financial crimes against the elderly are grouped into two general categories: fraud committed by strangers and financial exploitation by relatives and caregivers. These categories can overlap on the bases of target selection and the means used to commit the crime.
Who Are the Exploiters?
In a blog post entitled "What You Need to Know About Scams and Why Scammers Have You on Their Radar," fraud perpetrated by strangers was discussed. Here, scammers scheme to get someone else to part with his or her resources.
According to "The MetLife Study on Elder Financial Abuse: Crimes of Occasion, Desperation, and Predation Against America's Elders," over half of reported cases of elder financial exploitation were perpetrated by strangers (51 percent), followed by family, friends, and neighbors (34 percent), businesses (12 percent), and Medicare and Medicaid fraud (4 percent).
In a domestic setting, roughly 40 percent of perpetrators of financial abuse were the victim's son or daughter, 20 percent were other relatives, 1.5 percent were spouses, and 4 percent were nonrelatives. Other findings showed that financial exploitation perpetrated by a family member was as high as 90 percent.
A national survey revealed that perpetrators were significantly younger than their victims, with 45 percent age 40 or younger and another 40 percent age 41 to 59.
Who Is at Risk?
An article entitled "Exploitation of the Elderly: Undue Influence as a Form of Elder Abuse" describes risk factors, or victim vulnerabilities, that make an individual more susceptible to exploitation, including advanced age (75 and over), gender (female), living with abuser, social isolation, and so on.
Most elderly fraud victims are characterized as educated, informed, and socially active, according to an AARP survey. Over two thirds of elderly fraud victims said they had trouble distinguishing between fraudulent and legitimate pitches, even though 90 percent of the respondents knew about telemarketing fraud.
Personal characteristics that may predispose a person to victimization include homeownership; an unlikelihood of seeking advice before making a purchase; an unfamiliarity with consumer information and rights; financial risk-taking behavior; an openness to marketing appeals; and an unawareness of scams and deceptive selling practices.
Financial exploitation may not seem to carry the same weight or severity as other forms of abuse. Not true -- financial exploitation can be just as devastating as other forms of abuse. If you've ever been targeted for financial exploitation, you know how difficult the process is to become whole again.