Elder financial abuse has been categorized as “a crime of the 21st century,” according to the presenter of a webinar on understanding elder financial exploitation and fraud.
“I do see financial abuse of our elderly population is becoming, I’d almost say, a societal issue,” said Michele Kryger, elder and vulnerable client care officer with AIG Life and Retirement. Kryger presented a webinar on “Understanding Elder Financial Exploitation and Fraud,” for the National Association for Fixed Annuities.
Elder financial abuse and fraud has become so prevalent that almost everyone knows someone who has been a victim of it, Kryger added.
The National Council of Aging estimates losses from elder financial abuse to be anywhere between $2.9 billion and $35.5 billion a year, she said. “And those are staggering numbers. It's really tough to nail down the actual amount of loss. That's a big range. And the reason why is because many of these cases go unreported. And the national Adult Protective Services Agency reports that only one in 44 cases is reported.”
Victims of elder financial abuse often are reluctant to report the crime out of shame or fear. In addition, many of the perpetrators of these financial crimes are people the victims love or trust, such as family members, making it more difficult to get the victims to report the crimes.
“It’s important for people in the financial industry to be prepared to help clients see signs of exploitation,” Kryger said. “The concern here is that these numbers are only going to increase as our population ages. And with age comes an increase in different risks like cognitive issues or medical issues that leaves individuals more vulnerable to predators.”
'A Unique Position'
Congress passed the Senior Safe Act that was signed into law in May of 2018. The act enables financial institutions to report cases of suspected financial exploitation and receive immunity from the reporting. That immunity is provided only if the institution can prove that their staff is trained to recognize signs of elder financial abuse.
“Financial professionals are in a unique position to see red flags of exploitation where otherwise it may go unnoticed, especially if there's nobody else involved in this - just the client managing their finances,” Kryger said.
AIG conducted a study of elder financial abuse and found the following:
- 47% of senior citizens handle their financial matters entirely on their own.
- 81% of seniors say they don’t believe anyone close to them would take financial advantage of them.
In addition, AIG found seniors were unaware of common financial scams including the pigeon drop scam, romance scams, invoice scams and prepaid credit/debit card scams.
“Seniors expect that their financial advisor or a financial account representative would inform them if they suspect financial abuse,” Kryger said. “What that means is they're expecting us to be keeping an eye on these red flags. So it's important for us to have the right controls in place that we can do so.”
Kryger said AIG launched its Elder and Vulnerable Client Care Unit in 2016, and has trained everyone in the company’s life and retirement business to be on the lookout for signs of possible financial abuse, such as withdrawals of unusually large amounts from client accounts.
“We have a group of financial advisors that we work with and we provide guidance on how to handle these issues,” she said. “We also will report cases to protective services where we think that their client is not acting in their best interest or maybe putting themselves at harm, either financially or even physically.”
She cited an example of a client who was cognitively impaired and decided to move out of her apartment and live on the streets. Having the client discussion on helping to prevent elder financial abuse “can be tricky,” Kryger said.
“But you must make sure you're talking to your client about protection. Have powers of attorney in place; have trusted contacts in place. And finally, document everything.”
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.