Elder Financial Exploitation: A Crime AND a Serious Health Risk

No matter what your age, your health and wellbeing depend on more than your medical condition. Other factors have a huge impact, and geriatricians are constantly seeking ways to identify, study, and serve the needs of the whole older person -- psychological, emotional, and social, as well as medical. Elder abuse and the fast-growing body of research about it that I discussed recently is a good example (Why Elder Abuse Is Everyone's Problem).

Elder abuse is an ugly, even life-threatening problem, yet it tends to "fly under the radar." The most common form is financial exploitation, which the Administration on Aging's National Center on Elder Abuse defines as, "the illegal or improper use of an elder's funds, property, or assets."

This can mean cashing an elderly person's checks without permission; forging an older person's signature; misusing or stealing an older person's money or possessions; coercing or deceiving an older person into signing any document (like contracts or a will); and the improper use of legal instruments, such as conservatorship, guardianship, or power of attorney. There can be telemarketing and door-to-door scams, and Medicare or Medicaid scams as well.

Perpetrated by family, "friends," caregivers, and predatory outsiders, financial exploitation hurts almost one in 20, or 5 percent, of older adults.

"These crimes pose a triple threat, because they are not only devastating to the older adult's health but they have terrible social and economic consequences as well," says Mark Lachs, MD, MPH, a pioneer in the field of elder abuse research, medical director of the New York City Elder Abuse Center, and a board member of the American Federation for Aging Research. "When they're financially exploited and there are no resources left for their care, these older victims effectively become wards of the state. They become Medicaid recipients. Elder abuse victims not only suffer, they suffer in ways that are incredibly expensive to our systems of public health, welfare, and to our entitlement programs."

A high price
The damage goes well beyond the financial, but the sheer dollar amount is high. A widely used estimate from the MetLife Mature Market Institute is $2.9 billion per year, but a more recent study, the 2015 True Link Senior Vulnerability Survey, suggests both a higher number of victims and losses that may total more than $36 billion per year.

African Americans and the poor are among those most likely to fall prey to this shameful crime, according to an important study co-authored by Janey C. Peterson EdD, MS, RN, a 2013 recipient of the Paul Beeson Career Development Awards in Aging Research, and Mark Lachs, both of Weill Cornell Medical Center.

It seems counterintuitive, but being friendly, educated, and even financially sophisticated can also increase risk, according to the True Link study.

The California Bankers Association offers some "red flags" for families and others, including older people who:

  • Suddenly acquire new acquaintances, particularly those who take up residence with the older person.

  • Worry about paying common bills, such as heat, or signs that he or she is being evicted.
  • Indicate that property is suddenly missing, or that mail is no longer delivered to the home.
  • Have obvious health or mental problems that are not treated, a sudden change in demeanor, or noticeable changes in appearance and grooming.
  • Cognitive impairment increases vulnerability
    No one is more vulnerable than a person with cognitive impairment, such as Alzheimer's disease or other forms of dementia. Protecting people can be tricky, though, because symptoms of dementia come on slowly and many people do not know the warning signs. Ironically, one of the first signs of dementia is the inability to manage finances (not memory loss).

    Take the case of Dr. Max Gomez, Sr. The father of Dr. Max Gomez, Jr., who is the medical correspondent for WCBS television in New York City, the senior Dr. Gomez was a successful obstetrician-gynecologist in Miami. As Alzheimer's disease slowly took hold, he became the victim of several frauds, including a girlfriend who drained his savings account, a medical clinic where he had the title of medical director which made him legally responsible for numerous loans, and Medicare fraud perpetrated using his identification. By the time his son learned of his troubles, "his bank account had been plundered, essentially his life savings were gone," says the younger Dr. Gomez. "Here he was helpless and being taken advantage of left and right," says the son, who adds that his father still does not remember losing his money.

    While maddening, this story is not uncommon: people with dementia tend to lose almost 50 percent more money to financial abuse than people without dementia.

    Follow the money: a role for the financial services industry
    One avenue for improvement would be an expanded role for financial institutions. According to Under the Radar, a landmark study on which Mark Lachs was co-principal investigator, only 1.1 percent of known financial abuses cases are currently referred by financial institutions.

    A recent article in InvestmentNews even suggests some financial advisers are so worried about potential liability that they are dropping clients at the first hint of cognitive impairment.

    And although 83 percent of financial advisors believe companies should require training on diminished capacity, only a third of advisors said their companies require it, according to a 2011 survey by the AARP Public Policy Institute.

    But progress is coming, if slowly. Bank of America/Merrill Lynch has begun a concerted effort to educate its workforce in how to spot and address cases of elder financial exploitation. Part of that effort included appointing a director of financial gerontology, Cynthia Hutchins, possibly the first such position in a major financial institution.

    "Our first responsibility is to protect our clients," says Ms. Hutchins, who spent 20 years as a financial advisor before earning a master's degree in gerontology and taking on her new role. "We encourage financial advisors, client associates, and others at the client level in branches to know their clients, trust their own instincts, notice things happening in client accounts that might be uncharacteristic, and to report anything they suspect. We tell them it's really important not to under-report."

    Hutchins has authored Senior Financial Exploitation: Addressing a Hidden Threat, which lists warning signs, including:

    • A senior who seems confused about recent financial transactions, or is reluctant to discuss recent financial activity;

  • Changes to property titles, wills, powers of attorney, etc.;
  • Unexplained credit card activity, uncharacteristically frequent or excessive withdrawals from accounts and newly authorized signers on accounts;
  • Checks written to "cash," transferring assets to unfamiliar people, giving away money, unexplained disappearances of cash or valuables or any other out-of-character changes in financial behaviors.
  • Additional guidance on best practices in elder financial planning will be available on July 22 from Cognitive Impairment and Financial Abuse, an InfoAging webinar featuring Cynthia Hutchins, Laura Mosqueda, MD, Director of the National Center on Elder Abuse, and Duke Han, PhD, a Beeson scholar and associate professor of behavioral sciences at the Rush Alzheimer's Disease Center. Learn more here.

    What health professionals can (and should) do
    There is a lot at stake, and more that doctors, nurses, social workers, and other health professionals can do.

    Households over age 60 own half of all the financial wealth in the United States. Yet only 2 percent of older Americans, and 5 percent of their children, reported that health care providers ever mentioned any concerns about handling money. This, despite the fact that the cognitive processes that help us retain financial literacy have been proven to decline with age.

    Even those who do not develop dementia may lose a step: a study at Texas Tech found that financial literacy scores consistently dropped by one percentage point every year after age 60.

    Providers should share this information with all their older patients, especially those with mild cognitive impairment (MCI), and advise them to put safeguards in place. "We must make screening for fraud a standard practice," adds Terry Fulmer, PhD, RN, FAAN, an authority on elder abuse and the new president of the John A. Hartford Foundation.

    A tricky balancing act
    Preventing financial exploitation requires striking a balance between privacy, autonomy, and safety. Unfortunately, even a trusted adult child or caregiver can be the person taking advantage of an older adult. Financial, health care, and law enforcement professionals can all watch for warning signs of potential abuse, including:

    • A caregiver who shows excessive interest in elder's finances or assets or does not allow elder to speak for himself;

  • A caregiver who suddenly acquires expensive possessions;
  • A caregiver who is reluctant to leave elder's side during conversations about finances;
  • An older adult who acts withdrawn, fearful, or submissive towards caregiver;
  • Family members who refuse to pay rent to an older adult homeowner; or
  • New "best friends" or "sweethearts" appearing in the older person's life.
  • As Cynthia Hutchins at Bank of America says, "These are the people you're supposed to be able to trust. But when money's involved, people do strange things."

    Resources: Where to find help
    If you see or suspect elder financial exploitation, the first call is Adult Protective Services; each state has a program, and most collaborate with local Area Agencies on Aging, which has county- or city-based
    offices. Click here to find help near you.

    The federal Consumer Financial Protection Bureau offers a very thorough compilation of resources called Money Smarts for Older Adults, which includes names, phone numbers and Web resources offered by several federal agencies.

    More cities can follow the lead of Dallas, where senior service organizations have collaborated with the District Attorney's office and the court to establish a new Elder Financial Safety Center.

    For those in institutional settings, two useful resources are Four steps to protect residents from financial abuse and Protecting residents from financial exploitation: A manual for assisted living and nursing facilities, from the Consumer Financial Protection Bureau.

    Protecting Older Investors: The Challenge of Diminished Capacity is a publication of the AARP Public Policy Institute with recommendations for policymakers and stakeholders.